H Goldie Blog

FT ARTICLE - If you have to reject me, tell me straight

2012-01-23T13:42:00.003Z

Below is an article we have reproduced from today's Financial Times, written by the brilliant Lucy Kellaway. Do take the time to read it.

IF YOU HAVE TO REJECT ME, TELL ME STRAIGHT

Last December, Elly Nowell was interviewed for a place at Magdalen College, Oxford to study law. When she got home, she sat down and composed a letter to the ancient institution. “I very much regret to inform you that I will be withdrawing my application,” she wrote. “I realise you may be disappointed by this decision, but you were in competition with many fantastic universities and following your interview I am afraid you do not quite meet the standard of the universities I will be considering.”

This 19-year-old girl has taught me two important things about rejection letters. First is how well they work in the wrong direction: from candidate to interviewer. To have the powerless rejecting the powerful not only does the soul a great deal of good, it may make sense tactically. To dump a complacent boyfriend is a time-honoured ploy; I don’t see why the same shouldn’t work with jobs and university places. If there is anyone with any spark in Magdalen’s law faculty they will surely be regretting this plucky, funny girl who got away. (Though perhaps wondering if law, that dullest of all dull courses, was right for her.)

Second, by mimicking the standard rejection letter, Ms Nowell reveals what a pathetic form of communication it is. Patronising, disingenuous, all-round beastly. There is only one accepted way of writing these things, used by all organisations everywhere, and it contains three bits that go like this. “Thank you for your interest in,” they all begin. “We have had a record number of highly qualified applicants and regret that . . . ” And then, an upbeat ending: “We wish you all the best for your future.”

All three elements are shockers; far from softening the blow they intensify it. First, as a reject, you don’t want to be thanked for your “interest”, as what you were showing wasn’t interest, but desire for a position. Neither is it remotely comforting to know how many other great applicants there were. Worst of all, no one appreciates hollow good wishes from someone who is telling them to shove off.

When putting rejection into words, less is more. When one of my children was rejected from a university it was less upsetting to see the naked word UNSUCCESSFUL against the entry on the online application form than to read the letter which arrived a couple of days later with its bad tidings routinely packaged with insincere good wishes.

One might think there were nicer ways of saying no. Howard Junker, the founder of literary magazine ZYZZYVA used to return short stories with a covering letter that began: “Gentle writer, Please forgive me for returning your work and not offering comments. I would like to think of something to make up for my ungraciousness, but I don’t think a few quick remarks would really help.” He signed off with a handwritten, “Onward! J”

How charming, I thought when I first heard of this. But then I read a blog from a not-so-gentle writer who had received the very same letter on many occasions and found it anything but charming. The point is that no standardised letter can ever soften any blow. Rejection is rejection and it hurts.
Indeed, sometimes a brutal rejection is better. Antony Sher often describes the letter he got from the Royal Academy of Dramatic Art that said: “Not only have you failed the audition and we do not want you to try again, but we seriously recommend that you think about a different profession.”

Similarly, some 30 years ago a senior colleague of mine applied for a job at the Economist and got a rejection letter back from the editor’s secretary asking him not to contact the editor again. Such rudeness can only make the recipient think “screw you” and fill them with just the right sort of bloody mindedness to fight on until they make it.

The only worthwhile kind of rejection letter is one that gives reasons. Ms Nowell told Magdalen that she thought it stuck up and off-putting to candidates who didn’t come from posh schools, a point the college might do well to ponder.

In offering an explanation she wasn’t mimicking the normal style: employers almost never give reasons for fear of being sued, or because they don’t want to enter into a dispute, or because their hiring processes are so opaque they don’t know the explanation themselves.
The best rejection letter I ever received contained a reason I will never forget. I had written to a Mr Ivan Sallon, city editor of the Sunday Telegraph, asking for a job. He replied saying that there were no vacancies and went on: “May I offer you a word of advice? When applying for a job, do take care to get names right.” The letter was signed: Ivan Fallon.

lucy.kellaway@ft.com
Copyright The Financial Times Limited 2012.

MARSHMALLOWS !

2012-01-14T16:37:00.002Z

I’ve always hated a particular English sweet called marshmallows, popular with children at fairgrounds for its sickly sweet synthetic taste and soggy texture. Sometimes people toast them which makes for an even more horrible gooey mess.

The DTC feedback has adopted a visual presentation which is obviously inspired by marshmallows, right down to the chemically induced colours.

The feedback appears to be an exercise which has all the characteristics of the previous ones focussing on relative performance but completely avoiding any detail or specifics which could really lead to any useful analysis which people could take away from the exercise and which could give them at least the satisfaction and compensation of assessing their business against their peers in a genuine and meaningful way.

The DTC has regularly hosted and promoted its own seminars as an opportunity for Sightholders to gain insights and inputs to improve their businesses. How ironic therefore that an exercise that is proclaimed by DTC to be so robust cannot apparently risk exposure to the sort of genuinely meaningful scrutiny and dialogue that one would both reasonably expect and hope for.

What's Up?

2012-01-12T13:58:00.004Z

It’s always difficult to comment on what you don’t understand and despite the fact that the DTC announced the CPQ results and provisional list over 3 weeks ago we are still waiting for the feedback which would at least have given Sightholders and their brokers hopefully some understanding of the outcomes as well as the opportunity to evaluate how the process worked, undeniably to the advantage of some but also to the severe detriment of others.

If there is the confidence that is claimed by DTC in the robustness and rigour of this process then the feedback should hopefully provide the rational explanations that are required to demystify a process which seems to start off as relatively transparent but becomes increasingly opaque as it progresses. Even more importantly, for a business whose reputation and credibility is based around checks and balances as well as sound management and judgement, it is difficult to see how some of the outcomes have been reached or evaluated in terms of either business coherence or indeed in some cases best practice.

The DTC has the procedures in place (internal verification, third party verification, BPP and ultimately the Ombudsman) to ensure that those cases that are both contentious or indeed controversial, as some clearly are(!), are fully and properly addressed before the full and final list is announced in March. This will be the real test of whether this process and its outcomes are genuinely robust and convincing and, of course, the DTC will be judged (as we all are eventually) on actions rather than words.

EXPECT THE UNEXPECTED !!??!!

2011-12-22T14:27:00.002Z

I think my reaction to some of the CPQ outcomes is summarised nicely by this title. I shouldn’t be surprised because every process seems to have had some outcomes which one really struggles to comprehend, let alone accept.

If it was an essay writing or best fiction competition that had consumed so many months of our lives and so many livelihoods and futures did not depend on it, I probably would be a lot more relaxed and comfortable about it than is the case.

I bet my view is fairly widely held but doubt whether many will have the balls to publicly agree with me, but it won’t stop me saying what needs to be said both now and into the future.

Nevertheless, as it is the season of goodwill and good cheer, I wish all my faithful readers a very happy Christmas and New Year!

TOO BIG TO FAIL AND TOO IMPORTANT TO GET WRONG!

2011-12-20T13:16:00.000Z

Yesterday the British coalition government and the Diamond Trading Company made two long awaited announcements. The one from the British government was Chancellor Osborne announcing the government’s policy to address the systematic failure of the British banks in 2008. At the same time the DTC announced its new provisional client list.

The British government made it clear that they intend to separate the solid banking retail sector from the speculative banking sector (casino banking) to ensure that banks cannot be brought down again through irresponsible and ill advised speculation leading to toxic debt and subsequent government rescue.

Looking at the new DTC list there still appears to be a disconnect between the reality of criteria assessment and established behaviours which are at complete variance with coherent or sustainable models in the longer term.

One thing that both the government and the DTC have to deal with is the consequences of uncontrolled speculation. Just as governments had not choice but to rescue banks ‘too big to fail’, the DTC has been obliged to rescue a diamond industry and market also ‘too big to fail’.

Let me make it quite clear that I am not criticising the good intentions of DTC management to operate a system that can be considered both robust and credible. It is no easy task and never was. Before SoC was introduced brokers’ input into the selection process was felt to provide checks and balances which gave the whole system an extra layer of protection, dialogue and comprehension.

Since SoC the KAMs inherited the potentially conflicting role of being confidante, advisor and judge, jury and even executioner! Given the inherent conflict in such a position it is hardly surprising that it was felt that an Ombudsman was necessary to oversee fair play.

Marketing is not just about shared aims but shared values as to how to achieve them and surely those values have to include a dedication to getting things right. Right for the consumer, right for the client, right for the industry in general. The DTC’s commitment to doing the right thing in general is recognised by the fact that it is still the diamond company that is the reference point for the whole industry and rightly so, which is why whatever they do is subject to such intense scrutiny and market analysis.

Checks and balances are essential to any democratic society or credible process and to admit to fallibility or systemic errors is a sign of fairness and strength, not weakness.

ETHICAL BUSINESS AND THE CONSUMER

2011-12-15T12:38:00.001Z

A report from today’s FT (‘Consumers stick with principle over price’) shows clearly how ethically sourced and provenance brands and goods increase their sales (‘up 8.8% in 2010 against a 0.4% rise in consumer spending’). Even in such straitened times for the consumer this shows clearly that consumers do not feel comfortable with any purchase, from food to luxury items, where there is any genuine concern about whether exploitation or intimidation has been an integral part of their production.

In some cases the emphasis is around fair trade, in other cases there is a much more sinister dimension where production has been linked to serious human rights abuse in countries with either, at best, dubious or, worse still, proven reputations for brutality and tyranny.

The DTC has been absolutely right to have clearly identified its own proactive and robust stance on any issues that have damaged the hard fought reputation of the industry since the horror of blood diamonds emerged in the tragedy of Sierra Leone. They are also absolutely right to ensure that the provenance of the Forevermark is beyond question.

It is very clear where ethics are concerned that there is no room for doubt or compromise when the reputation of the industry can so easily be called into question and at a time when political tyrants have never been more under threat across the world. The DTC’s unwavering and consistent position on this is absolutely vital from both an ethical and a business point of view.

POLITICAL AND ECONOMIC COHERENCE (or the lack of it)

2011-12-05T16:57:00.000Z

At a time when the world’s attention is focussed on whether the Euro and the Euro zone will survive the extraordinarily relentless and challenging stress-test the market is subjecting it to it may seem strange to talk of the EU’s success because, whatever the gravity of the current problems, the political achievement of creating a European economic union of 27 sovereign nations is undeniable in terms of both the breadth and ambition of the project and in terms of the fractured history of Europe as a continent.

India, due to become the world’s most populace nation, comprises 28 states and 7 union territories and like Europe has a level of political complexity and a political class which consistently manages to send out confusing and contradictory messages to the world (the latest being whether Indian will open up its retail sector to foreign investment).

Europe is certainly having a hard time and widespread negative press at the moment and India’s political class perhaps also needs to look towards Europe to see what happens when political coherence is not addressed it will inevitably be forced upon you by events.

A SAFE PAIR OF HANDS

2011-11-14T17:10:00.004Z

When I was a young man it was considered a compliment for someone to be described as being ‘a safe pair of hands’, it being viewed favourably to be dependable, reliable and comprehensible (and, yes, sometimes even boring). Then along came the ‘masters of the universe’ and their conceit and ignorance led us to the horrible mess that we are in today.

The problem with Supplier of Choice (as rolled out by Gareth Penny) was not so much the aims but the methods. What the industry doesn’t need is more talk of robust transformation. It is an industry which is already confused and disorientated by constantly tumultuous and testing events over the last few years and the sale by the Oppenheimer family following close on the announcement of the move to Botswana does little to make the industry at present feel particularly reassured about the future however much they are urged to embrace it.

However, it is encouraging that Cynthia Carroll made particular mention in her interview with CNBC ( http://video.cnbc.com/gallery/?video=3000055512 ) that they will be ‘moving forward with the Sightholders’ and also she mentioned the word ‘respect’, which I believe is essential to all successful relationships and what was always the vital ingredient lacking in the one-sided ‘masters of the universe – we know what’s best’ approach.

MAN AND MYTH

2011-11-05T08:37:00.001Z

If myth maketh the man and the man is no longer what becomes of the myth?

OOPS – THEY’VE DONE IT AGAIN!

2011-11-02T09:16:00.000Z

If the world economy wasn’t of such vital interest to us all, the current situation in Greece would be considered a particularly Greek tragedy and references to Greece as the cradle of democracy don’t really help much.

Unfortunately it is looking increasingly likely that Greece will be adding yet another ruin to its impressive collection, that of the Eurozone.

THANK YOU MR GANZ

2011-11-01T17:55:00.008Z

"IDMA PRESIDENT SAYS TENDERS ARE A REAL THREAT TO FUTURE SUPPLY"

It’s not often that one reads in the trade press anything much other than the usual blend of bland almost PR type commentary intended to flatter the advertisers and mining companies, while the trade’s leading gurus seem to carefully avoid discussions which might be deemed controversial and interesting because, one can only assume, they are so keen to be invited back as the next fearless ‘talk show host’.

So it was interesting to read a report in The New Jeweller (an Indian trade magazine) on Mr Moti Ganz’s (President of IDMA) article which had previously appeared in the Israeli Diamond Institute’s House Journal. The article is frankly so well written and well argued that everyone in the trade should read it.

Its message couldn’t be clearer and is one that I have always championed, that while tenders undoubtedly have a place in the context of efficient diamond distribution, if they were to become the dominant distribution channel the industry would have no good reason to invest in its own future. Whoever heard of a coherent and sustainable strategy based on the most unpredictable supply channel.

This debate which ebbs and wanes according to the market’s mood and resale profitability needs to be put to bed once and for all so that our fearless commentators can actually focus on some of the real issues for an industry about to undergo a major transformation.

GOOD NEWS

2011-10-28T12:35:00.003+01:00

First of all it’s Diwali and let’s celebrate that.

It was the palpable over confidence and hubris of the politicians, economists and bankers that lead to the 2008 world economic crisis and its political consequences. However, the current lack of confidence about the future is also palpably unsustainable based on history and experience. This being said, history has always taught us that it is only when problems are recognised and agonised about that they are dealt with. So what is the good news?

1. The Eurozone has come up with a plan that given political goodwill (and a possible investment from BRIC countries!) might just restore confidence in the world economy.

2. US economy has returned to solid economic growth in the third quarter of 2011, despite the drag of unemployment and lack of a recovery in the housing market.

3. Finally, just before one writes off Europe, interesting to read in today’s paper that Spain is to build and operate the Saudi Arabia high speed rail line and that China’s own high speed rail plans both for internal and external sales are faltering following the major accident in Wenzhou as a result of their haste to build the world’s biggest bullet train system without due regard to safety.

Which brings me back to Chancellor Merkel, who has been criticised for being behind the curve, but whose possibly more thorough (Germanic?) approach may in fact be more viable in the long term.

Depending on which paper you read and on what day, you can find enough news to decide whether your cup is half full or half empty. Here again I make no apology in borrowing our old friend Gary Ralfe’s favourite saying that ‘things are never quite as good or bad as they seem’.

Have a great weekend!

ON ‘GETTING YOUR HOUSE IN ORDER’

2011-10-10T16:30:00.000+01:00

As Prime Minister Cameron reminded President Sarkozy and Chancellor Merkel today in a Financial Times interview, time is running out for the Eurozone to put its house in order if it is to retain its credibility and the market’s confidence.

There are similarities with the current situation in our industry, that if the industry doesn’t address effectively its problems in the short term they are likely to continue to haunt us in the future rather project the image that we need to, that of a confident, relevant, forward-looking and consumer orientated industry, who can count on the continuing support of specialist banks in both good and bad times.

In my blog in Feb 2010 I referred to the confidence gap opening up between the Western world and the emerging BRIC countries. While it is certainly true when expressed in terms of GDP and growth, economic interdependence cannot be de-coupled in terms of overall confidence levels. Are the Chinese or Indians overly concerned about the effects of a Greek default? Definitely not in terms of immediate bank exposure (like the Europeans) but there is no doubt that they will be watching matters closely to see whether the European Union emerges with its economic credibility in tact or in tatters.

Once again the leadership role for our industry falls upon the shoulders of the DTC in particular, the Indian industry and the bankers and as long as they all behave responsibly confidence will return in spite of what’s happening in the wider world.

There is an significant difference between our industry and the situation the EU finds itself in - the EU is struggling to improve institutions and processes that address the banking and confidence issues that have become so inextricably linked. In our industry we already have the marketing structures and specialist banks and the DTC’s leadership which allows us a clearer recovery path than there appears to be in Europe at present.

LEADERSHIP

2011-09-27T18:34:00.001+01:00

One of the central themes of the DTC Business Excellence Seminar on Monday was leadership in general and whether entrepreneurs are born to greatness or can be coached to develop the extraordinary skills required to establish and run a successful business.

Three distinguished business lecturers had been invited by the DTC to address break-out sessions which were attended in rotation by everyone. The event was well organised and interesting, but of particular interest were the introductory remarks of De Beers CEO, Phillipe Mellier. At a time when leadership will be the crucial factor in whether the world economy is going to continue recovering or slide back into recession his remarks about the leadership role that he believes he must assume in his position were pertinent.

He reminded the Sightholders that the diamond industry is a $100bn industry, more than double the size of the industry he has come from, and the clear inference was such an important industry needs clear leadership and that he intends to provide it both by presenting a vision of the future and working closely with partners to realise it.

Essentially the approach seems to be one of pragmatic leadership, based on mutual respect and there is no doubt that the industry is ready for this approach. The plain speaking is much needed to address an unacceptable gap between rhetoric and reality which has meant that there has been reluctant tolerance of behaviour that either just is not acceptable in itself or even in the diamond industry’s best interests.

At a time when the industry is going to have to adjust to the challenge of the move to Botswana there is a particular need for a clear, honest and forthright narrative that will allow the industry to have a vision of its own future that will make sense.

SUSTAINABLE AUCTIONS ?

2011-08-23T14:26:00.006+01:00

A SILLY TITLE FOR A SERIOUS SUBJECT

August invariably is a rogue month, when situations that are not really unexpected at all still manage to take us by surprise. Such is the case in the diamond market at present where a combination of slower polished sales and a challenging world economic outlook have affected diamond sentiment significantly in the last couple of weeks.

But what has actually changed?

Demand for luxury goods and diamond jewellery remains strong at the retail level and the supply/demand fundamentals would suggest that while the more exuberant premiums were definitely over hyped (and possibly manipulated) recent demand for rough and polished in general has been rational and robust for the right reasons.

Once again, however, the argument for the DTC’s model against that of other producers is thrown into sharp contrast as we see how auctions both distort the reality and disturb a market and industry which needs sustainable pricing and rational behaviour as its principle drivers.

Even a well-informed consumer would struggle to understand why rough prices have dropped at a time when gold is achieving ever higher prices and the share markets are so volatile and investors increasingly look to diamonds as a safe haven.

Sometimes it seems that the diamond industry is its own worst enemy, and it takes surprisingly few of these so-called ‘market makers’ to over react which, with the hindsight of their own experience, is perhaps the one thing they should have learned to control.

Ever since I have been in the industry, the DTC has done its best to create the sense of structure and stability required to allow it to have a vision of its own future. Lose that and what’s left?

GERALD ROTHSCHILD - A TRIBUTE

2011-08-17T11:20:00.005+01:00

For as long as I have been in the diamond industry, Gerald Rothschild has been a name and personality to be reckoned with. A broker in the true sense of the word, always understanding that when common aims can be identified and agreed, cultural, linguistic and business differences can be resolved through goodwill and respectful, effective communication.

His own career path was certainly not as straight forward as he would have liked and expected, but his personal commitment to the industry and his clients remained consistent and unquestionable throughout his life.

It is in the nature of being a broker that relationships are subtle and discreet and for this reason do not often receive the recognition and profile that others in the industry enjoy. Gerald’s own contribution to the diamond industry over a long period of time has been significant and he will be remembered warmly by those clients and friends whose success he played no small part in.

We extend our most sincere sympathy to his widow Alison and his sons.

POSITIVE ROLE MODELS

2011-08-12T10:48:00.013+01:00

In a world seriously short of positive role models sometimes they appear (with a little help from the media) in the most unlikely places and in the most extreme circumstances and their personalities and dignity capture the mood of a disorientated and angry nation.

The media is often accused of creating hysteria but the case of Tariq Jahan, the father of young man deliberately run over during the rioting in the Midlands who appealed for calm, was held up by the head of the local police to have averted serious communal strife by his dignified and empassioned appeal for calm and peace.

Another unlikely hero is the unfortunate Malaysian student Ashraf Rossli, set upon by a gang of feral youths who pretended to assist him while robbing him, sort of reverse Good Samaritans. Fortunately the young student is recovering and when interviewed by the media made it clear that he will continue to pursue his studies in England, despite what happened to him.

WORLD ECONOMIC MELTDOWN?!

2011-08-05T10:33:00.001+01:00

With the credibility of European and US politicians understandably called into question by their handling of recent events and young people taking to the streets (from Tunis to Tel Aviv) to express their frustration with their political leaders, the politicians cannot be enjoying their summer holidays too much and the papers and media are doing nothing to improve public optimism or market sentiment.

Many of us in this industry remember Gary Ralfe with particular warmth and affection and for his easy charm and natural eloquence. A remark he often made, which has certainly stayed with me and I’m sure many others, is that things are never quite as good or as bad as they appear to be. Perhaps we should keep this in mind as we enjoy our holidays.

ENSEMBLE!

2011-06-15T11:53:00.004+01:00

I have worked in this industry quite long enough to know what and whom I like and why and, regrettably, just as important these days what and whom I don’t like and why.

So, the thought of another gathering overflowing with ‘faux camaraderie’ filled me with a mixture of healthy scepticism and déjà vu (yet more hectoring, lecturing and pontificating?).

However, refreshingly that wasn’t the case at all. We were introduced to a charming, quietly confident but clearly impressively qualified person who talked in a respectful and nuanced way, using the word ‘ensemble’ quite strategically to define his approach. An approach which seemed to easily connect with and engage his audience.

