Shmuel Schnitzer, chairman of Israel Diamond Institute (IDI) and Yoram Dvash, president of Israel Diamond Exchange (IDE) have recently talked to Hong Kong Jewellery over the big issues concerning the global diamond trade and the Israeli diamond industry.
HKJM: Hong Kong Jewellery
SS: Shmuel Schnitzer
YD: Yoram Dvash
HKJM: What is the most pressing issue in the world’s diamond industry?
SS: Profitability. Over the last five years, diamond manufacturers could not make money. The price of rough diamonds was too high, and polished prices didn’t keep up. At the beginning of 2016, the big producers namely Alrosa, De Beers came to a conclusion that they had to correct something concerning the pricing policies. And they did. Hopefully, the prices will now be a little bit normal.
HKJM: How about in Israel?
YD: Firstly, we have many of the younger generation of diamond exchange members joining the industry. Secondly, being affected by the world problems, we have tried to hold more shows in Israel and build new facilities for our diamond polishers.
SS: Our main mission is to promote diamond manufacturing in Israel. We manufacture close to US$2.5 billion worth of diamonds which is a substantial amount. We believe Israel can be a strong diamond manufacturing centre only if we polish a substantial amount in Israel. This is the main effort we are dedicated to as the goal for this year and the coming years.
HKJM: How do you convince people to manufacture in Israel instead of in other cutting centres with lower operation costs?
YD: For big stones of 10 carats and up, labour is not such an issue. Most of the companies in Israel manufacture big stones. You have to remember when we manufacture in Asia, Thailand or wherever, we have the shipment and insurance costs and it also takes much more time.
SS: We manufacture the medium to higher quality stones. For this range of stones, even if you cut them in India which is known for cheaper labour, they pay almost the same as us. Only for the very very small stones, one to six points, where the costs of labour are dominant, it is justified to polish in Thailand, China, Russia, etc.
HKJM: Most of the IDE members are dealers. How do you help them?
YD: You are right. Israel is one of the biggest diamond trading centres. We have launched the International Diamond Week in Israel for four years now, which is a great opportunity for us to bring customers from all over the world to Israel. Besides doing business, they make connections with our members as well.
HKJM: Are synthetic diamonds still forbidden on the IDE trading floor?
SS: You can’t prevent people from dealing in synthetics. You can sell synthetics in the building or in the offices. But we have our rules on the diamond trading floor which is only for natural diamonds. We’re not trying to prevent synthetics; one-hundred-percent full disclosure is the main issue. If people know what they’re buying, they can make their choices. Synthetics don’t worry us because we believe 99 percent of customers prefer natural diamonds. By the way, we don’t call it ‘synthetic diamond’. A diamond is natural. Synthetics are a different product.
HKJM: The diamond trade has been in a quest for an effective generic marketing initiative to reinforce the appeal of diamonds. How is the situation now?
SS: Several years back, big diamond producers such as Rio Tinto, De Beers and Alrosa had stopped donating money for the promotion of diamonds. De Beers alone had dedicated US$200 million per annum for generic marketing campaigns. Designer bags, mobile phones and the tourist industry, everybody is working on promoting itself. Nevertheless, seven member companies of the Diamond Producers Association (DPA) have recently donated US$6 million for generic marketing. What we are doing is not only for our generation. The marketing initiative aims to reassure the younger generations of the appeal of diamonds for women, it is part of their being. We want to make people understand that everybody can afford diamonds.
HKJM: How is the impact of Internet on diamond sales?
YD: We have more than 200 members who have learned how to use the eBay system and opened stores with eBay. We’re the first bourse in the world to push our members to work with the Internet. At eBay, the bestsellers in Israel are diamonds and jewellery.
SS: Though selling online is not fully a trend yet, it will be a big trend in some years’ time. At present, twenty to 25 percent of diamonds in volume are sold online. Internet is also a good marketing tool.
HKJM: The market was slow last year. What’s your outlook for 2016?
SS: I think we have a good chance to see a better year for the diamond business. From a supply point of view, rough production will be lesser by 20 percent because big producers have declared smaller production scales which helps keep the prices of polished up and regulate the market. In terms of demand, we see a better demand worldwide, mainly from the American and European markets. In the Far East, we hope situation will be better when China market improves. Her slowdown is temporary.
YD: We are waiting for the trade giants to make a few more steps. The American market is okay. Europe is more stable now. China will be growing again. We’re sure that our industry will be growing too. (Photo courtesy: IDI)
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