Competition is rising between diamond trading centers. Not only are there new online suppliers on the net vying for a greater portion of the global rough and polished trade, but the diamond distribution channel is constantly changing.
Antwerp: leader for 70 years:
Over $16 billion in polished diamonds pass through the Antwerp diamond district’s exchanges each year. There are 380 workshops that serve 1,500 companies. There are also 3,500 brokers, merchants, and diamond cutters.
- Antwerp has been a focus of the diamond trade since the 15th century.
- The industry was transformed when Lodewyk van Berken invented a new form of diamond polishing tool, the scaif, which enabled the creation of the stereotypical sparkling, multifaceted diamond. This attracted orders from European nobility – and attracted other craftsmen to Antwerp.
- Charles the Bold commissioned him to cut and polish the Florentine Diamond. In the 1890s a diamond industry was established in Antwerp by families of diamond traders and manufacturers who came from Amsterdam, Netherlands.
- Since the late 20th century, Indian and Armenian diamond dealers have gained importance in the city’s diamond trade
- While as of 2012, much of the gem cutting and polishing work historically done in the neighborhood had moved to low wage centers elsewhere, about 84% of the world’s rough diamonds passed through the district, making it the largest diamond district in the world with a turnover of 54 billion dollars.
The Antwerp Diamond hub is no longer the only leader of the industry, controlling once 80% of the world trade. A number of factors are contributing to this shift of diamond hubs:
- Antwerp has become over-regulated: The Antwerp World Diamond Centre (AWDC) has responded by launching its ‘Project 2020 Antwerp Diamond Masterplan,’ in an attempt to maintain its relevance as a diamond trading hub. [source] According to its manifesto, the strategy aims to tap new opportunities in the polished market, particularly in China; enhance its ‘Diamonds From Antwerp’ brand; promote hi-tech polishing; launch an electronic trading platform; establish a jewelry wholesale market, and expand its rough diamond trade – with plans to open a rough desk in Africa. In short, Antwerp is seeking to diversify its diamond sector as it faces new competition in its typecast role as a rough trading center.
- Globalization: Re-centralisation of wealth. The wealth has grown. The diamond demand shifted towards a more emergent market such as China and India. India’s new 2% import duty on polished diamonds has all-but killed the opportunity to attract foreign companies to operate or sell to the domestic market. India remains the biggest diamond cutting hub in the world.
- India, the appearance of new digital supply chains: The number of diamantaires present is decreasing by 45% for 5 years. Jewish (80%), Jain Indians, Maronite Christian Lebanese, and Armenian dealers are replaced by automated supply chains. Access to new consumers became easier as the internet brought the world closer together. The Internet has enabled small to mid-sized companies in isolated countries to conduct international business. No need to operate two offices in New York and Mumbai to access the best clients. It requires almost no logistics to set-up your business online. Now with mobile technology leading the charge of global communication, a WordPress eCommerce, an attractive Instagram and a few exits towards larger online stores is enough.
- KoinDex: Koin International’s New Market-to-Market Platform for Rough Diamonds [source]
- 15 new online suppliers such as Blue Nile, Ritani, Rare Carat, IDEX, Stone Algo have raised over more than 20M in seed round investment, promising to offer a great option to just buying a diamond online. This rise of competitions has made the once-upon-a-time Rapnet a not-so leader of the diamond industry online.
- New blockchain solutions are rising by the day, increasing transparency into the supply chain. Today, we count over 20 different ones, from Everledger (WeChat [source]), Tracr, T, Haelixa, Provenance proof, Trustchain, JWL, Diamsledger, and many more.
- New York, Antwerp, Mumbai, and Dubai are no longer an obvious destination to buy diamonds. New hubs are rising, increasing its relevance such as Mumbai, Hong Kong, Botswana, and Bangkok. The greater the regulation and control, the less willing diamond companies are to maintain a presence in any particular center. And it has become easier nowadays for them to relocate. Already, foreign companies are eyeing tax havens such as Dubai to facilitate their trading. In recent years, a number of companies, largely Indian, have relocated from Antwerp to Dubai, including the recent move of a high profile sightholder. Dubai is marketing itself while focusing on enhancing its profile as a rough trading hub.
- Botswana, the promised land: Almost overnight Botswana will become a major rough distribution center:
- The government of Botswana’s goal is to bring business into the country and build a long-term vision for the diamond industry. [source]
- De Beers relocates it’s Diamond Trading Company (DTC) unit from London to Botswana. [source]. But the fact is that fewer goods will be traded in Antwerp as a result of the DTC move and the AWDC is correct to think long-term in its strategic planning.
- Lucara’s blockchain platform Clara will modernize the rough diamond market, says its new chief executive [source]
- LVMH has recently:
- Johannesburg, the rough trading city: Certainly, Johannesburg’s diminished diamond industry has an opportunity to revive its secondary rough market and the industry there should be thinking about how it can capitalize on Botswana’s growth. After all, hundreds of diamantaires will be traveling via Johannesburg to buy rough in Gaborone on an almost monthly basis. [source]
- New York rebirth: Polished trading centers also need to improve their standing. New York’s Diamond Dealers Club is trying to revive its trading floor and is working to attract large jewelry retailers to buy polished local. The club is also planning a trip to Dubai to sell New York as a vibrant source of polished diamonds. [source]
- Ramat Gan, a visionary jew business. Israel’s industry has done well to penetrate growth markets in the Far East over the past decade and maintain its strong position in the U.S. polished supply. But it appears to be lacking a strategic plan to evolve with the changing market dynamics. After all, local activity has shifted and Israel is not the significant cutting center it used to be as many large Israeli companies have relocated their operations elsewhere. Rather, Israel has become a niche market for recuts and high-end goods. However, while one doesn’t see the scores of international buyers that once defined the trade, Ramat Gan still offers a powerful trading environment as dealers there are knowledgeable, service-oriented and savvy risk-takers. Israel’s industry leadership needs to take advantage of those strengths in light of the changing global distribution network to ensure its long-term relevance. [source]
As each center strengthens its niche, they are also diversifying their activity as market developments dictate. Centers ought to consider their strengths and ensure that they offer the most attractive and hassle-free environment possible to do business. No matter what worked in the past, there are new and better alternatives competing for the trade. As each lays claim to being “the world’s leading diamond hub,” there’s an increasing number of centers vying for the title. [source]