A pleasant surprise and, arguably, just what we need in this sometimes jaded and cynical business.

Phillipe Mellier - on vous souhaîte, bienvenue et bonne chance!

SUSTAINABLE BEHAVIOUR?!

2011-05-10T14:13:00.000+01:00

If I was to say to you BPP compliance was an event held every 3 to 4 years and not an ongoing commitment, and that for the rest of the time there was no compliance required, you would think that I had taken leave of my senses or I was being deliberately provocative.

So, that’s why I say that while the new contract period and the DTC process around it is undeniably a necessary and significant event it surely needs to be carefully considered whether the applicant has demonstrated a level of consistency in behaviour, as well as performance, and this surely is an integral part of the credibility of business coherence.

There are clearly those whose business model came close to failing the test of recent events and maybe others who feel the CPQ process is little more than an exercise in creative writing that comes around every 3 (or 4) years, an event that is not in itself an intrinsically dynamic process. Let’s hope that they themselves are proved wrong by events!

THE GOOD, THE BAD AND THE UGLY

2011-04-18T11:41:00.022+01:00

Since I first visited Mumbai in 1968 I have developed a deep attachment to India, its culture, its people and huge respect for what the Indian diamond industry has achieved, so all my comments should be viewed in that context of love and respect.

I was so happy to be back in India participating again in the DTC Sightholder Business Review meetings which have, as ever, proved that the quality, depth and candour of this dialogue is what continues to set the DTC and its Sightholders apart from the other mining companies and why the DTC is still the world’s most respected and important diamond company based not just on its proud heritage but on its exciting future and why Sightholder status still represents the pinnacle of achievement and recognition in our industry.

BILLBOARD PROCLAIMING VARDA'S OPENING OF THE INDIAN DIAMOND INSTITUTE

However, this being fully recognised and accepted there are times during these visits when I am reminded of the title of one of the most famous films ever made ‘The Good The Bad and The Ugly’ the classic spaghetti western that launched the career of Clint Eastwood the legendary American film actor and director.

The Good – because in our trade and industry the majority of businesses retain a strong commitment to strive for excellence and ongoing improvement, whether it be across manufacturing, marketing or both and in order to achieve this management knows it needs to do the right thing by its staff and behave consistently and fairly so they know what is expected of them and consequently ‘deliver the goods’ to the required level.

The Bad - however, in contrast there are those whose business model (if you can call it that) is so shifting and impermanent in character and opportunistic by nature that if they are specialists in anything at all it is the constant attempt to redefine their role and reinvent themselves in a way that defies credibility let alone business coherence when the presentation and reality of the model as presented bears little relationship to their actual activity. In fact the most transparent part of their business is often the cynicism and shamelessness of how they go about this.

While it is normal for any company to adapt and improve and indeed from time to time adopt other companies’ innovations, where it beneficial and appropriate to their existing model, these are those companies who indulge in mindless and poorly executed copying and scheming, engage in silly gossip and petty intrigue because for them diamonds are just a means to an end and a vehicle to make money and speculate. While they may pay lip service to sustainability and customer experience, they are really much more interested in what is going on in the secondary market.

There has been some debate, although actually surprisingly little (as moderators and trade press seem prefer to take the conventional wisdom and politically correct position) as to the impact of reduced rough supply on the Indian manufacturing industry as a result of some producers’ politically driven beneficiation agenda, however worthy its aims are. However, there is a particular debate that needs to take place, and sooner rather than later, around the link between reduced supply of rough to India and its likely impact on reduced polished sales into, what everybody agrees, is the most rapidly increasing and potentially world beating diamond consumer market.

The correlation between rough supply and polished production, and polished sales and creative downstream marketing efforts, is the marketing dynamic which has driven the huge increase in sales to India and direct to market and it would be ironic if the producers and Sightholders, who have created this genuinely win/win situation, undermine its potential themselves by underestimating the importance of the connections that have driven this extraordinary success story.

‘Living up to diamonds’ in India is not just about full compliance with BPP and the Kimberly Process for both the moral and reputational issues clearly recognised by all legitimate diamond companies, but there is an additional Indian dimension too at a time when, as elsewhere in the world, there is a growing movement of social activists in India, utilising Facebook, who are pressing the government and its agencies to be more accountable in general and address the corrosive effect of corruption on civil society (The Ugly).

There are some Indian diamond companies who while they give back to society in many admirable and practical ways, including charitable institutions founded and funded by themselves, need to recognise that corporate responsibility has to be extended into the wider domain across all areas of political and social concern and supporting the ethical value chain at all levels of society is the right way forward.

ANNA HAZARE

KIRAN BEDI

SWAMI AGNEWESHA

Link to Facebook Campaign

www.facebook.com/AnnaHazare.support

While the Indian industry has often been accused of irrational exuberance in the past, and some might argue that this is the case at the moment, the fact is that the success of the Indian manufacturing and distribution network is really what dominates and drives the entire diamond industry and the operation of the new bourse is likely to increase and not reduce its central importance and who will come to the rescue of the industry next time it loses its nerve? But as we know, sometimes memories are short and selective.

AL-QAEDA OR AL JAZEERA ?

2011-03-01T15:29:00.002Z

What started in Tunisia with the self immolation of unhappy 26 year old fruit seller Mohamed Bouazizi, has reverberated around not just the Arab world but the whole world.

There are those that fear that given the lack of a democratic history and institutions in the Arab countries that extremists will seize the moment.

However, I share the view of Monsieur Gérard Araud, French Envoy to the UN, who says ‘The world is changing and I think it is changing for the better and I guess the security council has to be at this rendezvous with history.’

There were those who said that democracy wouldn’t work in Portugal or Spain or in India and have all been proved resoundingly wrong. Why should the Arabs be any different?

How encouraging to see that non politicised professionals and young people are demanding the respect and accountability denied by their own Governments.

Ironic that Al Jazeera is based in Qatar, but any organisation that has been banned by ex-US Defence Secretary Mr Donald Rumsfeld and ex-Egyptian President Mr Hosni Mobarak must have been doing a good job.

Will there be economic turbulence? Yes, of course. But in the long term the world will be a safer place if the Western democracies for once support the good guys instead of the bad ones.

CREDIT WHERE CREDIT IS DUE

2011-01-27T15:04:00.000Z

Yesterday I had lunch with an old friend, Edward Johnson, Director of GIA London, who remarked that he had not read any of my blogs recently, to which I replied that it was hardly surprising as I hadn’t felt sufficiently inspired or motivated to write one and I prefer to only comment when I think I have something interesting to say that hopefully will add value.

This, of course, is a very important year for the Diamond Trading Company, its Sightholders, its brokers, its well-wishers and the trade in general as we all embark on the assessment process for the new contract. It would be premature to say anything very specific at this stage but I think one thing is clearer than ever, Sightholders should only get credit where it is due, by having demonstrated that that what they have said in previous profiles has proven to be credible.

This, after all, is a test of not just of the clients and their business models but also the DTC’s who rightly expect Sightholders to add value not only to their own businesses but also to the DTC and indeed the industry in general and inevitably it’s the results of the process itself on which it will be judged.

ANOTHER YEAR OF MISERY?

2010-12-08T13:27:00.001Z

While most Sightholders have undoubtedly done very well out of the DTC system, and arguably in a few cases far too well, there are others who seem to have been sentenced by an inflexible and unresponsive system which seems to be completely at odds with the concept of relationships which has so often been extolled as a cornerstone of DTC policy (Partnerships in Excellence).

Business continuity has also failed to live up to the expectations that were raised when it was introduced as a response to the worldwide crisis and its effects on our industry. Explan as usual seems to benefit mainly those whose ranking was established over 3 years ago and which hasn’t been revised or reviewed. A lot has happened since the rankings were established and yet it seems to be very much a case of ‘plus ça change’ and the rigidities of the system remain firmly in place, despite the fact that the DTC acknowledge that lessons have been learned.

Systems are designed to provide a structure which supports relationships and doesn’t undermine them. They shouldn’t be placed above the outcomes and seen to be infallible when clearly they are not.

Ours is a love driven industry, completely dependent on the consumer relationships which are the motor of everything we do. It is time to do a better job with the relationships that really count upstream and a little love and understanding would surely be ‘living up to diamonds’.

The fact that the contract has been extended by a year should provide an opportunity to address and correct some of the most obvious failures of the system and give hope to some of those Sightholders who are recognised by the trade as one of ‘the world’s leading diamantaires’ but apparently are not recognised as such by the company who coined that phrase in relation to its own partners.

Three years of frustration and disappointment is more than enough but a fourth year would be just unbearable for those in this situation. Instead we propose that the DTC introduces a measure of flexibility in allocating Explan which would address the shortcomings of the current system and manage those client relationships that are under considerable strain into the next contract period.

BHARAT DIAMOND BOURSE – ‘BETTER LATE THAN NEVER’

2010-10-22T12:18:00.004+01:00

This old saying acquires particular relevance in relation to the remarkable achievement in rescuing this hugely ambitious project from ignominious failure and widespread scepticism as to it ever being completed successfully.

Congratulations to Anoop Mehta and his colleagues for their perseverance and determination to see it succeed to the benefit of the entire global trade and industry.

33 DIAMONDS IN CHILE

2010-10-14T16:47:00.001+01:00

The whole world has been totally gripped by the ultimate reality show. Not one based on wannabe or minor celebrity flim-flam but a truly heroic life and death struggle to rescue 33 miners trapped ½ a mile below a mountain in the Atacama Desert.

In a world depressingly short of heroes and truly inspirational behaviour a drama of faith, human endurance, technical ingenuity and national pride achieved its heart warming conclusion in reuniting the trapped miners with their loved ones.

Even hard-nosed journalists and presenters struggled to maintain their usual composure whilst reporting on this emotionally charged and unprecedented rescue mission.

My understanding is that the diamond industry has a rather good record in looking after the welfare of its miners. That is surely where living up to diamonds should start because without the courage and determination of the miners our industry simply wouldn’t exist.

THE 5th C – CREDIBILITY

2010-10-11T15:17:00.001+01:00

One doesn’t hear much about ‘The 4 C’s’ these days but in its time this De Beers inspired theme was the widely recognised and understood description of a diamond’s basic attributes and as recognisable to consumers as the perennial ‘A Diamond is Forever’ slogan.

At this last Sight the consultation process for the next contract period was initiated by Howard Davies and interesting discussions took place around the company structure element.

While the discussion comprehensively covered many of the concerns of the DTC and Sightholders a word that I think is underused in our industry didn’t feature. That word is credibility.

As long as I’ve been in the business credibility has seemed to me to be perhaps the most important denominator and differentiator between one business and another. Coherent business plans are great, exciting marketing concepts too but without credibility they are no more than words on paper.

It is not often that one of my previous blogs themes (and dreams!) has come true so it is only fair to acknowledge it when it happens. In September 2008 I wrote a blog lamenting the fact that the DTC senior management from London (and I included myself as a leading DTC broker) had not attended any of the GJEPC Award functions for many years, so I am very pleased that Varda is indeed guest of honour tonight, attending the ceremony in Mumbai.

Why is this so important? First of all because the awards have credibility and it is the performance of the companies that earn them the awards. So let’s hear a lot more of the word credibility in these discussions that are leading up to the finalisation of the assessment process because it’s not merely a box ticking exercise or an exercise in creative writing. It is the credibility of everyone (and we include ourselves) that is on the line and most importantly the credibility of the process itself.

ON MINES, MARKETS AND MANUFACTURERS

2010-09-10T13:28:00.001+01:00

A major industry conference is coming up in October in Mumbai once again entitled ‘Mines to Market’, although why manufacturing doesn’t get a mention in the world’s biggest diamond manufacturing country is beyond me!

Since SoC was introduced the importance of manufacturing has tended to be rather played down unless it is linked to the beneficiation manufacturing agenda. Let me once again state quite clearly that it is absolutely legitimate and normal for African producers to seek to obtain the maximum benefits from the natural treasure that they are fortunate to own when genuine employment opportunities are created as well as viable value addition to their economies.

However, the Indian industry, which has had such a mutually successful relationship with the DTC over so many years has understandable concerns about the extent to which it can rely on the DTC in the future to support its huge manufacturing infrastructure. The same infrastructure which has sustained and supported both the DTC and indeed all producers for so long.

In business, as in life in general, it is genuine commitment as well as co-operation that creates enduring relationships. Gareth Penny has successfully over the years identified shared goals which the Indian industry has enthusiastically endorsed but industries and markets hate uncertainty and a lack of clear commitment from either side in a relationship can only result in confusion and often unintended consequences due to a lack of mutual confidence.

I make no apologies for being a firm defender of the sight system as being in the best interests of sightholders and producers in the long term. However, it is perhaps unsurprising that the Indian industry has formed rough procurement companies to try and leverage the fact that India is likely to remain the locomotive of diamond manufacturing for the foreseeable future. The lack of any clear narrative from the DTC or its producer partners as to how the DTC/India relationship is going to be sustained into the future leaves a communication void that others will fill.

The fact that some of the promoters of these alternative methods of obtaining rough are themselves sightholders seems to indicate a level of nervousness about the relationship and the future intentions of the DTC that does not bode well for the future health of the diamond industry as a whole. When such major buyers are so short on confidence it is hardly surprising that the rest of the trade takes a lead from them.

Surely it is absolutely in the interests of the DTC and Botswana to continue to engage with the Indian industry to protect their own interests as well as India’s. However the ambiguity surrounding the future of the DTC/Indian supply/sightholder relationship can only complicate matters for all and eventually marginalise the DTC’s up till now significant role in the world’s most important rough and polished consuming market.

Both Gareth and Varda can be in no doubt as to the importance of the Indian industry in repairing the considerable damage inflicted by the collapse of confidence. Gareth is being honoured in India by the Indian Sightholders, he also will I believe be addressing the conference next month. How appropriate it would be for him to take advantage of this opportunity to bring the rigour and transparency which he has become known for to a subject which really needs now to be properly and sensibly addressed in the interests of all.

MISSION ACCOMPLISHED ?

2010-07-26T12:24:00.003+01:00

Gareth Penny’s surprise resignation has clearly not surprised me as much as it has some and I certainly don’t believe that his resignation signals any great change in the DTC’s business model or policy. I neither take seriously some of the stranger rumours that the diamond industry unfortunately still seems to enjoy so much.

I am very much inclined to take the announcement pretty much at face value, I think it has been clear to anyone who knows Gareth that he was always and remains a highly competitive and driven individual determined to make his mark as an innovative business leader. He has always come across as a man on a mission in a hurry to change things.

While I have never doubted the sincerity of his aims or his personal integrity or had major reservations about the general direction in which he wished to take the industry in. I haven’t always liked the approach or process involved and I believe a more considered dialogue with clients and brokers at the time would possibly have been just as effective.

Gareth’s commitment to his family life is very genuine so I have no problem accepting that references to putting his young family first is indeed an important factor in his resignation decision as well as a general feeling perhaps that he had come to a crossroads in the development of his own career and felt it was the appropriate time to move on as the figures have shown that the recovery is in place.

Can he claim to have achieved his aims in terms of how the DTC defined and promoted SoC originally?

In defence of the reputation of De Beers and the diamond industry in which it operates he can certainly take considerable credit both for the conviction and clarity of his views and the way he implemented them. Certainly high marks here, the area which had the most potential to seriously damage the industry both short and long term.

De Beers is a heritage brand (as the brand extension into retail reminds us) so it surprised many, myself included, the extent to which the strategic review disowned the achievements of the past in order apparently to focus on the challenges the future held.

Where I think Gareth must be disappointed, whether he admits it or not, is that the rhetoric around efficient channel distribution in rough supply has had much more mixed reviews and many have felt that the process has been elevated over the interests of the clients and indeed the DTC itself on many occasions. The very serious crisis which the industry has emerged from showed up the weaknesses as well as the strengths of the current distribution system.

There is a general feeling that the assessment process has often appeared to be excessively complicated, unresponsive and inflexible and this remains an issue the DTC management will be well advised to focus maximum effort on into the next contract period if the credibility and confidence in the system is to be retained.

No doubt many columns of trade and other press will be devoted to Gareth’s career and his leadership of both the DTC and De Beers. Much of it will be fawningly complimentary, some of it absurdly hostile or just unfair. While I have certainly expressed my views forcefully over the years (hopefully in a constructive manner) on quite a few of the aspects of SoC which had worried me and the clients we represent, I have never once doubted either the sincerity or clarity of purpose of Gareth Penny or his personal integrity. Although Gary Ralfe started the strategic review Gareth became its principal and most determined architect and it will be interesting to see whatever learnings from his experience he will take with him to share with his future colleagues in whatever industry he chooses or chooses him.

QUOTE OF THE DAY

2010-07-22T14:28:00.000+01:00

After a busy day at the Sight, Sharookh and I thought we would reward ourselves with a nice cold Guinness at the Cambridge Arms in Battersea. Little did I know until I went to the gents that I would find graffiti on the wall that would rather sum up my attitude to life in general, I’m going to share it with you and I hope you enjoy it as much as I did.

‘A positive attitude may not solve all your problems but it will annoy enough people to make it worth the effort’

SUPPLIER OF CHOICE AND THE ‘NEW NORMAL’

2010-07-20T16:30:00.000+01:00

I am still trying to understand the significance of the new normal in terms of where it takes us and what we should take from it and how this particular narrative is likely to develop. However, I understand it will be the theme of the forthcoming Business Excellence Seminar and I look forward to getting some real insight into what it represents both to the DTC and by extension to DTC sightholders and brokers.

This particular sight has given out somewhat mixed messages as it is recognised to be one of the year’s most important sights from a manufacturing perspective but there have been ITO delivery shortfalls across a wide range of goods as well as the fact that there has been no explan.

The business continuity programme was promoted by the DTC as an important add-on to the ITO process to address distribution issues which had been brought very much to the fore following the industry’s near-death experience in late 2008 though 2009.

Now things seem very much back to the old normal, I am wondering really what the new normal represents in distribution terms.

The contract period being extended was possibly made more palatable to those who were looking forward to the opportunity of correcting some of their supply issues by the hope that in the interim the business continuity programme would fill some of the gaps in their supply relationship with the DTC.

As we approach the new contract period it is so important to all of us that we get a system that we can live with and support and derive strength from for the future, whatever it may hold.

Last week’s Sunday paper contained an interesting assessment of the difference between the new British coalition government and the previous Labour administration. It made the point that the previous administration became so obsessed with process and how it was playing out that they lost sight of their own convictions and that is something that we simply can’t afford to do. Most businesses are greater than the sum of their parts and that applies to Sightholders as well as big corporations. We have to look at the holistic qualities a business represents and relationships have to be leveraged on that basis rather than simply reducing a business relationship to competitively vying for placement in individual bands and hoping that it all adds up to a viable business. We have all the skills required to make sure that the system is rather more than merely a computer generated result which cannot be reprogrammed or reassessed when required and when necessary in a rational and relationship-friendly way.

The challenge for us all is to fix the problems and not just move the parameters. Much has been achieved but we have to now acknowledge we can’t afford to be having a discussion around the same issues in the new contract period. If that is what’s meant by the ‘new normal’ then I’m all for it.

TURKISH DELIGHT

2010-07-09T15:46:00.004+01:00

In common with anyone who follows world affairs closely you would expect me to have some views on the way the interception of the aid ship Mavi Marmara was handled: I have however no intention of falling into the trap of airing them at this point, as like many others I prefer to await the outcomes of the Israeli governments own enquiry into an incident which is proving to be a significant rupture not only in a previously solid Israeli Turkish relationship, but is leading to a reassessment of Turkey´s newly assertive role on the world stage.

Like many Europeans (and rather less Americans) I have abiding respect and sympathy for secularists who take on the entrenched dogma of the religious right of whatever religion that tries to impose its dogma and agenda, over and above legitimate rights of human beings.

Modern Turkey would not be what it is today if Kemal Ataturk had not taken the vigorously nationalistic and secularist path, that led to the renewal and restoration of Turkish pride after the fall of the Ottoman Empire. There is now concern both in Turkey and elsewhere about the Islamization of Turkish politics.

However, it is the present leadership of Turkey whose efforts to join the EC were rebuffed by the French, Germans, and who else but the Austrians, who made it clear they would not accept Turkey´s full membership. While the ´Anglo-Saxons´ (what an ethnically inaccurate term for the U.S and Britain) were generally supportive of Turkey´s membership, the impression given but never openly stated was that Turkey was not eligible for membership of an essentially Christian club.

Is it surprising therefore that Turkey should reorientate and rethink its own policy to take into greater account its own extraordinarily significant geographical and strategic location, in the face of the EEC indifference amounting to rejection, and multiple threats to its own peace in a chronically unstable region.

As my readers will recognise, a constant theme of mine is how respect or lack of it drives international affairs and business for more than is normally recognised.

Religious fundamentalism, terrorism, and fanaticism has spread across the middle east from Iran to Afghanistan, claiming not only the lives of many young and brave Americans and Europeans, but an increasing number of innocent victims across a region where lives are blighted by the economic and political failure resulting from this toxic mix.

In the meantime, Turkey, a country that was told it was too economically backward to qualify for membership the 27 nation European club last week reported a growth of 11.4% (second only to China) compared with a European average of a little more than an anaemic 1% much to Turkey´s delight and the inexorable law of unintended consequences and lack of respect for a nation’s legitimate and reasonable aspirations.

FIFA WORLD CUP SOUTH AFRICA 2010

2010-06-14T13:06:00.005+01:00

What a truly magnificent global tournament the World Cup is - an event that allows nations to express all their national fervour and patriotism legitimately by getting behind their national teams in the hope that they will be skilful and lucky enough to become world champions.

The World Cup is a truly global phenomena because it is organised by a world governing body which, like the Olympic Committee, knows that it has to be not only inclusive but also aspirational in encouraging always the ethos of mutual respect between competing national teams and their supporters to ensure that the competition is played to mankind’s noblest competitive instincts and national pride - not the basest.

A world without cultural ties and sporting events would be a truly barren place, that is presumably why the men of evil always target them.

The fact that the World Cup is being hosted for the first time in Africa and South Africa, in particular, has a political dimension of huge significance, confirming that its people have finally emerged from the shadow of Apartheid to take their rightful place in the community of nations. However, none of this would have been possible if they didn’t have the infrastructure and political stability to support the event.

How sad that family tragedy prevented Nelson Mandela from attending the opening game. It is, undoubtedly, his wisdom and forbearance in understanding the power of sport in unifying people in a country whose sporting allegiance previously tended to divide along racial lines. The World Cup is an achievement that belongs to him and the people of South Africa but which all the world recognises and rejoices with them in their success and pride.

Even for those of my age who were not directly oppressed by the Apartheid regime - it’s ridiculous, evil dogma cast a long shadow over our own futures almost on a par with the threat of nuclear war and global destruction.

The political boycott of South African rugby certainly contributed to the downfall of the Apartheid regime and it seems few nations or regimes (except perhaps the North Koreans, and even they are participating in the World Cup) seem to enjoy pariah status.

Talking of ex-pariah nations, Serbia, another specialist in ethnic cleansing, lost to Ghana (with its Serbian coach). Their participation is an important step in their further rehabilitation and integration into the world community.

Those countries that ignore the lessons of soft power and international public relations and think that the projection of brute force and political intransigence are the solution to their problems, are running against the current tide of human history and it is even more inexcusable when they ignore the lessons of their own history.

As for South Africa fulfilling its economic potential, multi-racial Brazil (the B in BRIC) has perhaps the most widely admired national football team and that is something to aspire to.

EUROZONE BLUES

2010-06-11T15:31:00.004+01:00

In a blog posted on Friday 19th Feb 2010, I predicted that Europe would be in for a difficult time, especially in comparison with the surging economies of India, China etc. In fact the confidence issues that were the central theme of this blog have turned out to be an even more headline grabbing sovereign debt crisis than I had imagined and the Euro (and Sterling) look as though they will both be in the sick bay for quite a while.

This said, let’s not forget that Europe is still the preferred destination of most tourists and the European luxury brands have a heritage and prestige that is unmatched.

The increasing prosperity of Asia, Latin America and hopefully in time Africa will ensure that European luxury goods sales will continue to grow significantly, marketed as they are with extraordinary passion and creativity. These luxury branded products will be as coveted in the shopping malls of Arabia, China and India as they came to be in Japan when it began its extraordinary ascent into prosperity in the post war years. Where Europe leads others will follow, giving local and home grown brands the inspiration to develop their own unique propositions. We are already seeing in India how the local jewellery brands tend to be influenced by and emulate European or American brands.

By next year, leading analysts state that China will be the biggest luxury goods market, overtaking Japan. There is huge demand in China for the priciest watches and jewellery, not to mention designer clothing. Luxury goods companies have noticeably outperformed the wider European market since the financial crisis helped now by a weaker Euro and a boom in Asian emerging market demand. In France, Chinese tourists last year surpassed all other nationalities, including Russians, as the biggest shoppers according to a recent French government survey. China imported more than 10 million cases of French wine last year, 50% up on 2008 with Hong Kong fine wines auctions now becoming as important as those in London. But don’t let’s write off London either, Louis Vuitton has just opened a £45m store in Bond Street, which remains arguably the most luxurious street in the world.

Maybe Europe needed a good kick up the Eurozone and the Europeans will again surprise everyone (including themselves!) by rising to the occasion both as individual countries and collectively, even in Britain a country known for its Euroscepticism, the new coalition government seems to be engaging with other European nations in a constructive spirit.

RESPECTFUL RELATIONSHIPS

2010-06-11T15:27:00.002+01:00

My good friend, Mr Rajen Parikh of Antwerp, has again come up with a fascinating and historic photo from his personal family archives, a wonderful portrait taken in 1937 of a group of distinguished Palanpuri diamond merchants and in the centre the present Nawab of Palanpur, a wonderful gentleman whom I’ve had the privilege to meet, who is now 92.

When Russell Shor and I had the honour of meeting the aged Nawab (a Muslim Maharaja) 5 years ago, the Nawab spoke with pride, respect and admiration for the Palanpuri community and their achievements in founding the modern diamond industry. Although the Maharajas and Nawabs have no official title or position in the modern Indian republic the respect and admiration for the Nawab of Palanpur is fully reciprocated by the Palanpuri community who, as this picture so clearly demonstrates, remember his role and the support he extended to the community in realising their diamond dream.

The composition of the photograph has a charming harmony and balance to it, as well as an old fashioned formality, which seems to capture not only the integrity of the photos subjects but also the respectful relationships between them, a fascinating and dignified moment in diamond history captured forever.

Our historical archive is open to all at www.hgoldie.com and is intended to be a resource available to all those who are interested in the Indian diamond story and, of course, this is often the story of the Indian diamond ‘diaspora’. Fuller details of the historical note provided by Rajen on the individuals in the group portrait are available in our archive.

If you have interesting family photos in your attic or dusty old photo albums, please can you look through them and forward any historical photos to us c/o nina@hgoldie.com so that we can add them to this living memory of the origins of our business and our current success and prosperity.
All photos will be fully attributed to the owner and all descriptions provided will be attached and accredited.

BRITISH ELECTION RESULT

2010-05-13T12:07:00.001+01:00

I was in big trouble at the Sight with some of my broker friends (yes, I do have some!) who were seriously worried when I was overheard in the coffee shop expressing a view to another broker friend that I might vote Liberal Democrat. However, when I saw the final televised debate I decided to vote Conservative, especially as I live in a constituency where voting Liberal would have made little sense.

Thank goodness that Gordon Brown’s administration has finally drawn to a close and with it a cynical and discredited administration which presented to the public no clear vision of Britain’s future while indulging in a hopelessly negative and divisive election campaign.

The British people had delivered their verdict, even if it was a rather ambiguous one, reflecting disillusionment not only with Mr Brown but also with the British political class over the expenses scandal.

However, the reasons for which I was considering voting Lib Dem are actually coming to fruition because apparently in Cameron we have a pragmatic ‘one nation’ Tory and in Clegg (who is interestingly exactly the same age) he seems to have found someone with whom he can do business in forming a coalition government which hopefully will command the authority and respect required to tackle the grim legacy of Mr Brown’s boom to bust policies.

Hopefully this coalition, the first for 70 years, will usher in a period of more consensual and co-operative politics which will please more of the people more of the time and reduce the influence of the rabid Tory Right and silly Liberal left.

Possibly Cameron is the statesman-like and pragmatic Prime Minister that the British people have been waiting for. The Labour party will now be obliged to take a long, hard look at themselves and decide what they represent and whether they are going to return to old Labour or new Labour or reinvent themselves completely.

LAS VEGAS OR WALL STREET?

2010-05-04T14:10:00.002+01:00

To borrow Mrs Thatcher’s famous observation on being removed from office ‘it’s a funny old world’ (and by the way one wonders what Mr Brown will have to say?) It is indeed a funny old world when Las Vegas expresses publicly its resentment of having their business model compared to Goldman Sachs’s in remarks made during the US Senate’s sub-committee enquiry into that company. [See FT article reproduced below.]

The casino operators claim (with complete justification) that they operate in a closely regulated environment with clear house rules and a transparent business model. In general gambling has come to be seen as perfectly acceptable leisure pursuit in a controlled environment however, gambling as a significant component of a business strategy is not about managing risk, it’s about creating risk, and bubbles inevitably have a habit of bursting.

In the DTC context both qualification and renewal of Sightholder status and supply levels are determined by a rules-based assessment, a process which looks at established performance, the applicant’s differentiated business model and the relevance of their value addition proposal in relation to specific ranges of rough.

However, once the outcome of the process is determined and announced at the beginning of the contract, rough continues to be supplied on the basis of the model presented regardless of whether it is adhered to (even in spirit) during the contract period. It is this disconnect and lack of accountability which exacerbates a lot of the unnecessary problems we experience in our industry and needs to be addressed if we are serious about sustainable and viable price increases and business as our major goal.

This is not about a dealing or a manufacturing model, compliance is expected in terms of business practice to defend the reputation of the diamond industry and to ‘live up to diamonds’ in general. However if companies do not practice the model on which their supply is based then why should companies who have, broadly speaking, complied with the model which earned them their contract be disadvantaged?

It is surely implicit that Sightholders, as part of the prestige that they enjoy, have not just to sell their rough at the highest price possible but to look to the long term value, growth and welfare of the diamond industry and when appropriate they need to be reminded of their responsibilities and obligations during a contract period and that the assessment is not just a theoretical exercise to earn supply but a real commitment which they should at least attempt to honour.

FINANCIAL TIMES ARTICLE
Straight-dealing Vegas bristles at Wall Street gibe
By Matthew Garrahan in Las Vegas
Published: May 1 2010 03:00 Last updated: May 1 2010 03:00
When Goldman Sachs executives faced rhetorical fire from angry members of a US Senate committee this week, much of it invoked a city that had little to do with the bank but everything to do with negative public attitudes towards Wall Street.
Goldman, which has been charged with fraud by the US Securities and Exchange Commission, "had less oversight than a pit boss in Las Vegas", said Claire McCaskill, a Democratic member of the committee. Mark Pryor, a fellow Democrat, was more damning. "You're market-makers but you're also playing in that market," he told the Goldman executives. "Instead of Wall Street, it looks like Las Vegas."
The US investment bank has denied any wrongdoing and been defending itself vigorously. Also taking umbrage, however, are the people of Las Vegas.
America's gambling -magnet is known for many things: garish buildings, excessive behaviour, Elvis Presley and all-you-can-eat buffet breakfasts. But the people who live in the city and work in gambling resent the comparison with Wall Street.
"It's very offensive," said Shelley Berkley, a Democratic congresswoman whose district covers the city's gaming strip and casinos, ranging from the luxurious Bellagio to the rather down-at-heel Binion's Gambling Hall & Hotel.
"Las Vegas casinos might not have clocks but we have rules, we have regulations, we have odds for sports betting," she said. "Everyone knows what the rules are and no one is getting ripped off."
The regulatory framework for casinos in Nevada was established in 1959 - mainly to keep gangsters out of the booming industry. Nevada at that time was the only place in the US to allow gambling.
Robert Faiss, a lawyer with Lionel Sawyer & Collins, a Nevada firm, helped frame those regulations and went on to work in the Nevada Gaming Commission and the White House, where he served in the -Lyndon Johnson administration.
"You don't get to be regulated [in Las Vegas] unless you successfully complete an examination that may take years to complete," he said. "Every aspect of the applicant's life is examined and there are minimal internal control standards [within each company], which are exhaustive."
In 1986, leading organised crime figures including the reputed boss of the Chicago mob, Joseph Aiuppa, were convicted of skimming millions of dollars from Las Vegas casinos. But industry veterans argue that the checks and balances within the current regulatory system have helped the industry shed its past associations with organised crime.
Mr Faiss pointed to the spate of accounting scandals that rocked corporate America in recent years and said: "You won't find any gaming companies among them."
Gamblers who feel they have been the victim of fraud in a casino can make an immediate appeal to the Nevada Gaming Control Board, which, together with the Nevada Gaming Commission, is the main regulatory agency for Las Vegas casinos. The commission wields considerable power in the state: Harry Reid, the Senate majority leader, is a former chairman.
"The reality is the gaming industry is very well regulated," said Ms Berkley. "What happened on Wall Street would never have happened in a Las Vegas casino . . . it's the most well- regulated industry on the planet."
That sentiment is echoed by gamblers interviewed by the Financial Times this week. Most said they were aware of the risks involved when they gambled.
"When you come to Las Vegas you know you'll lose some money," said Cheryl Westland, who was visiting from California and playing slots in the Tropicana. "What I'm not prepared to do is lose half the income on Wall Street that I've spent my life saving - but that's what happened."
Rob Clegghorn, president of a carbon stainless steel company in Ontario, was making his yearly trip to Las Vegas. He enjoyed a drink while playing a slot machine in the Mandalay Bay casino, one of the largest in the city.
"The odds are pretty slim and if you win it's a bonus," he said. "But I know the rules here and they don't change."
Copyright The Financial Times Limited 2010.

SUSTAINABLE SPECULATION!?

2010-04-30T13:24:00.000+01:00

A deliberately provocative title designed to draw attention to probably the single most serious challenge facing the diamond industry at the moment.

The return of rampantly irresponsible speculation sometimes targeted at driving up premiums in specific ranges to levels which are known to be totally unrealistic in relation to polished diamond pricing at a time when retailers understandably are looking for rational and consistent supply.

The same exuberant confidence of the Indian diamond manufacturing sector which has thankfully constantly been the driver and main support for the whole industry also, once again, provides opportunities for those speculators who seek to artificially inflate prices for their own short term ends.

These ‘players’ (I hate the term with its greedy casino connotations) are as usual unconcerned about the implications of their behaviour putting at risk the sustainable recovery in rough and polished prices which is essential to the industry’s future prospects.

This at a time when the world’s leading financial newspaper (the Financial Times) has been featuring a number of interesting articles particularly focussing on the positive future trajectory of diamond prices and the reasons for this.

Those relatively few, but nevertheless influential, ‘players’ who deliberately leverage privileged positions to engage in attempts to manipulate prices have a recklessly flawed business model, creating a volatility in the industry that can only stifle a sustainable recovery.

Goldman Sachs are currently having to explain and justify their own business model to the US Senate and legislators, shouldn’t our own ‘players’ also be called to account to explain the rationale behind their business practices and whether or not it can be considered responsible trading.

SPECIAL RELATIONSHIPS (or let me know if there is anything new!)

2010-03-30T11:58:00.008+01:00

At a time when the US administration (some of the most senior US Generals included) is increasingly questioning the reality of its special relationship with the present Israeli coalition government led by Right Winger Benjamin Natanyahu, another ‘special relationship’ is being called into question. This time by the junior partners ‘the Brits’ who in a post Blairite world are now having some serious doubts about the benefits of its own long cherished (by politicians at least) special relationship with the US [ref: House of Commons Foreign Affairs Publication].

However, even the US administration, faced with a deficit quite as serious as that of the UK would not humiliate its Generals and sink to the pettiness and hypocrisy of the UK government, led by the truly appalling Mr Brown, who has ordered its Generals and Air Marshals to travel second class when travelling by rail.

UK MPs and government ministers still, of course, enjoy the privilege of travelling first class (or in golf cart one)!

No wonder a Sunday Times You Gov poll of 1,500 people shows that by nearly 2:1 voters believe that this is the most corrupt parliament in Britain’s history.

This aside, the conclusion has to be that if special relationships are to remain special they need to be not only nurtured by both sides but never ever taken for granted by either side.

Those special relationships that do not endure fail most of all through lack of respect for the other partner’s behaviour rather than necessarily the other partner’s point of view. In business as in international relations it is much the same.

AN OSCAR FOR INDIA

2010-03-26T10:44:00.003Z

Prominent trade pundit and commentator Chaim Even Zohar recently awarded his personal Oscar to the Indian diamond industry for its ‘starring role’ in leading the world’s diamond industry out of crisis into recovery.

Absolutely right and appropriate but also I think particularly interesting given that Chaim’s coverage of the Indian industry has often appeared to be somewhat ambiguous or ambivalent.

Does this recognition of the pre-eminent role of the Indian industry mean that we can now look forward to Chaim sharing his views and possibly in-depth analysis on how African beneficiation might impact not only the Indian industry in the future but also the implications for the vital interests of the mining companies themselves?

THE NEW NORMAL

2010-03-15T16:56:00.003Z

It is important that the diamond business has a narrative which it can relate to and entirely appropriate that the DTC’s senior management does its best to provide one to its Sightholders and stakeholders.

The phrase ‘the new normal’ has a reassuringly rational and responsive ring to it and nicely encapsulates consumer sentiment in the western world. To what extent this more subdued consumer mood (zeitgeist) applies to the Chinese, Indians and consumers of other rapidly emerging countries is open to question.

However, now that we are in recovery mode and the Indian industry is in exuberant form again it is easy to forget that only just over a year ago the industry was in the midst of a crisis in confidence the severity of which had not been experienced since the 1980s.

This time last year there was a lot of discussion about the lessons that had to be learnt from how the industry collectively and individually handled those testing times and most of these issues revolved around the effectiveness of the distribution model and how it functioned under extreme pressure.

While there are certainly challenges ahead and that awful old cliché about cautious optimism is appropriate we must not allow the ‘new normal’ to revert to the ‘old normal’ and risk repeating the distribution mistakes of the past. The ‘new normal’ requires a more rounded and inclusive approach to DTC Sightholder relationships.

MIND THE CONFIDENCE GAP!

2010-02-19T17:09:00.005Z

I have to admit that it is quite a while since I was last brave enough to face the London Underground. However, I believe that there are still recorded announcements advising passengers to ‘mind the gap’ between the platform and the train.

We do seem to live in a world where a sort of confidence gap is opening up between the so called Western world and the emerging BRIC countries. Obviously nothing is ever as simple as that but what you can say, with some degree of confidence, is that confidence is more badly shaken in the US and Europe than elsewhere and this is shaping attitudes at both a political level and the all important consumer level as well.

This confidence gap was evidently reflected in the discussions that took place in Davos with the Chinese and Indian representatives apparently very confident about the direction and management of their own economies and the major role they have played in leading the world out of this horrible recession.

The good news was that the world, and even perhaps Gordon Brown deserves a little credit for this, did get together at the right time to cobble together a sufficiently unified response to deal with the banking crisis and the subsequent aftershocks to the world economy.

Also the world has moved to a much more G20 (G2?) position rather than inadequate and unrepresentative G7 format. Most commentators feel that this more multi-polar approach to the regulation of the world economy was in any case overdue in recognising changing economic reality.

However, experience and age has taught me to be wary of the sort of conventional wisdom that equates one country’s (or group of countries) success with the seemingly inevitable failure of others. I remember years ago when visiting clients in Antwerp the topic of the day was invariably that the US economy was washed up and Japan would overtake not only Detroit but the world. This was all very much focussed on the US automobile industry’s problems and disregarded the other vital elements of American creativity and economic diversity. Who would have thought that we are now in a situation where the American automobile industry is (hopefully) recovering from almost total wipe out and it is the much lauded Toyota brand and its much imitated model (The Toyota Way) that is facing the most difficult test of its entire history with its Chairman being called to explain his position to the US Senate.

The idea that the US would shortly be overtaken by Japan was also very much based on the fact that there had been the most extraordinary exponential increase in sales in the Japanese market as a result of the De Beers marketing efforts in promoting the diamond culture in Japan converging with a booming Japanese economy.

So while, of course, we should be impressed, enthusiastic and heartened by the extraordinary progress the BRIC economies have made and what that means to the rest of the world, we should not be too hasty in writing off Europe and the US, although sometimes the Americans and Europeans seem so confused that this reinforces the impression that they’ve lost confidence in themselves, which will certainly be serious if it affects their political leadership’s will to address their own problems.

Take the UK economy, as we approach an election it is interesting to note that in both the Sunday Times and the Financial Times there have been letters from groups of eminent British economists who disagree strongly on the timing of when deep financial cuts are made to restore health to the UK economy by bringing debt under control. However, neither groups of economists disagree on what needs to be done; it is all about the crucial question of timing and also possibly the political sympathies of the economists in question.

Greece has been having a pretty torrid (and horrid) time in economic terms and the Germans don’t seem to be in too much of a hurry to bail them out.

The Spanish government, who seem to have been effectively in denial about their own situation following the near collapse of their building based sector, have been so concerned about how their economy is being viewed that they sent their Economy Minister to London to reassure leading financial houses and the editors of the Financial Times as well that the situation will be brought under control.

Let’s look further at Spain. Undoubtedly the 19% unemployment, the highest in the Eurozone, is a huge and rightly worrying reflection of the structural rigidities and problems that they need to address. But this is also a country that has one the best and most extensive high speed rail networks in the world, so impressive that the highest US transportation officials have studied it as a model for their future planning.

Anybody who knows India will agree that while the transport infrastructure (roads, railways and airports) are definitely improving, there is an awful long way to go for Indian railways to catch up Spanish standards.

We now seem to be in the situation where the immediate threat of the collapse of the world economic order has undoubtedly been avoided and we live in a world that is much more realistic about the risks of uncontrolled exuberance, over confidence and hubris. Back to Spain again, the Spanish banks (in particular Santander) and the Canadian banks have both been held up as examples of responsible and conservative banks who avoided the excesses of the US, British and other banks. One thing does seem to be clearly emerging, as the world economy slowly and stutteringly improves, is that while co ordination will still be essential for global recovery and trade, countries and blocs of countries will have to address the problems that have arisen in the aftermath of the world economic crisis. The confidence gap will continue to be an issue to those countries whose politicians do not walk the talk and deliver what’s required of them.

INDIAN DIAMOND INSTITUTE GETS ITS YOUNGEST CHAIRMAN

2010-02-17T15:08:00.006Z

Still on the theme of my previous blog, delighted with the news that Aagam Sanghavi has been appointed, at the age of 26, Chairman of the IDI. It is absolutely right and appropriate that the new generation of talented, well educated and highly motivated diamantaires are making their own mark on the industry and taking on more of the responsibility for ensuring that the Indian industry’s institutions remain relevant and cutting edge, as well as effectively representing the Indian interest and point of view.

Congratulations Aagam!

ARTICLE: Times of India 12th February 2010

AS POLISHED AS THEIR DIAMONDS

2010-02-02T15:02:00.002Z

There is a new generation of bright, young, well educated diamantaires who we have had the pleasure of getting to know well in the last few years. They are the scions of established Surat Sightholders, many of whom were pioneers in making Surat what it is today. Their parents had the foresight and means to invest in their education and what a good investment that has proved to be.

Their fathers are rightly proud of them because while they are as polished as their diamonds they still retain the likeability factor (many of them are indeed friends). The ease and assurance with which they take on the challenges and responsibilities they have inherited will, I am confident, also ensure success in taking their family businesses forward.

To me, and I’m sure I’m not alone in this, the likeability factor is really important. Everyone prefers to do business with people who have human empathy and charm as well as obvious talent. These young men are also properly grounded because they have the confidence that they have obtained from their parents insisting on them doing the appropriate ‘stage’ (French) i.e. giving them the technical and commercial exposure which can only be properly understood when experienced first-hand.

For once a journalist actually wrote a well-informed and interesting report in the Financial Times (see below) on the Surat industry and quoted, amongst others, one of this new breed of younger diamantaires, Keval Virani. Keval commented that “this generation grew up watching diamond advertisements. Their parents wanted gold necklaces. They want diamonds”.

The DTC can take much of the credit for that fact that Surat is the diamond manufacturing power house, although their support was initially slow, and the DTC can take full credit for the comment Keval makes as the DTC’s initial investment in advertising diamonds and brands in Indian gave rise to today’s booming Indian jewellery market and their clients’ development is indeed a shining example of sustainable value addition and the benefits of the Sightholder system and the link between effective manufacturing and marketing.

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Surat: Domestic demand has been the city’s best friend
By Kevin Sieff in Surat
Published: January 28 2010 19:04 Last updated: January 28 2010 19:04

Every morning, one thousand rough diamonds sent from Africa land on Keval Virani’s desk. He takes a quick look at the stones, holding them by the handful to a desk lamp.

“Most people see something like this, and they think of Antwerp or Tel Aviv,” says Mr Virani, director of Karp, one of Surat’s largest diamond cutting and polishing companies. “They’ve never been to Surat.”

About 80 per cent of the world’s diamonds are cut and polished in the Gujarati city on the country’s west coast.

With its smokestacks, slums and 2m migrant labourers, it is an unlikely place for one of the most globalised parts of the Indian economy.

It has battled a series of exceptional natural disasters: an outbreak of pneumonic plague in 1994 and one of the region’s worst floods in 2006.

About 250km north of Mumbai, it was the Dutch East India Company’s first Indian port in 1607, and has since swung between exuberant growth and near-destitution.

Its most recent growth spurt, which started in the mid-1970s, put Surat on the map as a hub of India’s manufacturing industry. It quickly became one of the country’s largest pools of unorganised, cheap labour and a welcome alternative for businesses tired of wrestling with Mumbai’s powerful unions.

Its slums were razed and rebuilt. Its 750,000 looms operated almost 24 hours a day, producing a third of the country’s textiles. Diamond polishing outfits thrived, from Karp’s towering headquarters to dank basements, where less valuable stones were cut.

By 2007-2008, diamond exports had risen to $14bn, with most operations carried out in Surat. The city’s synthetic fabric sector grew to be worth $8.7bn, making it the capital of India's growing trade in synthetic textiles. Surat was named the country’s fastest-growing city in 2007, with an annual gross domestic product growth rate of 11.5 per cent.

Growth was rewarded by the government: the construction of a nearly completed cargo airport, and the Reserve Bank of India's announcement that it would allow advance payment for rough diamonds without any bank guarantee from nine mining companies.

“It's hard to believe just how much, and how quickly, this city has grown,” says Sevanti Shah, chief executive of Venus Jewels, one of Surat’s best-known diamond polishing companies.
But last year’s financial crisis threatened to stall the city’s ascent.

Unlike places such as Bangalore, where service industries have been the engine of growth, the highly cyclical – and less recession-proof – manufacturing industry is the backbone of the economy.

At the end of 2008, the diamond industry was operating at about a third of capacity. It shed thousands of jobs. A string of diamond traders committed suicide, dominating the headlines of local newspapers.

“Outsiders thought we were finished,” says Rohit Mehta, the president of the Surat Diamond Association. “They told us we were too dependent on the west as an export market.” Industry leaders took a controversial decision to stem the supply of rough diamonds and avoid flooding the production pipeline. Thousands of domestic migrants returned to their rural homes.
But in the year since the worst of the economic crisis, Surat has bounced back in a recovery led by national consumers. Though the industry is still about 20 per cent off its pre-recession peak, domestic consumption of diamonds nearly doubled last year, bringing in a total of $5bn, according to a number of industry leaders.

Vasant Mehta, chairman of India’s Gem & Jewellery Export Promotion Council, predicts another significant increase in domestic consumption in the coming year.

For the first time, Indian diamond polishers are hitching their fate to home consumers. The trend is noticeable in Surat, where glitzy stores sell diamond jewellery on bayside avenues.
“I don’t know where we would have been without domestic consumption last year,” says Mr Shah.

Some of Surat’s industry leaders have drastically shifted focus, targeting emerging markets.
Keval Virani of Karp says that his company, a sightholder – an authorised bulk purchaser of rough diamonds – of De Beers’ Diamond Trading Company, has shut down operations in the US entirely, to focus greater attention on China and India.

“We’re seeing wealthier Indian consumers, and that helps buoy sales. But it’s also a matter of changing tastes,” Mr Virani says. “This generation grew up watching diamond advertisements. Their parents wanted gold necklaces. They want diamonds.
”
Domestic demand has also sustained the textile industry. In spite of the economic downturn, many of Surat’s largest textile manufacturers reported growth of about 7 per cent.
Like Mr Virani, Surat’s textile manufacturers point to the recession as a lesson in the importance of the country’s strong domestic market.

“Why bank on foreign consumers, when we have so many people here who are hungry to buy?” says Mahendra Kajiwalla, a local owner of textile mills and retail outlets.

Copywright The Financial Times Limited 2010

UNINTENDED CONSEQUENCES

2010-01-27T15:09:00.006Z

A eminent panel of civil servants this week reviewed some of the more disastrous policy decisions taken by both Conservative and Labour administrations over the last few years and published their conclusions that more careful and considered preparation would have avoided the unfortunate consequences to their political masters’ credibility and judgement.

Some of the biggest offenders they identified were Mrs Thatcher’s Poll Tax and Tony Blair’s ‘Dome’ both issues well known to my British readers. However as President Obama found out recently, a politician’s credibility is always ‘on the line’ regardless of personal charisma and an awful lot depends on their support team doing the correct preparation in order to both anticipate and see off the real problems. It is the unforeseen problems and how they leave themselves a route open to resolving them that are the test of a really good statesman, administrator or businessman. The Massachusetts electors have forced Mr Obama to re-examine his policies and the way the have been sold to the US Congress and public. Our Mr Brown is so seriously in hot water on all fronts that it is impossible to contemplate that he will ever reinvent himself sufficiently to appeal to the British public, however much he tries (and boy does he try!).

The fact is that nobody seems to really know what Mr Brown stands for (himself included), he’s been New Labour, Old Labour, Right Wing, Left Wing, tough, caring, penny-pinching and spendthrift - whatever he thinks will earn him a vote or two. Unfortunately for him the British public can see right through him and even the aptly named Mr Balls (his very doctrinaire and Left Wing Education Minister) possibly has more credibility because at least he is consistently ridiculous, so much so that the policies he was promoting of alienating the middle classes and chasing the traditional Labour vote have been reined in because of the threat of other ministers to unseat Mr Brown if he persists in what is seen as a sure election vote loser.

I expect by now you are wondering when I’m going to get to the point in relation to the diamond industry, OK here it comes – the new contract period is being drafted and has hugely important implications for existing clients. It is absolutely essential that there is enough room in the process that no systemic failures are allowed to occur because that reflects not only on the credibility of the DTC but also on that of the Sightholders. Preparation has to be done now to ensure that any ‘unintended consequences’ can be both addressed and corrected within the process before any damage to reputation and credibility is done.

If I was senior DTC management contemplating committing to a 3 year contract with any company outside of the current contractual arrangements I would certainly consider it imperative, before any final decision is taken, to have a personal meeting/interview with the top management of that company, again, in order to obtain the level of understanding necessary to make a truly informed judgement in relation to the written material submitted. It can be argued that this would also put them on a level playing field with the current Sightholder list who enjoy a personal relationship and understanding with the DTC in addition to their written submission. This would be by far the best way, in our view, to ensure that the process does not throw up unintended consequences i.e. unsuitable or unworthy partners.

Gareth quite rightly said in his address to the Sightholders at the January Cocktail Party, it’s all about ‘relationships and passion’ and how can you enter into a passionate relationship (being serious for once) with somebody who you have never met or have had little regular contact with.

The right type of business with the right level of passion and commitment, in other words those who believe in living up to diamonds, have nothing to fear and everything to gain by meetings which give them the opportunity to position their case personally and the DTC the opportunity to protect its own credibility and the whole Sightholder concept.

BUT WHO WILL WRITE THE HISTORY?

2010-01-22T14:11:00.003Z

Although an aggressive virus prevented me from attending Nicky’s annual Cocktail Party this Sight week, copies of Nicky’s, Gareth’s and Varda’s speeches were made available through the internet providing a very interesting and relevant ‘tour d’horizon’ of the current situation in our industry from a DTC, Sightholder and trade perspective.

However I was intrigued by a passing comment Gareth made in his speech when referring to overcoming the extraordinary difficulties of 2009 he said ‘when they write the history of this period...’ Undoubtedly no history of the diamond business in the last 100 or so years could be even contemplated unless the central role of the Diamond Trading Company is acknowledged and explored. Like it or not, no one can deny that the DTC has provided the structure and vision that has created the modern diamond industry. The problem is that although corporate histories are necessarily rather self-congratulatory, unofficial histories have tended to be generally ill-informed or ill-intentioned or often both. So a genuinely balanced history has yet to be written.

Sightholder status still remains the most sought after recognition of diamond industry excellence and the DTC has defended the interests and reputation of the diamond community as a whole very effectively. What other producers have both projected and protected the image and reputation of diamonds? And on those rare occasions when they have, invariably they have been following in the footsteps of a DTC initiative.

The Sightholder system evolved to meet the needs of producer and manufacturer based on the simple recognition that sustainable pricing in our industry is impossible without sustainable relationships.

The fact that DTC gatherings such as this Cocktail Party are still so eagerly attended in the depths of a grim winter and reported upon demonstrates not only that the communal cohesion of the industry is still the industry’s greatest strength but also without a compelling narrative the industry would lose its way completely and the verdict of history would surely be ‘how could they possibly have let that happen?’
My own experience in trying to publish a history of the Indian diamond industry has clearly shown me that the diamond story is so obscured by legend, romance and intrigue that sadly whoever writes a history of this period is never likely to do it justice. However, this should not be used as an excuse because it is sad to think that a comprehensive history of this extraordinarily successful industry and its importance to the Indian economy now looks likely to be lost in the mist of time and legend but perhaps that’s how we prefer it, or is it?

FRUGAL ENGINEERING

2010-01-14T11:45:00.007Z

I coined the phrase about India having ‘democratised’ the ownership of diamonds back in the ‘70s when a unique combination of affordable Indian manufactured polished converged with the emergence of US mall-based mass merchandisers (Zale in the forefront!) leading to an extraordinary expansion in diamond ownership in the US and creating ‘promotional’ and ‘fashion’ diamond product categories which had not existed before.

An interesting article about India in Monday’s Financial Times entitled ‘A Nation Develops’ talked about the abundance of talent in India fuelling the shift from the global centre of outsourcing to one of innovation and described the Indian talent for ‘frugal engineering’ being closely linked to the innate Indian cultural mindset of cost consciousness.

The Tata group have now introduced the world’s cheapest car the ‘Nano’ an impressive product based on the concept of frugal engineering and sound conceptual marketing.

India, which has long been the production power house of the world’s diamond industry, can also claim now to be its creative crucible and its frugal approach to manufacturing, combined with solid entrepreneurial skills will in my view ensure its predominant manufacturing role in our industry.

I have never had any patience with the view that describes manufacturing as ‘a given’. Effective distribution to manufacturers remains the key to sustainable rough diamond pricing and conferences with titles such as ‘Mines to Marketing’ seem to conveniently miss the middle and most important M, Manufacturing as if diamonds somehow polish themselves.

IN MEMORY ALEX BARBOUR

2010-01-07T14:34:00.015Z

All of those who had the pleasure of knowing Alex Barbour will have been saddened to have learned that he passed away just after Christmas.

He joined the DTC from a successful banking career and was a conservative, cautious and modest man (admirable qualities that are sadly lacking from today’s banking fraternity) he had a solid understanding of diamonds and the industry and played a major role in steering the DTC through exceptionally difficult times, arguably more challenging and certainly more prolonged than those we have recently experienced. Despite the pressures and problems that he had to contend with he remained unfailingly courteous and constructive.

He was always encouraging to those younger and less experienced than himself, which also will not be forgotten by those who remember his consideration.

Alex was always very comfortable with Indian clients, as they were with him, and he enjoyed India not only from a business perspective but also culturally and socially.

Alex was very happily married to his French wife Claire (see photo below) and indeed had a great appreciation for everything French. Sincerest condolences to his family, he will be fondly remembered by his many friends and colleagues.

Photos from H Goldie Archive

Guiding Principles Again!

2009-12-18T13:00:00.002Z

Someone who read my blog on guiding principles said OK, that’s all very well but what are your guiding principles and those of your company? A fair comment and one that deserves a response.

First of all I think to add value to any business relationship you have to start off from a position of mutual respect which means you will automatically want to do the right thing for the client because whatever advice you offer, you know and they know it is offered in a spirit of constructive and confident engagement. We have always found that where the relationship is based on mutual respect and confidence communication is easy, effective and invariably productive in the long term. I have never wanted to represent or defend clients I didn’t genuinely like and believe in.

I have invariably found the closeness of the relationship evolves into a real friendship and nothing has given me greater satisfaction over the years than the enduring relationships I have had with my clients and colleagues both in India and other centres. Now that I am older and wiser I value these relationships more than ever and it is particularly gratifying to work now closely with the sons and nephews of the pioneers of the industry who, of course, have had the benefit of the best education that money could provide, whereas their fathers (several of whom started in this industry at a very young age) learnt everything in the much tougher ‘university of life’.

If you lose your respect for a client or company (and regrettably this can happen) then it is far better to concentrate on those companies for whom you retain respect and remain worthy of your full support.

A good broker is always acutely aware of each client’s individual sensitivities as well as their legitimate collective concerns about their own interests being properly represented.

A DTC broker, several years ago, unusually issued a formal and very public statement which received wide coverage at a time when the implications of Supplier of Choice was foremost on everyone’s minds stating that they had been appointed by the biggest US jewellery retailing group to assist them develop their manufacturing with a view to them becoming Sightholders. This, of course, hasn’t happened and a recent statement by the company involved confirmed that they were withdrawing from their manufacturing activity. However, let’s imagine the broker had been successful and I was one of their existing Sightholder clients I would have had very serious misgivings about them taking a position that sat so very uneasily with my own interests and in relation to those core diamond skills which rightly define Sightholder status.

The apparent lack of respect for their existing client base was the most striking thing about the statement, as well as the obvious opportunism of their intentions. We have now moved on into a much more realistic place and while we all accept that there are often definite advantages in vertical integration, when properly conceived and soundly based on core skills, this sort of band wagon approach is rarely the right reason to do something.

We have also been a company which never takes the view that only big is beautiful and we will always fight for a justifiable cause regardless of the size of our client’s business or the slickness of their presentations over the reality of their business.

Also I do sincerely believe that business should, whenever possible, be fun – one should enjoy the challenges and the people you work with. This encourages not only confidence but creativity and stiff over-formalised interchanges are not only uncomfortable but additionally are normally unproductive and unsatisfying. Normal human beings (and yes, I count myself as one) appreciate warmth and humour in their business interactions, which is why Mahiar Borhanjoo’s style of communication is appreciated and no one I know feels his humorous asides and banter diminish in any way his message or his astute business acumen and sound vision.

In short, our guiding principles remain to continue to always endeavour to do the right thing for the right reasons at the right time and thereby get it as right as possible for all our clients first of all and in doing that hopefully for ourselves too.

INVESTMENTS OF PASSION

2009-12-15T10:52:00.002Z

We practice what we preach

THE ‘DECOUPLING’ OF GOLD AND DIAMOND PRICES

2009-10-12T16:14:00.019+01:00

In the 1980s world economic crisis the phenomena which came to be known as ‘stagflation’ led to a flight from conventional investment vehicles into alternatives gold, diamonds, fine art, antiques etc.

Gold has always been a refuge and safe haven, given the centrality of the gold market in the organisation of the economic and financial world and its obvious tradability.

Diamonds, while having always been considered a store of wealth, prestige and status had never been similarly perceived as an investment vehicle due to their lack of fungibility.

However, when a young entrepreneur named Martin Rapaport began codifying diamond colour and clarity grades into price grids based around the certification of diamonds the term ‘D Flawless’, originally a trade description, entered into consumer awareness and the 1ct D Flawless price became the benchmark for diamond price movement.

While diamonds and gold had always been the staple (and stable) items of jewellery manufacture, their perception as alternative investment vehicles took hold in the late 1970s when both rose to giddy and unsustainable heights only to collapse in the 1980s inflicting great damage on the diamond industry in particular.

Gold reached a high on January 21st 1980 of $850 an ounce, a record not overtaken until January 3rd 2008 and gold prices have just extended their record run above $1,060 a troy ounce up about 20% since the start of the year.

The diamond investment bubble of the 70s centred obsessively on the relentless commoditisation of the ‘D Flawless Carater’ through certification and sealed packaging, becoming respectable when mainstream financial houses added their endorsement by actively promoting and getting involved in the trading. The problem was that the trade in 1ct stones was distorting the whole market, rather as if the art market was suddenly only interested in Van Goughs to the exclusion of all other artists. This is probably what created a more dramatic bust in diamond prices than in gold prices because the price of the 1ct was pushed to such an extent that collapse was inevitable, even though the diamond business was enjoying it so much it was in blissful denial about the obvious risks.

By the end of 1980 the benchmark ‘D Flawless Carater’ had reached $62,000, 6 times the 1976 price and 39 times the 1970 price before falling back to a low of around $10,000 [Russ Shor] . It is hardly surprising that the perception of diamonds as in investment vehicle has only gradually recovered from this debacle. On the other hand, gold has undergone a similar trajectory since the 80s but is clearly very much back in favour.

One thing gold and diamonds have in common is that while they both are both perceived as store of wealth they are prized above all for their adornment value. However as we often see in India, gold’s biggest market, the consumer’s willingness to buy gold jewellery is very price sensitive and if prices rise too much gold jewellery sales suffer in spite of the fact that gold jewellery purchase is absolutely embedded in Indian culture.

So you may say, this is all very well and interesting, but what is the conclusion? Well, if only I knew! However, I do definitely believe that we will see in these times of economic volatility that diamonds will be increasingly appreciated for their investment value as well as their scarcity. Of course they do have to be investment grade diamonds to qualify but the narrow definition of investment grade diamonds as being ‘D Flawless Caraters’ will hopefully never reoccur in the same way but while some people may be happy to have their gold ingots in the safe what sad person could possibly want to keep a beautiful and priceless diamond in a safe rather than where it belongs, around the neck or on the hand, or belly button (why not) of your beloved.

Finally, I do believe that the time for diamonds as an investment has come but I'm much less sure about the term 'investment diamonds'. Follow that if you can!?

ON CHAIM’S ‘DANGEROUS INDIAN BUBBLE’ AND THE DTC’s BUSINESS CONTINUITY POLICY

2009-10-09T14:35:00.002+01:00

Chaim’s editorial in his latest (must read!) Diamond Intelligence Briefs portrays the recent Indian led mini boom in rough prices as a “dangerous bubble” rightly stating that it is driven by a combination of factory and production led demand and rough speculation rather than a hoped for revival of US polished demand.

Nothing really new here, a scenario which is quite familiar to us all (we’ve been there before). As usual the Indians (often it seems the problem but rarely seen to be the solution) get no credit at all for leading both the industry and the mines/producers out of the dire post Lehman Brothers crisis in our industry.

Chaim played a prominent role as moderator in the DTC’s Town Hall meetings held in Antwerp, Tel Aviv and Mumbai. How come in Mumbai (beneficiation the ‘elephant in the living room’ issue) the implications for the Indian industry of the African producers beneficiation policy was studiously ignored and did not feature as a prime topic of discussion in an open forum. Is it because of Chaim’s own views on beneficiation? Or a desire not to embarrass the hosts of the event?

Chaim also states in his piece that the “message from London” is that the “DTC will refrain from selling additional goods” which he explains as “ex-plan allocations”.

If this is to be the case (and I sincerely hope it won’t be) it would have serious implications for the business development of those Sightholders who believe the DTC Business Continuity programme is the only good thing to have emerged from the crisis period, a positive and appropriate response to distribution issues which has revived a lot of Sightholder confidence in the relevance and potential of Supplier of Choice and the validity of their own relationships with the DTC.

AFRICA AND ALTERNATIVE PERSPECTIVES

2009-09-28T15:47:00.001+01:00

Although disappointingly few people post replies or views to the blog (as I think is often the case) our statistics have established that we have a good and growing number of visitors, particularly in the US, UK, Belgium, Israel and India.

However the blog receives very few visitors from Africa or African producer countries. I recognise they probably feel they have more important things to do and achieve than read blogs, however I don’t believe it ever did anyone any real harm to read and consider views that do not necessarily conform exactly to their own, especially when they are well intentioned. Am I wrong that their apparent lack of curiosity about alternative views is slightly disconcerting?

THE LAND OF SACRED COWS

2009-09-24T14:07:00.006+01:00

I found it amusingly ironic that in the FT article (reproduced below) on South African Beneficiation a South African lawyer described the policy as becoming ‘almost a holy cow’.

In the land of holy cows it is truly strange that the extraordinary benefits (beneficiation) to the Indian economy (particularly the states of Maharashtra and Gujarat) and more generally to the wider diamond industry, producers very much included, is so consistently and inexplicably undersold and under-recognised.

The Hong Kong show once again has demonstrated the huge importance of both the Chinese and the Indian trade and consumer markets. How come when everyone seems to recognise and appreciate the importance of these markets that the Indian manufacturing industry is taken so much for granted when you consider it is the prime driver for the significant and exciting development of these markets and their success in the future.

MINING INDUSTRY REMAINS DIAMOND IN THE ROUGH
By Tom Burgis
Published: July 16 2009 16:14 Last updated: July 16 2009 16:14
The laboratory’s fittings and microscopes glisten almost as brilliantly as the diamonds themselves. Under the watchful instruction of expert foreign cutters, locals perfect stone after precious stone. With every tweak of their tools, the cutters ensure that a greater share of the gems’ value accrues to the African country from whose soil they were plucked.
It could be a sparkling example of South Africa’s management of its bounteous minerals. The problem – at least for the new government in Pretoria – is that the state-of-the-art cutting factories lie over the border in Botswana.
“Beneficiation”, as the process of refining metals and minerals that would otherwise go abroad in cheap, raw form, is a hot topic across the continent. Botswana, long a model resource-dependent nation, has led the way with its new diamond park.
South Africa is blessed with as much mineral wealth as any other state on earth. It already has some downstream mineral manufacturing, most notably in platinum. Now it wants to go much further but its attempts to enact a notoriously difficult shift in a volatile industry – and to do so in the teeth of a commodity crash – have unnerved the private sector.
More than a century after its first diamond and gold rushes, most of the country’s minerals still depart for smelters and sorting houses based overseas.
On paper at least, the government wants to change this. At its most recent five-yearly party congress, held in November 2007 in Polokwane, the ruling African National Congress passed a resolution in favour of such a shift.
And in a speech to launch a draft beneficiation strategy in March, Buyelwa Sonjica, then mining minister, said: “The trading structure of our mineral commodities is essentially premised on a model that sought to sustain a colonialist political configuration and serve its agenda.”
As the draft strategy notes, in 2007, South African minerals generated gross revenues of R225bn($27bn). Even though they only amounted to 10 per cent of the total of rough minerals mined, those resources that processed minerals were far more lucrative, bringing in R40bn.
The initial goal is to wring greater revenue from 10 commodities ranging from gold, and platinum to coal and iron ore by nurturing local jewellery, pigment, steel and vehicle sectors and by improving self-reliance in energy.
The state will offer incentives and might take unspecified measures to encourage demand for processed South African wares from big importers of raw materials, especially China.
If progress is not satisfactory, however, “regulatory levers will be applied”, says Mosa Mabuza, the top official at the mining ministry. “The industry has a responsibility to ensure that, once an environment is created for manufacturers, we ensure them security of supply.”
However, the policy has private sector critics worried. Beneficiation “has almost become a holy cow”, says Peter Leon, a partner who heads the natural resources and regulatory practice at law firm Webber Wentzel and current chair of the International Bar Association’s mining committee. “You have to be careful how far you push it.”
Detractors argue that as a potential processing centre, South Africa enjoys no real comparative advantage. It may have abundant minerals but, when it comes to skills, a reliable power-supply and sweeteners for investors, it looks distinctly unattractive compared with existing manufacturing centres.
In diamonds, for example, while the country already processes some top-of-the-range stones, Stephen Lussier, a De Beers executive, says: “It can’t survive if they have to cut the lower-cost stones. The labour costs are much lower in India.” Nonetheless, the government has created a state diamond trader in order to make all the country’s diamonds available for local processing.
Roger Baxter, chief economist at the Chamber of Mines, says: “The subject is very emotive as there is the perception among some policymakers that the mining companies continue to export all the raw materials to London and that all the jobs in downstream processing are forfeited to the old colonial powers.
“But this perception is simply not based on reality. Where the commercial opportunities exist, there is ‘value-adding’ taking place.”
Mr Baxter argues that the reason South Africa refines all of its platinum and accounts for 15 per cent of catalytic converter manufacturing worldwide is not because 60 per cent of global supply of the resistant metal comes from under its northern plains but because of the incentives that created the downstream industry.
That manufacturing across the board as a share of gross domestic product is steadily declining indicates, he says, that the government has yet to come up with an industrial policy that makes beneficiation of other minerals commercially worthwhile.
In any event, as the government of Jacob Zuma – now in its third month in office – takes shape, the policy is likely to be implemented. Recalling the development of South Korea last century or the UK the one before, the mining ministry’s Mr Mabuza says: “There is a natural progression from having resources to manufacturing. But sometimes you have to make things happen.”
He adds: “Our resources are diminishing. While we have those resources, we have to make a quantum leap.”

ON ‘SUSTAINABLE RELATIONSHIPS’, ‘GUIDING PRINCIPLES’ AND AUCTIONS!?

2009-08-28T12:10:00.002+01:00

The word sustainable has become almost obligatory usage in relation to policies or behaviour that are seen to be socially, politically or environmentally accountable and responsible as opposed to that which is seen to be exploitative, cynical, predatory.

However, we should not forget that ‘sustainable business’ is only achievable and credible when supported by sustainable relationships (enduring relationships). This requires not only shared aims and objectives but shared values based on mutual respect and confidence in the longer term, rather than relationships overly restricted and restrained by contract periods or short term business prospects.

While we all need to adjust and adapt to the challenges life and business presents, which have been particularly testing for us all for almost a year now, those who talk loudest about guiding principles are the ones who often seem to be least inclined to observe them.

While the social cohesion and entrepreneurial culture of our industry has been the driver of its success the reverse side of this positive is an unappealing sub-culture of gossip, innuendo, misinformation and intrigue which has never served the industry particularly well. Difficult times generally bring the industry closer together but as things improve some of the least appealing habits seem to come to the surface again, and this is hardly ‘living up to diamonds’.

Similarly, the discussion around auctions or competitive bidding for rough and whether it adds value in the long term attracts a lot of posturing and frankly rather absurd (thinking out of the box?) comments from people who should (and in fact do) know better. While it is undoubtedly appropriate for spectacular polished stones to be auctioned in the rarefied atmosphere of Sotheby’s, Bonham’s and the like, auctioning boxes of Grey Rejections or 5-10s simply is not an option if sustainability is accepted as an essential prerequisite of a stable and confident business.

Why should anybody in their right mind commit to manufacturing or marketing such difficult goods if they were not assured of a proper long-term commitment from their supplier? One accepts that to make up a box of Argyle Pinks and pretend that that is a wholesale or volume business would be ludicrous but to claim that all diamonds and producers would benefit from auction driven transactions completely flies in the face of our experience in the industry and the real meaning of sustainability in terms of manufacturing, marketing and commitment. It would indeed be extraordinary and inexcusable, not to mention ironic, for us not to have learned the lessons of our own history.

DEALS, DEALERS AND MANUFACTURERS

2009-07-23T14:53:00.002+01:00

Now that the Indian industry has (as I knew it would) rediscovered its innate optimism and enduring confidence in its own abilities, its dominant position and that of the Diamond Trading Company are both very much back in play and thank goodness for that!

Inevitably, as business picks up and the crisis in our industry and the world economy starts to recede, one of the diamond industry’s most vexatious, complicated and contentious issues comes back into the spotlight. The issue I am referring to is the respective roles of dealing and manufacturing with regard to efficient channels, effective distribution and value addition.

Nobody can seriously suggest that dealing is not an integral component of our industry, in fact if you look at the Indian industry, by far the most important in manufacturing and marketing terms, its complexity and culture requires effective dealers as well as the first class specialist manufacturers who are the solid foundation of the business.

Dealing only flourishes into complex markets which have a strong established secondary market based on a thriving entrepreneurial culture. As well as, of course, high volume activity and a critical mass in manufacturing across a wide range of rough. The question has always revolved around whether dealers support manufacturers or manufacturers support dealers, a very chicken and egg situation. The main discussion normally centres on whether dealers enjoy a privileged position in rough supply terms compared with manufacturers in relation to the considerable risks that they take on board.

In the case of emerging centres, taking Botswana as the prime example, the political imperative is to generate local employment and economic benefits making the export of rough totally contrary to the stated aims of beneficiation. So, legitimate dealing can only flourish in a major free market entrepot like Antwerp, Mumbai or Tel Aviv.

One should be cautious about sticking convenient labels on businesses which then encourage a ‘one size fits all’ mindset to all scenarios. Several years ago somebody coined the phrase ‘dealer/manufacturer’ (a term I could never quite get my head around). Indeed some dealers do manufacture. However, if dealers can claim to be manufacturers why shouldn’t manufacturers do deals (for manufacturing)?

Looking ahead to the new contract period at a time when there is a lot of discussion about business continuity and how the benefits of the existing system can be improved, I have concerns that a rules based system that does not even attempt to address the differentiated roles of dealing and manufacturing, or assess the relative merits of a manufacturing or trading led model or business surely cannot be relied upon to be inherently stable or efficient in the long term.

V OR W SHAPED?

2009-07-22T09:33:00.002+01:00

When things were particularly grim at the end of last year Ricky Ng and I had lunch and inevitably our discussion turned to how our business would be affected by the gathering storm clouds of world recession. We discussed the different types recessions which economists like to identify and I ventured my opinion that I thought we were in for a ‘V’ shaped one.

Whether I am proved right or the world economy still has a few after-shocks left to inflict on us remains to be seen. My own view (and I am no economist) is that once the US housing market really turns the corner then we should be home and dry because after all that’s where it all started in the first place.

However, whether the economic recovery turns out to be V shaped or W shaped (in teenage-speak ‘whatever’) we will still have no choice but to face up to it.

The important thing from our industry’s point of view is that a confident industry, even if it is at times ‘over exuberant’ drives everything from mining production through to retail and that’s what counts at the end of the day. This isn’t the first time that the Indian industry has been the Spring tide that raises all boats and I’m sure it won’t be the last.

There always is a lot of navel gazing about whether the Indian industry should consolidate or change its structure in some planned way but the truth is that it is the most extraordinarily resilient and adaptable industry and market forces will determine the direction it takes and the appropriate size of its manufacturing industry.

I always enjoy lunch with Ricky who is undoubtedly one of the most delightful as well as experienced of our colleagues in the business and I look forward to having a further lunch with him so we than theorise about what shape the recovery will take secure in the knowledge at least that it is taking place, however falteringly and whatever concerns about the future we still may have.

I HAD A DREAM!

2009-06-22T15:17:00.010+01:00

I had this strange dream recently about getting on a flight in Mumbai, flying to Tehran and then on to Tel Aviv and then back to London.

However, when I woke up I remembered that in February 1970 I did just exactly that. I took TWA Flight 001, the round the world service, from Bombay (as it was called then) and landed the next morning in Tehran. I still remember the luminescent blue haze around the mountains that encircle the city of Tehran as one landed. I enjoyed a very pleasant couple of days with my Iranian friends, the famous French singer Charles Aznavour was appearing in concert and I enjoyed a nice glass of chilled champagne in the bar of the Hilton hotel. I then flew on to Tel Aviv and proceeded to Jerusalem where I remember thinking it was distinctly cooler than Mumbai and Tehran and I wished I’d brought a pullover.

Would that that dream would come true, but then Martin Luther King also had a dream and if he hadn’t then Obama wouldn’t be the President of the United States. So let’s keep dreaming and hoping for a better future where men and women of good will dominate politics and international affairs instead of the Chavez’s and Ahmadinejad’s of this world.

MORE ON RESPECT

2009-06-16T15:15:00.014+01:00

The tumultuous events in Iran come as no surprise to those who take an interest in this great country and culture and who can see beyond the nuclear issue, however important it undoubtedly is.

The dramatic and unpredictable events unfolding in Tehran and the other major Iranian cities on an almost hourly basis represent much more than just a struggle between the hard line faction of President Ahmadinejad and his power base and the more moderate leaders in the Islamic republic but have much more to do with a vision of the future of Iran based on respect. Respect for women, for culture, learning, modernity, progress and freedom of speech, all things that the majority of us (whether or not we have a religious persuasion) believe in.

It is fascinating watching the media coverage to see that the pro reformist demonstrators comprise not only young men and women but a whole cross section of Iranian society. It is also very apparent that whatever is happening and will happen is being hugely influenced by the media, but not official media more blogs, Facebook, Twitter and all the latest channels of communication which Iranian youth are quite as comfortable with as our own. So much so that the regime doesn’t know how to play its clumsy attempts to control and manipulate the media. On one hand it tries to use the media to project its own agenda on the other it tries to suppress international transmission and communication where Iranians are looking for support and the sympathy of other nations.

Given the history of the US and Britain in interfering in Iranian internal affairs, a lack of respect for Iranian sovereignty which led to the extremism, radicalism and anti-Americanism which has been so rampant in Iran for so long, the Americans and British have to be particularly careful not to be seen to be interfering once again in an Iranian process (however flawed it may appear to them and us). However, we know very well where our sympathies lie and any political leader who polarises his country to the extent that people feel they have no choice but to take to the streets is a disaster.

In Venezuela we have seen similar situations to that in Tehran when Chavez’s supporters fired on opposition rallies in Caracas and it is no wonder that President Chavez and President Ahmadinejad get on so well as they not only have oil in common but share the same political techniques and the same type of populist posturing which has done no favours to either their economies or their people.

The Iranian presidential challenger, Mir-Hossein Moussavi, was quoted in today’s FT “We are ready to have the election re-run,” he said, insisting that people had to be “convinced” of the results after being “insulted”.

Respect is due to him and the people who have so bravely taken to the streets to express their democratic rights.

RESPECT

2009-06-04T13:00:00.004+01:00

I was very interested to hear of the DTC holding a ‘Town Hall’ meeting in Antwerp yesterday, which neatly illustrates a recurring theme of mine, how politics influence business, and vice versa.

Clearly the use of the term ‘Town Hall’ instead of the rather tedious ‘Road Show’, which to me has always implied some sort of circus event ,shows an ‘Obamaesque’ willingness to engage with stake holders and the wider public. Although I wasn’t present I understand the meeting was well attended and a lively debate ensued and there was a genuine effort to engage with the participants.

I have made no secret of my admiration for Obama, long before he was elected. If anything, I’m even more impressed (as I am sure most of my readers are) than I expected to be by his natural grace, assurance, intelligence and intuitive communication. If you read any paper in any language one of the recurring words that define his approach is ‘respect’. I have always believed that if you are respectful of other people, their points of view, their religious observances, their cultural differences and sensitivities you are much more likely to earn their respect. This is hardly a revolutionary concept but it is surprising how many people just don’t get it or can’t be bothered to make the effort.

Respect for other people’s ideas and culture does not demonstrate weak-will or diminish one’s own beliefs in any way. Neither does it demonstrate wishy-washy liberalism or political correctness if it is conducted with determination and integrity. Why shouldn’t Obama attempt to engage with Chavez of Venezuela? Or the Cubans? Or the Iranians? The previous US administration only managed to make a bad situation worse and were not conspicuously successful in dealing with the North Koreans either. At least by engaging with people you find out whether they are really dangerous, just upset or Mavericks who need to be understood. If you also respect your enemies it means that you are much less likely to under estimate them which, in the end, makes it far more likely that you will prevail over them.

Respect takes many forms and if the general public feel they are being treated in a cynical and disrespectful way, as Mr Brown is likely to find out tomorrow, they will express their displeasure at the voting booth.

Mr Obama is today addressing Cairo University, trying to improve understanding and assure the Arab world that the US has respect both for their religion and the region. The world will be listening and even more respect to him for confronting, in the early stages of his administration, issues which have not been properly addressed by his predecessors and never before in one of the most important cities of the Arab world.

Holding the ‘Town Hall’ meeting in Antwerp seems to recognise the continuing importance of this city to our industry and the significant attendance justifies the importance of this sort of engagement with the diamond community, particularly when it is based on a respectful dialogue and a preparedness to listen and engage with the industry’s concerns.

IN MEMORY OF VASANTBHAI SANGHAVI 1944 – 2009

2009-05-18T12:12:00.008+01:00

I would like to pay my own personal tribute to one of the Indian diamond industry’s great characters of recent years but much more than that, a real pioneer who set a model for polished distribution and client service which many aspired to.

I chose this photograph of Vasantbhai for two reasons, one because I took it myself in 1994 and secondly because it shows him at the height of his powers and achievements with his son Kalpesh and nephew Sanjay in his Prasad Chambers offices. At this time Vasantbhai was almost certainly the most important polished dealer in the Mumbai market with substantial polished purchasing operations in both Mumbai and Surat supplying a network of polished sales offices throughout the globe.

Having achieved this pre-eminent position in polished distribution and sales, Vasantbhai decided that the next step was to become a volume manufacturer and vertically integrate upstream. When he then decided to apply for a Sight it was assumed by many that he was interested in rough for trading purposes, given their huge success in trading polished. However, it became quite apparent to us that Vasantbhai was entirely serious about manufacturing and, as if to prove the point, he built in Pandole one of the largest purpose built factories of its time.

He was one of the few potential Sightholders who the DTC had heard so much about that they actually sought him out and requested a meeting and in fact the first meeting with him and DTC executives was held in my room at the Taj in 1994 during the DTC review.

In 1997 the DTC recognised Sanghavi’s commitment to manufacturing and granted them a Sight.

I had the pleasure of meeting Vasantbhai 3 weeks ago in Mumbai when he told us with much pride that he was being honoured with a lifetime achievement award (with his brother Chandrakant) which was to be presented to him by The Indian Diamond & Colourstone Association – NY at the Venetian Hotel, Las Vegas during the JCK Show next month. Vasantbhai was extremely successful in the US and Sanghavi still have one of the highest sales profiles of any Indian company there. He also loved the US (I remember him telling me that Los Angeles was a favourite city of his) and so it is particularly sad that he was taken from us before he was able to enjoy what would have undoubtedly been one of the proudest days of his life.

Unfortunately he enjoyed visiting London a lot less than he did the US because he felt his efforts had been consistently under recognised, a source of great disappointment to him.

It was part of Vasantbhai’s routine to take an early morning walk in Mumbai’s hanging garden park, sadly this Saturday morning he took his final walk. However, he will live on fondly and respectfully in our memories and the industry has lost one of its great personalities.

If you would like to leave your own personal message and memories in the comments, we would like to encourage you to do so.

My colleagues and I would like to express our heartfelt condolences to the Sanghavi family.

GREEN SHOOTS

2009-05-15T16:29:00.005+01:00

We are all well aware that the current revival in rough purchasing is largely driven by shortage of rough and also factory-led, rather than developments downstream. However, it is good news when a diamond fetches the highest price per carat for any gem stone ever sold and I think the industry should celebrate this for the good news that it is. It is also interesting to note that in the art world there are stirrings of demand for exceptional work and David Hockney's painting ``Beverly Hills Housewife'' sold for a record $7.9 million at Christie’s in New York yesterday.

Blue diamond = one big green shoot

DOING THE RIGHT THING

2009-05-12T15:00:00.007+01:00

We are all, quite rightly, judged by our actions whether it be as individuals, governments, big corporations or small companies in the court of public opinion. Which means we are expected to do the right thing at the right time in terms of human intervention.

In our own industry Gareth Penny is rightly keen to refer to the moral dimension and imperative of ‘living up to diamonds’ and naturally enough Sightholders expect the DTC to conduct its relationships with them accordingly.

Businesses and governments always have a choice to rise to the occasion and do the right thing or take refuge in the inertia of legalistic or bureaucratic obfuscation.

Governments, even democratic ones, often have a pretty poor record in doing the right thing. Take the British government’s shabby treatment of the courageous Gurkhas who have fought and died for the British and Indian Armies for the last two centuries.

It took a determined and popular British actress, Joanna Lumley (whose father, Major James Lumley, served in the 6th Gurkha Rifles), to front a highly effective media campaign to lobby the government for Gurkha families’ rights to domicility in the UK, an effort which succeeded in shaming and humiliating the UK government into ‘doing the right thing’. A government whose stock with the British public is now so low that they had almost no choice but to accede to the strength of public opinion in relation to the Gurkhas or risk sinking even further in the polls.

My father, a Lieutenant Colonel in the then 5th Royal Gurkha Rifles (Frontier Force) believed in doing the right thing and he, I know, would have been very happy with the result of the pressure brought to bear by this feisty and much admired actress on our mean spirited and miserable government.

The English father of a victim of the terrorist attack on the Taj recently wrote to me to enlist my support in the case of his son. He and his girlfriend were on the same floor (3rd) as Mily and I separated only by one room. In a desperate attempt to escape from the encroaching fire and the smoke entering the room they knotted together sheets, curtains and towels into an improvised rope to try and escape out of the window. Sadly the improvised rope gave way and Will fell to the ground sustaining major and life threatening injuries to his spine. Having undergone major operations in Mumbai by skilled Indian surgeons he was eventually repatriated to England where he remains undergoing treatment in hospital. His case has been almost completely ignored by the British government and he has so far received only a miserly £15,000 compensation. His father (his mother died of cancer) has dedicated himself to his son’s recovery (as far as it will ever be possible) and fair and appropriate compensation.

http://www.willpikemumbaiappeal.co.uk/

An article appeared in this Sunday’s Observer entitled ‘Terror Victim in Mumbai Now Abandoned in Britain’ and his father has a dedicated web site to help publicise not only his son’s very deserving cause but make the wider case for Britain to provide the same level of assistance to victims of terrorist attacks overseas as those that were put in place after the terrorist attack on the London underground system.

http://www.guardian.co.uk/world/2009/may/10/will-pike-taj-hotel-mumbai-terror-attacks

If any of my Indian, US or Belgian readers can draw this story to the attention of any press, perhaps you would be kind enough to do so as coverage in the Mumbai or indeed any other reputable press may be helpful in shaming and pressurising the British government into doing the right thing.

COMMENT ON GOLDIE SIGHT NEWSLETTER FROM CHAIM EVEN ZOHAR

2009-05-11T15:25:00.004+01:00

Chaim Even Zohar has made the following comment on the Goldie Sight Newsletter which can be found on the H Goldie web site at http://www.hgoldie.com/ :

2009: Rough Supply will Still Exceed Demand

Dear Mark.

Your sight newsletter - as usual - represents a most insightful comment on market sentiment. You report of having seen “a genuine shift in mood apparently driven by a growing supply concern amongst manufacturers who are now seeing the effects of mine closures on rough supply.” You are absolutely right from your perspective as a DTC broker, as your clients face the consequences to almost unprecedented production cuts and mine closures by De Beers, which led to a Q1 2009 output decline (measured in carats) of some 91%. No wonder that, as you write, “it appears that the DTC is struggling itself to respond to this sudden surge in demand.” This is right – it had been my understanding that larger sights had not been planned before next month’s sight – and this strengthening demand will enable a return to larger sights maybe earlier than expected.

But, Mark, the behavior of De Beers is in stark contrast to the actions of other producers. Moreover, De Beers is now resuming most of its production and – at an average – will deliver in 2009 some 40% less carats than in 2008. Not a single other producer is paying “such a price” and global diamond-mining output will run at about 85% of the 2008 level and come to US$12.35 billion – at 2008 prices. Assuming that average 2009 rough diamond sales will be at market prices that are 35% below last year’s, the 2009 mining output at 2009 prices would come to US$8 billion. Let me elaborate on our calculations.

According to the economic demand-supply forecast model developed together with Pranay Narvekar, a brilliant Indian diamond industry economist, we believe that cutting-centre demand for rough will come to US$7.4 billion – so the supply and demand will only be slightly out of balance, with a production excess of US$0.6 billion. However, the sharp fall in rough sales in the last quarter of 2008 has added some US$1.6 billion to producers’ stock. We should not forget that although the diamond downstream business was hit already in the 4th quarter in of 2008; mines took the hit mostly in 2009.

Looking at the full 2008 year, we see that rough diamond mining output actually increased by 4.9% to $14.5 billion (from $13.82 billion in 2007). The impact of mining closures and retrenchments are not yet visible in 2008 figures. Mining sales to the downstream market were a tiny 1.8% higher in 2008 from $13.95 billion in 2007 to $14.2 billion to 2008. Manufacturing output, however, fell ever so slightly by 0.8%, from $19.86 billion down to $19.7 billion, showing that industry naturally reacted faster and before the mining response to the economic crisis.

Mark, we calculated the economics of the first 12 months into the crisis, and, later, based on more information, we made projections for 2009. Because of the 33% decline in polished demand, diamond manufacturing output will fall in the first 12 “crisis” months by a hefty $6.5 billion to only $13.2 billion. This explains why in India some 400,000 workers have been made redundant, representing some 35% of the labor force.

As I mentioned above, looking at the full calendar 2009 year, global rough demand will decline from $14.2 billion to merely $7.4 billion, as also on the cutting level phase of the pipeline inventory reduction must take place before returning to a replenishment mood. We expect that in the final quarter of 2009 the global manufacturing sector will be able to purchase some $800-$900 million worth of rough per month. Though when replenishment will commence, this will be at a lower level, as with lower sales, the required working stick levels will fall as well. Consumer demand may not pick up before the 4th quarter of 2010. This year’s Christmas season is expected to be similar to last year’s.

But whether this scenario will work out or not depends on the producers – not just on De Beers, but also on the others. And there we see different strategies. Except for a technical-driven and scheduled 4% decline in output, the Russian will not reduce mining activity. It now tries to lure clients by offering long-term supply contracts which initially will sell at a premium (!) to market price – promising better deals later. [Some of the goods go for 20% above market price.] The fact that the government is doing some of the stocking (Gokhran), should not give much comfort. The mid 1990’s are not so long ago to simply ignore the lessons from the past.

BHP-Billiton’s diamond production in Q1 2009 was 53% above the comparable quarter last year, and 60% over Q4 2008. BHP-Billiton has specifically informed us that no diamond mine closures whatsoever are planned or contemplated for 2009. Rio Tinto’s Argyle and Diavik Q1 2009 productions were up dramatically, though they announced a 3 months closure.

Angola’s production fell away for a few months due to the financial trouble of the marketing agents; not because of any government policy to reduce output.

Our forecast is thus purely based on the announced mining plans of the main suppliers and it is on that basis that we have concluded that on the supply side in 2009, the global mining output will run at about 85% of the 2008 level and come to $12.35 billion – at 2008 prices! Assuming that the average 2009 sales will be at market prices that are 35% below last year’s, the 2009 mining output at 2009 prices would come to $8 billion.

As said above, cutting center demand for rough will, in our scenario, come to $7.4 billion – of which De Beers (DTC) will supply about $3 billion, which would be about 45% of total supply. This is in line with, or slightly above, the DTC’s market share. However, the dramatic fall in rough sales in the last quarter of 2008, has added some $1.6 billion to producers stock. So if, hypothetically, producers had no stocks at the onset of the crisis, they will accumulate through the end of 2009 some $2.2 billion of new stocks – partly held by the Gokhran. This is equal to almost 30% of the 2009 demand for rough.

So, Mark, I would hesitate to join those who are interpreting the current sporadic shortages of rough (and these shortages are real), as representing a trend. There is an element of wishful think – for which, at the end, someone will pay.

The current DTC shortages are a result of De Beers policy. The total 2009 diamond production should not give us “comfort”. At the end of the day, it is the overall world economic situation that will set the pace of recovery. As the bullwhip metaphor (ripple effect theory) implies, the upswing could be as rapid as the downturn.

Gareth Penny reminded me recently that diamond demand and prices have historically always peaked after a recession. What is needed is a combination of increased consumer demand and positive trade sentiments throughout the value chain.

Mark, as I said at the AGC Conclave in Chicago, where I had privilege of having you in the audience, in the long term, the dwindling mining reserves will lead to a situation in which demand will definitely exceed supply. But we aren’t there yet.

SUPPLIER OF CHOICE RESURRECTED?

2009-05-01T12:06:00.013+01:00

Perhaps I was somewhat premature in my burial of SoC in my blog on 6th February. It seems I must have been indulging in some Transylvanian fantasy. SoC may have been a brave new world for a chosen few but for quite a number clients it has proved to be a frustrating experience. They embarked on a journey believing the DTC’s rhetoric about vertically integrated and efficient channels in distribution, marketing etc and the journey has arrived at a very different destination to the one signposted originally. Even at the beginning of the year some manufacturing Sightholders were buying goods which were not in their ITO as they saw this as an opportunity both to support DTC and revive relationships which had withered.

So is SoC as successful as some would have you believe? A partial success? Or work in progress? In other words, can we really look forward to a new improved model? Perhaps most ironic of all is that the whole thing was designed to satisfy the EC’s competition concerns but has so many rigidities embedded in the system that it has apparently restricted the DTC’s ability to respond flexibly and appropriately to the current crisis in treating clients as individuals rather than as part of a predetermined process, and in doing so has made the system less competitive than it should be.

While the ITO is undoubtedly a good system in principle it is particularly relevant to manufacturers who have a constant need for sustainable supply, rather than the so-called dealer/manufacturers whose sales dynamic is to a large extent driven by a very different value addition agenda.

We have been told that the business continuity programme may address some of the issues that have most concerned those Sightholders who feel let down and frustrated by the seemingly irreversible trend for their interests to be marginalised. Before the last consultation process reassurances were given to the clients that their core strengths would be recognised by the new system and, encouraged by this, they made their plans accordingly and signed up for the ‘partnership in excellence’.

Successful partnerships are based on mutual confidence, respect and real (not hypothetical) performance. If these are to become the drivers of the process then I think we can all look forward to a new improved version starting at the next Sight with enhanced communication and a clearer ongoing narrative signposting the way forward.

SYSTEMIC FAILURE

2009-04-28T14:16:00.004+01:00

Our Prime Minister, the Rt Hon Gordon Brown, has recently been compared with an American President (certainly not President Obama you will be pleased to hear) but an altogether very different President, none other than Richard Nixon –otherwise known as ‘Tricky Dicky’.

While Nixon was undeniably an intelligent man, the approaches to China after all were quite Obamaesque in their vision and daring. He had of course a deeply flawed personality obsessed with his media coverage and the opposition – an early exponent of ‘spin’.

Some of Brown’s own inner-circle officials, several weeks ago, were exposed by the press attempting to set up a blog with the specific purpose of smearing the Conservative opposition by spreading scurrilous, unsubstantiated rumours, most of a sexual indiscretion nature. Had Gordon Brown not sacked and distanced himself from the people responsible this could well have been his own Watergate!

Brown’s speciality has always been to blame everyone else for the failures of his own policies. The Americans, the Germans and French, whoever it was convenient to point the finger at. When he hasn’t been blaming them, he was previously lecturing them on the superiority of the so-called ‘Anglo Saxon model’ (who or what exactly is an Anglo Saxon in our wonderfully diverse society?) as many of the most prominent Cabinet politicians are Scottish, not to mention banks and bankers (HBOS and RBOS), perhaps it should have been referred to as the ‘Scottish model’ (or would Scots admit to being Anglo Saxons? Only when it suits them and the English are paying!)

So what do the French and Germans (not to mention the British) make of his latest effort which is to raise taxes intentionally to punish the rich for the failings of the bankers who he lauded as the biggest contributors to our successful economy (the City). After all, he knighted Fred Godwin, head of RBOS, now the most vilified banker in Britian!

Now it’s the poor old manufacturers, entrepreneurs and small businesses of Britain who are once again expected to lead the British economy out of the horrible mess created by reckless and hubristic banking. So in short, when he isn’t saving the world’s economy (G20 etc) he’s screwing ours up by reducing the incentives and motivation for our genuinely talented, creative and innovative wealth creators, having squandered our inheritance with profligate spending and having sold our gold for next to nothing. It is difficult to credit that he was once referred to as the Iron Chancellor, give me the Iron Lady any day!

What they make of all this in Berlin or Washington one can only imagine, but the Swiss bankers must be very relieved because, having been told by Gordon Brown that they have to clean their act up, they are now sure to be overrun by Brits desperate to hang on to their hard earned wealth.
Finally, if Gordon Brown finds nobody else to blame, he will seek refuge in that convenient term so popular these days when describing the causes of this horrible recession ‘systemic failure’. Still I suppose the good news is that once you acknowledge systemic failure you have to fix it or lose even more credibility. Although in the case of Gordon Brown I don’t think that’s possible, at least as far as the British people are concerned

HEDDA SCHUPAK

2009-04-28T13:58:00.004+01:00

Having read Rob Bates’s Blog on my return from India, I am absolutely shocked that my dear friend and much respected, leading trade journalist Hedda Schupak, Editor-In-Chief of JCK, has evidently left her position.

I had the pleasure of attending her presentation at the Chicago AGS Conclave at the beginning of the month which was as full of insights as ever about how the US retail sector needs to react to the latest fashion trends to keep consumers’ interest.

When somebody as respected and experienced as Hedda is laid off (to use Rob’s term) it makes you wonder about the future of the industry in the US and it seems especially strange with the JCK Las Vegas show coming up and the sudden cancelling of the New Delhi show, what is going on?

Hedda, I’m sure, will bounce back because she is simply too important to lose.

Here’s a photo I took of Hedda posing with Anil Shah of Venus Jewel at the AGS Conclave in Chicago only 4 weeks ago.

SURAT RAILWAY STATION PHOTOS

2009-04-28T12:05:00.005+01:00

Images by M Boston and V Shine!

MIXED MESSAGES

2009-04-27T12:29:00.010+01:00

Having spent 45 frequently challenging, occasionally exciting but always eventful years in the diamond industry I have read more than my fair share of predictably trite and often poorly researched articles on our industry, invariably on the theme of diamonds losing or gaining their sparkle.

However, this week’s crop of articles on our industry was unusually interesting as 2 reputed serious financial journals both featured articles on the Indian diamond industry within a day of each other with starkly contrasting headlines on the ‘sparkle’ theme.

The first article appeared in the Financial Times on Thursday 23 April and was entitled India’s Diamonds Lose Sparkle, this was written by the FT’s new Delhi correspondent James Lamont. The following day the prestigious, also pink page, Economic Times (India’s leading English language business daily) featured an article on its front page headed Diamond Trade Regains Lost Sparkle.

So who is right? India’s Economic Times or the (International) FT? Are diamonds in India losing or regaining their sparkle? The answer to this simple question goes way beyond local interest to the Indian economy, but is of vital and major concern and interest upstream to the world’s diamond producers in Africa and elsewhere, across all the world’s diamond bourses and markets and downstream to diamond specialty stores, independent chains and, of course, the ultimate diamond consumer in the major consuming markets.

No recovery in the diamond industry or diamond jewellery sector can be sustainable or credible unless and until India, the epicentre of the world’s diamond polishing and cutting industry regains its confidence.

So given that both articles are broadly correct in their coverage of the severe difficulties the Indian industry has had to contend with since the latter half of 2008 which headline is right?

Having just spent the last week in Mumbai and Surat accompanying the visiting DTC delegation I think I am well placed to comment on this.

The answer is that the Economic Times article is more correct than the FT article, for the simple reason that the consensus view within the Indian trade is that the industry is steadily, if unevenly, emerging from the crisis it has been facing rather than it deepening further.

However, this being said the improved sentiment and increased activity remains tentative and fragile and the entire diamond industry from producers, market leaders, trade press and representative bodies could all do a far better job in effectively communicating both internally and externally than is regrettably apparently the case. Until that happens we can expect continuing rather superficial and almost frivolous articles about whether diamonds are gaining or losing their sparkle, all of which send out mixed messages to the consumer in terms of how she or he perceives our industry, its product and what it represents.

FT ARTICLES ON DE BEERS

2009-04-15T10:21:00.006+01:00

On 8th April two major articles on DeBeers appeared in the Financial Times. Both articles were written by Mr William MacNamara. The article entitled ‘DeBeers Braced for Turnover to Fall’ appeared on the front page of the FT and the second article ‘DeBeers to Aggressively Cut Production’ was featured on the inside page of the Companies section.

My colleagues and I sent the following letter in response to the FT articles, which regrettably the FT editors chose not to publish. As there were important points that needed to be made contained in our letter, we are posting on the blog (below) and would, as ever, be most interested in your comments, whether favourable or not.

Sir,

As rough diamond brokers with offices in London and Mumbai, and many years experience working closely with DeBeers representing our Indian Sightholders we are, I think, qualified to comment on the two very interesting articles on DeBeers by your correspondent William MacNamara.

While he has given an overview of the industry which certainly reflects the problems that we are all facing, there are certain key issues that have been overlooked.

The real test for DeBeers and the mining companies in general is their distribution strategies which are over dependent on supplying goods to dealers rather than directly to the major manufacturers.

The description of ‘small merchants’ in connection with India’s diamond cutters gives an impression of a cottage industry when the reality is that Surat (in Gujarat) is the diamond industry’s manufacturing hub with the highest concentration of high tech, modern and impressive diamond factories in the world. Indeed it is widely accepted in our trade that the Indian Gem and Jewellery Export Promotion Council’s claim that 8 out of 10 of the world’s diamonds are polished and cut in India is accurate.

DIAMOND FACTORY, SURAT

The Indian industry is in fact very capital intensive with huge investments in modern infrastructure, human resources as well as the skills to manufacture all qualities and sizes of diamonds including diamonds that other manufacturing centres do not have the capability to process for technical or economic reasons. So, the claim that the industry has an ‘inefficient and antiquated industrial structure’ cannot fairly be levelled at those manufacturers who operate in one of the most competitive manufacturing environments in the world.

The article does correctly reference the supply chain being ‘layered with intermediate merchants’. This reflects the fact that it is indeed, as stated, a complex industry due to the unique nature of the product. In the polished to retail diamond distribution it is indeed necessary to have intermediaries to direct the right product downstream to the jewellery manufacturer and retailer. The diamond bourses of Antwerp, New York, Tel Aviv, Dubai, Mumbai and others around the world are an essential conduit for the efficient marketing of polished diamonds and those that do not add value do not prosper or even survive.

DeBeers themselves have made it very clear that the days of them exercising control over the market are long past and the real test therefore is simply one of the effectiveness of their distribution within the approved ‘Sightholder’ group. The most efficient and effective channel is clearly to supply those genuine manufacturers who add value to the diamond proposition in the interests of everyone, right through to the consumer. The more goods are channelled indirectly, the more we have seen volatility and uncertainty. Once the Indian manufacturing industry regains its confidence in sustainable pricing and supply we will see the diamond industry recover its familiar sparkle.

Yours sincerely

THE WORST IS OVER?

2009-04-07T14:42:00.024+01:00

Badge courtesy of Margaret DeYoung - Organiser AGS Conclave Chicago

The 2 most pivotal countries to our diamond industry in terms of generating critical mass in activity and confidence are the United States and India, so attending the AGS Conclave in Chicago as a guest last week was important to me in trying to understand better how this relationship is going to play out as so much is riding on it. Something else both India and the US share is a love of jewellery, culturally and creatively embedded in both, as well as vibrant business communities always alert to opportunities and eager to do well.

There is no doubt that both countries’ diamond and diamond jewellery sectors have suffered severely in the last few months and there is nothing to suggest that the recovery in our own industry will closely track the hoped for improvement in world economic confidence that this talked about for the 2nd half of 2009. There is still plenty of bad news to come in the real world economy but the G20 seems to have marked a turning point in confidence.

The mood amongst American jewellers attending the Conclave was (to use a well worn cliché) very cautiously optimistic but we all know that the US (and India) have a capacity and resilience for dealing with adversity that we Europeans sadly seem to have lost, perhaps due to political leadership more than anything else.

Talking of political leadership, Obama has certainly not disappointed his supporters (and I am unashamedly one), although in the US the Fox Channel seems to be rather less enthusiastic than the Europeans who can’t get enough of him and the First Lady.

Business leadership is like political leadership, ultimately you will be judged on whether you deliver on the rhetoric and if the gap between talk and action is too great both credibility and confidence will inevitably be called into question. Those who claim a leadership role in the diamond industry should never forget this!

DIAMOND TRADE FACES CRISIS!

2009-03-13T16:15:00.006Z

Navin and I had the pleasure of meeting Mahiar recently who does his best to retain his good humour and positive take on our industry despite all the problems and negativity that beset us all at the moment, unfortunately some of which is self-inflicted. Mahiar told Navin and I about this article from the New York Times published in 1908, which he has now been kind enough to forward to me. He was absolutely right in saying that if you change the date from 1908 to 2009 the article could almost be republished with a few amendments here and there. In fact the sub-headings could have been taken straight from recent articles in the trade press (plus ça change)!

When things get tough you can count on old enemies of the industry to resurface, who don’t miss a trick to promote their own tired discredited agenda, so it was no surprise at all to see an article by our “old friend” Edward J Epstein in the international herald tribune, sister paper of the New York Times. The article entitled “The De Beers Nightmare - The diamond ‘overhang’ is the same old stuff he peddled before in his book “The rise & fall of diamonds”. However his book was published in 1982, 27 years ago and there has been a lot more rising than falling in the diamond industry since then and the DTC can certainly claim a lot of the credit for this!

However with the market gradually stabilising and recovering its confidence the DTC and its management bears a particular responsibility to have a clear & consistent narrative and avoid sending out mixed messages to sightholders and the market in general, that confuse and disorientate.

DYNAMIC DISTRIBUTION AND VAS

2009-03-09T16:41:00.001Z

I don’t think I am alone in thinking that the Value Added Service charge makes it even more incumbent on the DTC to have a dynamic and responsive distribution, which takes into careful account the manufacturing needs of its clients in order for their businesses to be sustainable.

The ITO is all about commitment and indeed has many good points, however, in the past we have sometimes seen the DTC systems elevated above the needs of the Sightholders. However good systems are they have to be viewed as tools to support and assist business development rather than impede it.

Yes, of course they should be fair in terms of how they operate but if they are not dynamic and they place obstacles in the way of business development there has to be a concern as to whether such a system can be viewed as genuinely competitive and also raises questions about the provision of the service aspect.

KAMs, brokers and sightholders/partners are above all interested in only one thing in the current situation – having a sustainable and profitable business which can provide a basis for overcoming the current difficulties and this in turn is contingent on how appropriate the supply from the DTC is to their business, and that’s the bottom line!

If rumour is to be believed that 2nd week sales reached between $40-50m, then that is proof itself that the current system is not distributing goods to the right people. This is reinforced by the fact that as far as we understand these were sales of rejected goods achieved at non-discounted prices, clearly indicating that the initial allocation was insufficiently responsive in the first place.

It is true that since January the DTC has adopted a more flexible approach by allocating goods outside the ITO however they still need to grapple with the problem of the forthcoming ITO and whether it will have sufficient flexibility built into it to start with to address the real issues. This will determine whether the system retains a dynamic element and the momentum required to see us through.

At the January sight Gareth talked about the DTC’s leadership role and given that distribution will provide the key in helping Sightholders survive the current recession, the market expects the DTC will take the necessary measures to address the shortcomings of the current allocation system.

SLUMDOG MILLIONAIRE?

2009-03-02T12:35:00.001Z

The unprecedented success of this powerful film set in Mumbai reminds one of the unquenchable spirit of the underdog in India in the face of adversity and impossible odds.

If Oscars were awarded to diamond companies, I wonder which ones would get the awards? Rather like the film industry, distribution is everything, get that right and the awards and business come rolling in.

In today’s market, more than ever, to buy rough on an ad hoc basis with no commitment from your supplier is certainly not going to interest manufacturers, and even less so traders. The DTC and other suppliers have for years talked about relationships and commitments, now is the time for all rough diamond suppliers to show that they really mean it because this is what their partners are entitled to expect and have always been promised!

'INVESTMENT' DIAMONDS

2009-02-23T17:54:00.001Z

The word investment is almost a dirty word at present, to invite someone to invest in something meets with scepticism at best and frequently derision at a time when the smartest fund managers, investment brokers and gurus seem unable to get a fix as to where the extraordinary volatility in the world’s share, bond and commodity markets is leading. As to when the markets will recover their composure, and what the new economic landscape will look like once that happens, is also far from clear at present.

It is hardly surprising therefore that gold is seen by many as a safe haven in today’s situation, but why not diamonds? Yes, fungiblity can be an issue, although with the accuracy of modern certification it really shouldn’t be. Those who seek to promote self-standing diamond investments in today’s market suffer from the same perception as any other so-called investment vehicle. However, let’s look at the reality. Any exceptional quality commodity, whether it be diamonds, fine art, real estate or even wine, will inevitably be in demand again as soon as consumers regain their confidence.

I’m not proposing for a moment that the diamond business wants to return to the 1980s when diamond and gold prices rose almost in unison to unsustainable heights, driven by frenetic speculation, only for both safe havens to crash.

At some point soon surely informed investors will start looking again at diamonds, realising that the fundamentals of the supply and demand balance are more favourable than is currently recognised even within our own industry (Varda’s DTC Sight Presentation). Janet Sussens validation (DTC Sight Presentation) that the DTC Christmas campaign in the US focussing on ‘fewer better things’ does definitely resonate with consumers comes as no surprise.

Now would be a very good time to buy exceptional gem diamonds (I don’t necessarily mean large stones only) for an investment. At least someone special to you can have the pleasure of wearing them while you wait for your investment to appreciate as it surely will. I would certainly be putting my money where my mouth is, if only I had some to invest at present!

But seriously, surely this would be the right time to diversify your portfolio if you are a high net worth individual and why are we not getting this message through to these people.

‘LESSONS’ FROM HISTORY?

2009-02-06T16:05:00.004Z

You may have wondered why somebody normally so opinionated has posted so few blogs recently and is apparently so unusually lost for words. I have wondered about this myself, especially as recently some younger colleagues and acquaintances have reminded me that I’ve been in the industry some time now and have somehow survived recessions, major ups and downs and all sorts of challenges. These colleagues have been looking to me expecting some sort of enlightenment and encouragement based on my own experiences and reading of the current situation. So, here goes!

First of all, there is no way that I can deny the severity of this bust compared with previous ones. It is about as serious as it gets in terms of the speed and depth of transition from bubble to burst and it is already reminiscent of the 1980s in that respect. Just to remind ourselves of what happened in the 1980s; after a prolonged period of global ‘stagflation’ (a name coined by a British politician to describe a toxic mix of economic stagnation and inflation) there was a dramatic flight from equities, bonds and financial instruments into ‘alternative’ tangible investments, diamonds and gold in particular, but also fine art.

The diamond industry, not believing its luck after a difficult few years, then leapt into ‘extreme exuberance mode’ and the most extraordinary speculation took off. Certification had only recently become widely accepted within the industry and the D Flawless Carat Stone became the benchmark price reference for a speculative boom rising from $40,000 at its peak and crashing to $10,000 when the bubble burst.

It was extraordinary to see clusters of brokers around the bourses in Antwerp engaged in frantic negotiation brandishing fistfuls of certificates without even getting their loupes out. Things only got more heated when the financial masters of the universe of the time decided the diamond industry was just too profitable for them not to jump on the bandwagon. Is this all horribly familiar?

Sadly many Belgian companies lost not only their shirts but also their entire businesses and some of the biggest companies of the time, whose names had previously been held in awe, collapsed ignominiously.

The road to recovery in large stones after this was faltering, slow and difficult and not particularly helped by the DTC’s macho attitude to pricing which made a bad situation even worse. But, of course, the recovery did happen eventually as economic confidence and prosperity returned, as it inevitably does.

So how does this compare to the current situation? The good news is that while polished prices have moderated, which is hardly surprising given the speculative trade that took place in the early part of last year, they have not collapsed and neither, I believe, will they.

The world is a very different place now, in the 1980s it was still divided by the Cold War and opposing communist and capitalist blocs. Diamonds were effectively politically prescribed in half the world and purchased underground except in the avowedly capitalist countries which had taken the biggest hit in consumer confidence.

One of many economic theories that have gained credence in recent times is the decoupling of India, China and other emerging economic superpowers from the US in particular. This severe recession has completely dispelled that theory as once again we have seen the economic excesses of the capitalist system in the US reverberate around the world in the most alarming way. Our own Prime Minister Mr Brown is only too ready to blame the US for all our problems while looking at the US and Mr Obama in particular to provide the economic leadership and stimulation packages that might get him another term in office (God help us!). So in that sense nothing much has changed in that problems that originate in the US have to find their solutions in the US. However, it is not as simple as that, the world has changed and Brown for once is right when he says that it is only concerted economic co-operation that is going to stop an even more alarming descent into a totally dysfunctional world economy.

Here there is an important difference, the meeting that is scheduled to take place in London in April of the G20 is representative of a new world economic order which may take its lead from the US and hopefully will be inspired by an effective US President and administration but will also have to be consensual in its approach if it is to regain the confidence and trust of the world’s financial markets and, most importantly, the world’s people and consumers.

As far as we are concerned, in the diamond business, there is only so much we can do in the meantime. However again I would say that there is an important difference between the 1980s and the present situation and that is the importance of the Indian diamond and diamond jewellery industry. I seem to have more confidence in the Indian industry than the industry has in itself at present. It is a resilient, adaptive and hugely important creative powerhouse that, once it regains its confidence, is capable of rising like a phoenix from the flames and bringing the rest of the diamond industry back up with it.

The fundamentals actually are not as bad as they appear to some. The industry is trying to put its house in order in terms of production and financial stabilisation in the face of worryingly slow polished sales. The rough supply to the industry has been dramatically curtailed and at some point this year it is likely that there will be a restoration of equilibrium in production and demand as long, of course, as the mining companies behave as responsibly themselves as they expect the trade and industry to!

Some of the DTCs biggest critics are those trade commentators and others who seem to sometimes have a self interested agenda to hasten the demise of the Diamond Trading Company. However, what is the alternative they seem to be advocating? Mini-me DTCs with a parochial outlook and a toxic mix of politicians and bureaucrats? All informed observers agree that the biggest threat to global economic recovery is protectionism and economic nationalism so while it is understandable for countries not to miss a sensible opportunity to develop their own economies, the marketing of diamonds in many different locations according to a political, rather than a commercial, agenda does not meet the needs of our industry.

The ‘Central Selling Organisation’ (CSO) evolved to meet the needs of our industry in terms of bulk supply at rational pricing to what was even then a global industry and could not have succeeded over such a long period of time if it was created simply to satisfy the ambitions of the Oppenheimer family and its associates. It actually made sense and worked. Consider the sort of alternative scenario that some the anti-DTC exponents seem to be promoting, a world of rough auctions, diamond based derivatives, no rough suppliers strong enough to give the market any sense of confidence or shared interest and goals in promoting and protecting the industry as a whole. What a nightmare for a volume diamond manufacturer. He would have to spend all his time in airport lounges chasing rough around the world trying to collect sufficient supply to justify an investment of dubious potential and a workload of such unsustainable intensity that synthetics would look distinctly appealing in such a context, although we know natural diamonds are what the public prefers. Even from a carbon footprint point of view his life would be made a misery. As for the box traders and dealers, like the famous supermodel, they wouldn’t want to get out of bed because the whole market would be a secondary market of such volatility it wouldn’t be worth even considering!

I make no apology for believing in the Sightholder system and, yes, I do have a vested interest in its success and nobody has been a bigger critic of SoC than me, a policy that may have started off with good intent but has been totally compromised by its arrogant interventionism and lack of respect for its own partners.

So I do feel entitled to express my view that the industry is far better off with the DTC than without it and that is why the DTC is constantly expected to show leadership and confidence often from the very people who try hardest to undermine it.

If you don’t agree with my views I would love to hear from you, and I hope this was worth waiting for!

JANUARY SIGHT AND THE FIFTH C

2009-01-15T10:51:00.000Z

Although I know one does not hear about the 4Cs in relation to diamond quality in the way that one used to (and again the 4Cs was another De Beers, or JWT, creation almost as inspired as ‘A Diamond is Forever’), it is still a recognised term amongst consumers, even if it doesn’t have any marketing bucks behind it nowadays. However, in our industry, as we all know only too well, there is a 5th C and perhaps that is the most important of all – CONFIDENCE and by that I don’t just mean consumer confidence, hugely important though that is, I mean our own confidence. Confidence in ourselves, our colleagues, our product, our business acumen and the resilience and determination of our industry.

If we don’t project our confidence in our product, why should consumers believe in us, especially when they are so lacking in confidence themselves at present.

The Sight is coming up next week, an all important one, that will set the stage for how business develops next year. I have confidence that the DTC will be presenting goods to the clients that will offer value and (I’m sorry to repeat myself) the confidence that they require to be able to move forward cautiously and, yes, confidently!

It is absolutely clear that we all need to be extremely realistic, given the unsurprisingly disappointing retail sales this Christmas season, but negativity and pessimism never did anyone any good and that’s not what our business is about.

The diamond dream is there to be promoted, protected and cherished because that’s our business and we are proud to believe in it.

SURAT BACK IN FASHION

2009-01-13T15:06:00.010Z

For quite a while now Surat has been rather conveniently and deliberately overlooked as its importance didn’t really seem to fit the agenda of some producers who were more interested in promoting their own. Given the influence of these producers it is not too surprising that the media was also rather inclined to follow the lead provided to them.

But there is nothing like a crisis in the industry to get people to really think sensibly and seriously about reality. The reality is, of course, that Surat has not become the beating manufacturing heart of the diamond industry by accident, but because it has accumulated a critical mass of diamond expertise, labour, hi-tech skills and capital developed over a 40 year period.

Inevitably the Indian press has been looking closely at the effects of the dramatic slow-down in our business on the city of Surat. The Economic Times, India’s leading financial newspaper, on 27th December, featured a half page article entitled ‘Diamond Defies Slowdown Blues’ (see below) referring to the Sparkle International Conference and Gem and Jewellery Exhibition in Surat and Gujarat’s Chief Minister Mr Narendra Modi’s speech in which he reminded diamantaires of their duty to look after their workforce during tough times.

The other article refers to Martin Rapaport ‘the maverick and controversial figure’ who is also opening an office in Surat, never one to miss a trend!

Other articles refer to Rosy Blue investing in a $3.5m jewellery unit in the Gem and Jewellery Special Economic Zone in Surat and Gitanjali Gems investing in 3 Gem and Jewellery Special Economic Zones in the cities of Surat, Ahmedabad and Bhavnagar.

It should not be forgotten that Surat is not only hugely significant to our own industry but it is situated in what is now being referred to as ‘vibrant Gujarat’ undoubtedly the state in India which is in the forefront of attracting investment and implementing business-friendly policies.
What is also timely is that Surat seems to have found its voice, and hopefully will not lose it again!

PLEASE CLICK ON IMAGE FOR AN ENLARGED VIEW

RETURN TO THE TAJ

2009-01-13T14:42:00.016Z

Mily and I were back in Mumbai last week to attend the wedding of Sunny, son of Nagjibhai of H Vinodkumar and Krinal, daughter of Mavjibhai of Kiran Gems. The wedding, which was held in the wonderful setting of the Aamby Valley, Lonavala, was both spectacular but at the same time very much a family affair in the best Indian tradition and Mily and I, along with Sharookh and Preeti, were delighted to share in this happy event.

On our arrival in Mumbai we stayed the Taj President, a perfectly agreeable business hotel, but a hotel which cannot be compared with the Taj in terms of its history, character or indeed iconic status. Although our accommodation was comfortable it didn’t feel right not to be in the Taj, despite the memory of the recent terrorist attack. So Mily and I decided to return to the Taj on the Friday, after the Aamby Valley wedding celebrations were over.

The mood in the Taj is unsurprisingly still very sombre and there is a moving memorial to the staff who lost their lives looking after guests so bravely and selflessly.

While you cannot compare the current position in our own industry with the carnage and wanton destruction inflicted on the Taj and the other targets by the terrorists, the challenges which now face our industry following an almost unprecedentedly poor season are very serious and will require major adjustments and reappraisals throughout our industry if we are going to have a sustainable business model in both the short and longer term.

The Taj is a fine example to all of us of how strong leadership in Ratan Tata and his team, can inspire a dedicated staff to almost superhuman efforts in overcoming traumatic and tragic events by moving decisively and determinedly to reopen the Taj Tower and work on restoring its heritage wing to its former glory.

There are lessons to be learned for all of us, including the Chief Commissioner of the New York police, Raymond Kelly, who sent a team to Mumbai and who stated (see article below) ‘we sent people to Mumbai, we got very specific information as to what happened there. We will make some adjustments that the public may not see. We have learned from Mumbai.’

What can our industry learn from this? Quite a lot, however bad things get, and they are certainly very bad at present, the determination and resilience of the Taj serves as an inspiration to us all in learning from our mistakes and facing the challenges we must overcome with confidence and quiet determination.

Above Sunny & Krinal

PLEASE CLICK ON IMAGES FOR AN ENLARGED VIEW

Our Session with City of London Police Tactical Firearms Unit

2008-12-19T16:42:00.003Z

On 26th June this year Mily and I attended a fund raising dinner in aid of the Bowel Disease Research Foundation of the Association of Coloproctology of Great Britain and Ireland. It was held at the Royal College of Surgeons of England, and the event was appropriately named Bowel Action, Midsummer Evening.

Although, it had an undeniably serious theme, it turned out to be a most enjoyable event and with a solid list of corporate sponsors and guests, succeeded in raising a useful sum for the charity (which is very much the poor cousin in relation to Breast Cancers capacity to mobilise support and attract funds).

As is usual in these events there was the usual raffle with some appealing prizes donated by sponsors, as well as an Auction of Promises. One of which was the session with City of London Tactical Firearms Group which we successfully bid for, hence our visit to Bishopsgate Police Station in the City of London this week, where we gained fascinating insights into the world of this dedicated force, who are all that stand between us and the mayhem and destruction of the terrorist menace, aimed at destroying all that is most dear to us.

Having recently been exposed to the terrorist attacks on Mumbai, one is all too aware, that there is only one way to protect the public against such atrocities, and that is the armed and immediate response, of such highly trained elite units.

While seeing the weapons and tasers was undeniably fascinating, the thing that most struck us all was the very fine line these officers have to tread between taking decisive action to protect the public, and not causing further loss of life inadvertently, such as in hostage situations and how their training is all about taking instantaneous action in the most extreme, confused and threatening of scenarios.

We would like to pay our respect and express our gratitude to these highly trained, motivated and professional units for the dangerous work they do on our behalf in the City of London and pay tribute to their equivalent forces around the world.

Please click on image for an enlarged view

BELGIAN-CUT DIAMONDS AND POLISHED PROVENANCE

2008-12-17T18:04:00.012Z

I was interested to see an ad in the Indian Vogue for a high profile Indian jewellery retail chain owned by perhaps the most prominent Antwerp based Sightholder. The ad makes a particular point about their diamonds being Belgian cut, although it is not specific whether it relates to the quality of the cut or the provenance of the cut.

If we are talking provenance here it seems somewhat unlikely, given the reality of the ratio of high quality polished production manufacturing between Indian and Belgian polished, that more than a small minority of the diamonds set in their jewellery brand are actually polished in Belgium.

While one accepts that copywriters often pander to consumer perceptions (or misconceptions) this raises a pertinent question as to whether making claims based on where diamonds are polished is actually a good idea, when transparency in rough to polished diamond auditing is the cornerstone of consumer BPP protection.

If a diamond is polished in Botswana or Canada, does it confer on that diamond some sort of moral ascendancy over its Indian or Israeli counterparts, I don’t think so. Surely the whole point of Forevermark is that it is a guarantor of three things – legitimate provenance, internationally accepted technical parameters and the fact that the diamond has been extracted in its natural state and not created or enhanced in a laboratory.

One can fully understand why Belgian chocolatiers want to differentiate their premium product from Cadbury or Hershey bars or why the French champagne producers successfully prevented sparkling wine producers of foreign denomination describing their product as champagne because they have genuine quality and provenance issues which have to be respected to protect the integrity of their brand provenance.

In the past a diamond’s provenance was indeed quite often indicative of polished diamond quality and finish. That is certainly no longer the case, and while some still talk fondly of the illusion that relates to polished, it is a term I have never cared for, even less so in an industry that now prides itself on its transparency.

What about the New York polishers, who although relatively few in number can certainly claim to be some of the most skilled in the world?

In India the term ‘American diamond’ is a complete misnomer and continues to be used to describe cubic zirconium or other diamond substitutes. (If you don’t believe me, refer to http://www.astroshastra.com/gemstore/diamond.asp )

STERLING CONCENTRATES ON ITS CORE BUSINESS

2008-12-12T15:28:00.001Z

On my return from India I was catching up on my favourite blogs and trade magazines and saw Rob Bates’s piece on his excellent JCK blog (a must for anybody who is seriously interested in the US industry) commenting on an announcement from Sterling saying that it was withdrawing completely from its rough procuring and manufacturing activity.

A lot has happened since they announced a few years ago that in line with SoC they were going to incorporate rough manufacturing into their corporate activity. In fact I remember at the time there was a good deal of concern amongst Sightholders, given the DTC’s almost obsessive interest in downstream retail activity, that this would have serious implications for themselves given the weighting of the assessment process in favour of marketing rather than technical manufacturing skills.

However, the only good thing you can say about recessions is they do tend to give a sharp reality check to some of the more delusional and over ambitious concepts that gain favour in strong markets.

Who remembers, except a few diamond brokers of the late Jurassic period, that Zale were once Sightholders for several years, and so were Tata. Neither of these prestigious and successful companies were able to add value to their core businesses but it did take them a while to discover that diamond manufacturing is an activity best left to diamond manufacturers.

Taj Mahal Palace & Tower Hotel Will Rise Again

2008-12-10T12:19:00.004Z

Flying back from Mumbai on Sunday 7th Dec, I was pleased to see a full page statement in the Financial Times which I think will be of interest to anybody who has enjoyed the hospitality of this iconic hotel so much part of Bombay’s history.

Click on the image for a larger view.

JODHAA AKBAR

2008-12-08T12:19:00.003Z

Since the Mumbai terrorist attacks on 26/11 Mily and I stayed on in Mumbai waiting to see if passports and personal effects might be recovered from the room we fled from.

In the meantime, the exceptionally kind and hospitable extended family who had taken us in since 26/11, ever solicitous of our comfort thought we might enjoy to view a DVD of a recent Indian box office blockbuster entitled Jodhaa Akbar, a beautifully realised love story starring Aishwarya Rai as the proud and beautiful Rajput Hindu Princess and Hrithik Roshan portraying the great Mogul Emperor Akbar and also starring stunning diamond jewellery by Tanishq, one of India’s most prominent and creative retail jewellers.

While the film is a romanticised and certainly fictitious version of events, its central theme of the wedding alliance between the Mogul Emperor and the Rajput Princess is true in that its political, military and social ramifications were a significant and deliberate attempt to reconcile Hindus and Muslims in the interests of a greater Hindustan.

Throughout the history of the world the terrorists and their historical antecedents have always targeted centres of prosperity, learning and culture, where men of different religious convictions and traditions respected and accommodated each other.

The beautiful city of Toledo in Spain, for a time a centre of Jewish, Moorish and Christian learning, is well worth visiting. As is the deserted city of Fatepur Sikri near Agra, where Akbar encouraged debate on the basic premise of religion between representatives of all the major religions in his empire, Hindus, Muslims, Christians, Jains and Zoroastrians [Parsees] is also a city that should be combined with a visit to the fabulous Taj Mahal.

Having watched the DVD I revisited a book based on Michael Woods, the British historian and broadcaster’s, television documentary series on the history of India and I was fascinated to read his description of Akbar and I quote “he had a very unconventional intellectual capacity, a fantastic memory and a brilliant ability to think (as management-speak puts it today) ‘outside the box’. When we see the disasters brought on by lack of flexible and imaginative thinking today, it’s clear that Akbar’s leadership skills surpassed anything displayed by most modern world leaders. Akbar, of course, had been brought up to survive in the real world.”

Finally, I’d like to end on a note which I think anybody who is a regular visitor to India will attest to, again from the preface of Michael Woods’ book

“I leave the last word to the fourteenth-century Indian poet Amir Khusro: he was a Muslim, he wrote in Persian, and his ancestry was Turkic, but he counted himself the luckiest man alive to have been born in India, and to have India as his motherland.

How exhilarating is the atmosphere of India!
There cannot be a better teacher than the way of life of its people.
If any foreigner comes by, he will have to ask for nothing
Because they treat him as their own,
Play an excellent host and win his heart,
And show him how to smile like a flower.”

DTC Business Review Meetings With Sightholder/ Partners Mon 24th - Wed 26th Nov

2008-12-04T11:10:00.007Z

So much has happened in Mumbai since the terrible attacks on the city commenced at about 9.30 on Wednesday night, that I really have to concentrate very hard to recall the exact details of what we were doing before that fateful evening, and there is a sort of sinister fire wall in my mind that divides activity before and after 26/11/2008.

However, I do remember that on the morning of Monday, 24th November, bright and early, we got straight into the meetings, with frank and useful exchanges of views between Sightholders and DTC, identifying and discussing the multiple and problematic issues confronting the trade and industry, and what needed to be done to address them effectively.

On Tuesday, the 25th, even earlier, and rather less bright, we took the 06.25 AM departing Shatabdi Express to Surat to attend a further six DTC Sightholder meetings scheduled for that day.

I wrote in my Blog of 5th June 2008, that Mahiar Borhanjoo had, in my view, the skills and potential to make a very remarkable Sales Director, and the fact that that he did not come to us from the usual diamond trade route, could be a distinct advantage, if he brought to the industry a much needed clear perspective and the energy required to make a real difference.

I am pleased to report that the meetings in Surat left the clients impressed with Mahiar's excellent communication skills, eloquence, quick intelligence and the genuine warmth, respect and empathy which transforms a routine meeting into an inspirational and positive one.

Surat clients were heartened to meet from DTC, a senior executive who seems to acknowledge and recognise the importance of Surat to our industry, rather than simply taking it for granted.
Lastly it would be quite wrong for me not to mention the dedication of the KAM's, who I think like us brokers, have really struggled particularly with some of the more esoteric and absurd aspects of SoC while trying to promote the positive ones.

There have fortunately been very few bad pennies amongst the KAMs, and those that were, have all been moved or have moved on, as well as several good ones who left of their own accord.
Generally speaking, the KAMs are personable, hard working, dedicated and have an appropriate level of experience and I must say my colleagues and I enjoy working with them, almost as much as we enjoy working with our own clients.

New York - Mumbai, the aftermath

2008-12-02T10:55:00.008Z

In December 2001, 3 months after 9/11, I took my wife, Mili, & our 3 daughters, Jessica, Rebecca & Rachel, to New York for our Christmas-New Year Holiday.
Why? Because like all normal families the world over, we find the attractions of New York very difficult to resist. The architecture, the museums, the restaurants, Central Park and of course, its renowned shopping as well as irrepressible energy of the city (just like Mumbai).

But there was another deeper reason - we needed to be there. We needed to express our solidarity with its people who share so much of our history and values and who needed our support, both moral and financial.

Just like Mumbaikars today, New Yorkers were shaken, bloodied, angry, disorientated and worried about the future of this great city and fearful of the next attack. Its administration and police on the highest state of alert, anticipating further outrages during the New Year celebrations.

We stayed in a rather nice little boutique hotel, the Muse, just off Broadway, opposite Times Square. Never have we been made to feel more welcome in New York than we were then in Times Square watching the celebrations and Mayor Giuliani hand over to Mayor Bloomberg among some of the tightest security New York has ever witnessed. In fact, the security cordons were so tight that we found ourselves unable to return until we were rescued by one of "New York's finest", who escorted us personally back through the police cordons to the Muse and refused my offer of a celebratory drink as he was still on duty.

PLEASE CLICK ON IMAGE FOR ENLARGED VIEW

Sharookh, Vinod Kuriyan, Mily and I went to the Four Seasons in Mumbai yesterday for the firsttime to check it out in view of the fact that those favourite hotels of so many, the Taj and the Oberoi will definitely not be receiving any guests for a few months at least. We can report to you that there was rigorous security at the hotel and in fact, no one was admitted without careful security checks. There were a lot of TV reporters and camera crews in evidence and the only other people in the restaurant was Nik Gowing, main presenter of BBC World News, who was grabbing a quick lunch. We took the opportunity to congratulate him on the BBC World coverage and indeed watched the reports that went out last night. However, I must say I was shocked to hear the terrorists who attacked the hotels described as 'militants'. If these were militants, then I just pray to God, I never meet a terrorist. How sad that the BBC that is respected throughout the world, should resort to such lame , political correctness.

For those of you who are worried that there is no suitable alternative accommodation in Mumbai while the Taj and Oberoi are closed for renovation that, of course, is not the case at all. There are a number of excellent 4 and 5 star hotels and the following are all easily accessible (less than half an hour from the Opera House diamond area). Here are the links to a few of the leading Hotels.

Four Seasons
Intercontinental
Taj President
Marine Plaza
Holiday Inn
Taj Lands End
Searock Sheraton

Mumbai has supported you and your business in the past and never has it needed your support more than today. If you are still worried about traveling, several of the leading Indian diamond companies now have completely interactive B2B websites and can provide you with all the diamonds and jewellery you need.

Mumbai battered, bloodied, brave and unbowed.

2008-11-28T13:32:00.004Z

My wife and I were staying at our favourite hotel, the historic Taj Mahal Palace and were in our room at the time of the terrorist attack.

We would like to pay our own personal tribute to the Hotel Staff, some of whom died at the hands of the terrorists doing much more than their duty required, trying to protect the guests. The same applies to the Mumbai Police, the Anti Terror Squad, the Navy Commandos, the National Security Guards and the Fire Department.

The fact that 3 of the senior most officers in the Mumbai Police Force, Hemant Kakare (ATS Chief), Ashok Kamte (Additional Chief of Police) and Vijay Salaskar (Encounter Specialist) were shot dead by terrorist gunfire, shows how extraordinarily courageous they were in responding to the multiple terrorist attacks of unprecedented ferocity and cruelty on the city - the Railway Terminal, Hospital, the city's 2 leading 5 star hotels and Nariman House.

I would also like to thank the Diplomat Hotel, behind the Taj Mahal hotel, and their staff who took us in and gave us sanctuary when we escaped down the fire escape from the burning old wing of the Taj.

Those who have been watching all over the world the unfolding events in Mumbai with mounting horror at the inhumanity and stupidity of these misguided, indoctrinated fanatics will have, I'm sure, noticed the quiet deliberation and determination of the security forces led now, in the final stages, by the NSG Director General, J. K. Dutt.

As I am writing this, Army and Navy commandos are still in what we hope are the final stages of neutralising the remaining terrorists in the 2 hotels and Nariman House. While the Indian forces have an approach that may look different to the British and American, they are certainly, in their own way, quite effective and just as courageous when under attack. We should salute them not only for their courage but their quiet determination in handling the extraordinarily difficult hostage situation that evolved. The fact that the hostages have been released is testament to their exceptional ability and dedication.

Finally, once again, our Sightholder Partners in Mumbai have proved that the relationship we have with them goes way beyond business, important though it undoubtedly is, and is one of true friendship to both the DTC and Brokers, taking us into their homes and looking after us as if we were family and indeed we are.

IT’S A FUNNY OLD WORLD!

2008-11-17T11:23:00.002Z

To borrow the phrase an unusually emotional Mrs Thatcher (undoubtedly one of Britain’s great Prime Ministers) uttered on leaving No 10 Downing Street, having been deposed by her own Conservative party for having ‘lost the plot’.

Only a few months ago speculation was rife in the British media that Gordon Brown would suffer the same fate at the hands of his own Labour party, following an extraordinary display of vacillation and political ineptitude over the calling of the next British general election.

As ‘Iron Chancellor’ to Tony Blair’s Prime Minister, ‘our Gordon’ became famous for his dour Calvinist Scottish obsession with government fiscal rectitude (while practising the opposite). He was equally famous for his defence of a policy of ‘light touch’ regulation of the city of London’s financial sector, and until quite recently resisted German Chancellor Angela Markels urgent calls for a co-ordinated regulatory framework of financial markets, much to her irritation.

Can this be the same man who is now being hailed as a hero for rescuing the British banks (he had no choice!) and having rediscovered Keynesian economic theory is now on a self-appointed mission to promote the co-ordinated fiscal stimulus package announced at the G20 summit in Washington as well as the co-ordinated international financial regulation agenda also announced (they have no choice!).

But, hey, who cares if it works and confidence is restored and the wheels of industry and commerce start turning again. As for Gordon Brown the British public look forward to giving their own verdict on him at the next general election.

Dear reader, I can almost hear you say ‘very interesting, what possible relevance has all this to the currently very serious situation in our own industry?’ My reply to that is everything because it is the world economy that’s the problem and it’s the G20 meeting and what follows that will determine what happens in Prasad Chambers, Pelikanstraat and 47th Street, although responsible leadership of our industry continues to be essential.

In the meantime, we must stand firm and believe in our supremely desirable product and ensure that the power it exerts over the consumer is not compromised by any actions we take collectively, or individually, in addressing our current situation.

Let’s just be cool and cautious, believe in our product and our future, and reassess the situation and move ahead accordingly in the New Year.

LUXURY BRAND ADVERTISING

2008-11-10T18:01:00.009Z

Following the DTC’s presentation of the impressive and doubled generic advertising campaign for the US market shown to Sightholders last week, I thought I would see for myself what the luxury brands were doing to promote and defend their own very important segment.

On Saturday I went into my local newsagent and purchased the Christmas issues of 3 leading UK ‘glossies’ Vogue (UK edition), Bazaar and Tatler. I am pleased to report that both publishers and advertisers are doing a terrific job of promoting diamond jewellery in particular and the diamond dream is very much alive in sparkling, imaginative diamond features and luxury brand advertising (as enticing and seductive as lingerie ads) featuring a range of creative diamond jewellery designs of unsurpassed beauty and variety.

Yes, there are of course some precious stones and a pearl or two amongst the overwhelming quantity of diamonds but, as we all know, a precious stone can often be a diamond’s best friend.

If you don’t believe me, go to your nearest newsagent, be it in Mumbai, New York, Tokyo, Milan or Atlanta Georgia, buy your own Vogue and other luxury magazines and see if that doesn’t make you feel a little better about the endurance and power of the diamond dream.

Let’s get one thing absolutely clear, if the consumer does not buy this season it will certainly not be for any lack of choice of differentiated and beautiful products and imagery and hopefully the luxury brand segment will be supported by the DTC’s generic campaign, providing a rationale in tune with the current ‘zeitgeist’, as David Lamb said it’s all about the enduring quality of diamonds and love.

I think where the DTC’s advertising may well connect with the consumer is that by giving diamond jewellery in tough times to loved ones (or even your wife!), the message is that you want all to be right within her world, even if the rest of world is in a bit of a mess at present.

HONEST BROKERS

2008-11-10T17:58:00.001Z

I’m sure DTC brokers don’t need to be reminded that, given the exceptional and major challenges facing the market in the short term (and long term if we enter a fully extended, global recession), is that we need to be in exactly the same leadership mode that Gareth Penny referred to when speaking of DTC and Sightholders at the Sight.

In fact, you could argue that brokers, given their unique experience and knowledge of the clients’ business, have an even more critical role to play at this juncture because it is only by protecting our clients individually and collectively that we will get through this. The only way really to do this is for the brokers to ensure that honest, open and frank dialogue informs the interaction between the DTC and Sightholder at every stage. That, after all, should always be the role of the broker and (to borrow a DTC phrase) is what a ‘dynamic triangular relationship’ has to be.

VILAS RAJADHYAKSHA

2008-11-07T16:32:00.001Z

Congratulations and respect Vilas, for 30 years service to the DTC, the clients and the industry.

Here’s to the next 30 years!

CHANGE HAS ARRIVED

2008-11-05T13:40:00.001Z

I may be an old so and so but I have 3 beautiful daughters and I’m even happier than they are about Obama’s victory and what it means to their future (and what’s left of mine).

It is not only very good news for the US but quite evidently for the whole world that a truly inspirational figure has emerged and the world’s most powerful and influential nation has an opportunity to reconnect with the rest of the world.

The word transformation is often overused but not in this case. The potential really is there and has never been more needed following a US administration who suffered from a delusion that military power alone makes you master of the universe.

Will this help our business?

Undoubtedly, if America regains its confidence and a sense of unity and purpose and has an inspirational President to fulfil aspirations, that can only be good for the rest of the world and show up the bad guys for who they really are. Having said that, the challenges facing Obama and his administration will be immense and the expectations will be difficult to live up to.

JOURNEY

2008-11-05T13:39:00.001Z

Why was the ‘Journey’ jewellery concept so popular? Because everybody recognises that life is a journey with ups and downs, trials and tribulations and that we are constantly tested, however successful we may be.

This Sight seems to be one of those events in the journey when a sense of perspective needs to be retained, that isn’t to say people should be irresponsible or put their businesses at risk (Gareth made that quite clear), but the points Gareth made in his presentation to the clients were absolutely valid and he is right to assert that if the DTC shows leadership, so should the Sightholders.

One feels that this particularly applies to those who have benefitted most in recent years. You can’t claim a leadership role if you are not prepared to walk the talk when the going gets tough because this is a journey that ultimately we all take together.

NOBODY DOES IT BETTER

2008-11-04T17:05:00.002Z

As expected, the DTC presentation this week at the Sight was professional, inspirational, vintage DTC doing what they always do best in a crisis, the classic generic advertising which they invented and basically own.

The campaign for the season cleverly repositions the diamond message and what it represents with a softer voice and the emphasis on ‘fewer better things’ at the heart of the campaign.

Nobody is better than David Lamb at explaining the uniquely creative process and meticulous research that gives their team and JWT the insights into the consumer psyche which results in those beautifully crafted and extremely effective TV and print campaigns.

Although the DTC has doubled their budget for the US season just imagine what could be done if this campaign was extended into other markets.

Isn’t it time for all producers and the industry to admit that when it comes to generic advertising for diamonds there is no point in reinventing the wheel and acknowledge that the DTC is ‘simply the best’ and that they should find ways to work together. That’s the sort of beneficiation that we really need urgently and everyone should sign up and support!

BACK TO BASICS

2008-10-30T17:38:00.000Z

One of the most important lessons that I think we’ve all learnt from the dramatic and worrying economic scenario that has enveloped the whole world is the basic truth that if it’s too good to be true or too clever by half it risks undermining the honest endeavour that actually makes economies work and gives human beings real satisfaction.

The ‘masters of the universe’ are in full retreat and we’ve seen their style of operations in all businesses, including unfortunately our own.

I’m looking forward to the presentation at the DTC next week with regard to the advertising plans for the season, because I’m sure the plans will be focussing on the human relationships that bind us and the powerful symbolism that diamonds represent in relation to the basic values that give our lives meaning, empathy and love.

One of the things that I have most admired in all the years that I have been a broker working closely with the DTC is the wonderful human and emotional values that have underpinned the most effective and creative of all their advertising, and no other producer has shown even the slightest signs of capturing that creative spirit and genius.

Surely it is not too late for the DTC to look at themselves in relation to whether they have lived up to the relationships with some of their existing clients and ex-clients who have served them well in the past and could have been treated with more consideration and generosity, in the interests of themselves as well as the clients.

Are we worried about the situation? Yes, of course. Will things get better? Yes, of course. Are we being realistic? We certainly hope so. What is realistic? Not sure at present, but who is. However, if Obama is elected next week I wouldn’t be too amazed to see stock markets surge throughout the world and a mood that will lighten the gloom and doom even though the damage to the real world economy won’t be so easily repaired.

“EVERYTHING IS IMPOSSIBLE, UNTIL IT BECOMES POSSIBLE.” (Spanish banker quote, FT today)

2008-10-16T15:01:00.005+01:00

In the now all too real world, as we have seen in the last two weeks and are likely to see in the next few weeks, this quotation neatly encapsulates a basic truth.

One of the reasons that the world economy got itself into such a mess is “that the masters of the universe” don’t normally have a plan B. Its plan A (or bust)! Based on the certainties of their own understanding of the universe and superior intelligence. When wiser councils, warnings or alternative plans or scenarios are offered, they are inevitably characterised as unduly pessimistic, old fashioned or irrelevant.

Rigid systems based on theoretical models which are not modified when found to be deficient, whether they be in distribution or marketing, are based on assumptions about markets and individuals behaving rationally and in a coordinated and easily controllable way. Anyone with experience knows that is never the case in really difficult times.

Yes, all businesses and industries need to have rules and structure and as much predictability as possible. If however systems are claimed to be infallible or placed on an intellectual pedestal that ignores reality, that is a clear case of thinking “inside the box” and is nothing to be particularly proud of.

“IT’S THE (GLOBAL) ECONOMY, STUPID!”

2008-10-09T17:20:00.007+01:00

Either I’m a bit of a contrarian or possibly a bit ahead of the curve but I’m feeling somewhat more optimistic this week than I was last week, in spite of all the gyrations of the world’s stock markets. Why? Nothing galvanises politicians into bold and decisive steps that might actually address the problems more than when their own jobs and (what’s left of) their own reputations (as well as bank balances & pensions) are on the line.

Masterly inaction is alright up to a point, especially when you actually don’t really know how big the problem is or what to do about it, but that luxury is no longer a consideration when the global economy is staring into the abyss and the prospect of the real global economy entering a prolonged recession which would have very few winners and plenty of losers.

This political dimension is all important to the restoration of confidence and it’s hardly surprising that the global repercussions of uncoordinated action have already been felt from Buenos Aires to Moscow and everywhere else in between. Politicians are now trying to cohesively to avoid disaster and introducing measures that are so bold
(or desperate) that just weeks or even days ago would not have even been contemplated.

How does this affect our business? Well, of course, we are as much a part of the global economy as anybody else but we do need to keep cool and not panic, after all we don’t have a share market or diamond futures commodities market, but we do have Diwali coming up, which will be a nice natural break before the US election and the Christmas season.

Back to political leadership and quotations, one is reminded what that great US President Franklin D Roosevelt said at his inauguration on 4th March 1933 in the middle of a bank panic during the great depression “The only thing we have to fear is fear itself.” I believe most Europeans feel as I do, that what we need now is another great democratic leader, let’s hope Obama gets elected and that he has the qualities that will take the US and the world economies forward as we certainly can’t afford any Herbert Hoovers.

Talking of fear, are we not reaching the point where the fear/greed equation starts to lean towards greed (fear of missing out on a stock market surge) and the mavens and pundits of Bloomberg and CNBC can be counted on to provide the markets with the commentary which will determine how things evolve in the both the short and long term.

TURBULENT TIMES

2008-10-02T17:15:00.003+01:00

What a roller coaster of a ride the world economy is going on, exciting at times but mostly rather scary. The financial markets are waiting for an American rescue package to restore confidence to world markets and financial institutions and indeed now the man in the street is increasingly worried about the effects on the real economy.

The diamond business has enjoyed the years of unprecedented spending and borrowing which in some cases has encouraged irrational exuberance in our industry, like so many others.

In good times an auto-pilot system can run smoothly, however, in turbulent times you want the reassurance that the captain is at the controls, vigilant and ready to react.

It has always seemed to me that the real challenge for management is being seen to be firm in resolve but, like a good pilot, flexible and alert enough to make sure that the passengers and crew get to the destination relatively unscathed.

Having been in the industry for a while now I have experienced a few bumpy rides and we had our very own crash in the early 80s which had devastating consequences for the industry and a number of leading companies didn’t survive, those who did were left to rebuild the business slowly and cautiously.

However, we must not forget that the economic environment today is totally different in the world and in our business. Globally people have become wealthier through dramatic political, economic and social change. Our industry has benefitted hugely from this increase in disposable income and despite the doom and gloom most of the industry should in fact be well placed to successfully weather the difficulties ahead as long as we work closely together and have confidence in each other, against the background of an improving world economic scenario when it comes, as it most certainly will.

AWARDS CEREMONIES

2008-09-23T17:08:00.011+01:00

Congratulations to our good friends and clients

Kiran Gems Pvt. Ltd., Mumbai
Sanghavi Exports Intl. Pvt. Ltd., Mumbai
Sheetal Manufacturing Co., Mumbai
C. Mahendra Exports Ltd., Mumbai
Godhani Gems, Mumbai
Renaissance Jewellery Ltd., Mumbai
Sanghavi Diamonds Inc., New York
R. A Gem Centre Ltd., Hong Kong
Kiran Exports BVBA, Belgium

all of whom have been honoured at the 35th GJEPC Awards ceremony in Chennai.

The export of polished diamonds from India is, of course, hugely significant to the Indian economy and also quite obviously to the producers and mining companies who rely on India to buy their product, polish it and market it. There is nothing like a huge volume production to focus your mind on what needs to be done to market the polished you produce, and nobody does it better than the Indian industry in terms of value addition.

Everybody loves an awards ceremony, the Oscars and Bollywood, it’s true, have more glamour and worldwide attention but these awards are important, whether they are sponsored by the GJEPC or its Israeli equivalent because you have to be doing an awful lot right to achieve sales of the magnitude that these winners have been recognised for. It’s not just about performance because, as we all know, performance without service is very short-lived. The film stars shoes may be created in Italy and the ball gown in France, but the bling comes from Bombay (and Surat!).

Unfortunately it is a long time since I attended this awards ceremony, and I regret that, because they definitely are important and I think these days under-recognised. Next year Sharookh and I will definitely be there (as long as it’s not Sight week) and it would be nice to see some senior management from the DTC giving the event some support and recognising real performance, rather than paper pledges. Conferences dedicated to mines and marketing seem to be the popular choice of Gareth and Varda and, while these events are sometimes interesting, a little bit of extra encouragement and DTC recognition for India’s manufacturing exporter heroes would, in my view, be very appropriate and is long overdue.

KIRAN GEMS

SANGHAVI EXPORTS

SHEETAL MANUFACTURING CO

C.MAHENDRA EXPORTS

GODHANI GEMS

RENAISSANCE JEWELLERY

X FACTOR

2008-09-05T12:55:00.000+01:00

I am certainly not alone in being an absolute sucker for the X Factor and all the other talent shows which captivate audiences throughout the world. Why do we all enjoy them so much? For me, it’s very clear that we are all fascinated by the good, the bad and the ugly and nurturing raw talent is something which we can all identify with because it is hugely satisfying. You can almost feel the excitement of the judges when, having sat through a mountain of awful acts, they suddenly come across the diamond in the Kimberlite.

These programmes would be nothing if it were not for the human interaction which makes them so compelling. As a broker, Sharookh and I have also, over the years, derived great satisfaction from meeting entrepreneurs who we recognised as having real talent and subsequently introducing them to the DTC who eventually shared our view. It does seem extraordinary to me that in the last assessment process almost everything was computer based and, as far as I know, the sales director had no role in the assessment process and only got to meet successful applicants when they had already been accepted as Sightholders.

Am I alone in finding this very strange and a little disturbing? Not if the viewing figures of the X Factor are anything to go by. If the auditions were performed in front of a computer and a panel of lawyers, I don’t think the show would have been a great success!?