JEWELLERY EDITORIAL

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2015/07/29

The upper crust of Middle Eastern society has a well-documented appetite for luxury purchases. Travel out to the retail Mecca of Dubai and you’ll find it packed with malls of gargantuan proportions, all bursting with concept stores from the world’s biggest brands, as well as local family-run businesses stocking elaborate goods.
 

In this affluent retail culture, jewellery is a natural fit and as such the UAE is in the top five global markets for gold jewellery consumption, with the Middle East Gems and Jewellery Forum estimating that sales of gold jewels in the region are worth US$2.5 billion. The Middle East also now has a number of prominent jewellery shows including the annual Doha Jewellery and Watches Exhibition, which attracts the likes of Cartier and Graff, while Jewellery Arabia put US$790 million of jewels on display in November, and Vicenza Oro launched a Middle Eastern version of its show in Dubai in April.

 

A ruby and gold Egg bracelet by ethical jewellery champion Pippa Small

A ruby and gold Egg bracelet by ethical jewellery champion Pippa Small

 

And in the malls and on the city streets, jewellers enjoy showing off with outrageous precious creations, such as the solid gold replica of Dubai landmark the Burj Khalifa made from 22.65kg of 18ct gold by craftsmen at the city’s Malabar Gold & Diamonds store. Other recent oddities include a Lenovo Yoga 3 Pro laptop made with a solid 9ct gold case, temporary tattoos made from 24ct gold by Marbella Paris and sold at Dubai hotel Burj al Arab, and Halal alcohol-free sparkling wine brand Lussory Gold, which is infused with flakes of 24ct gold and sold at Bystro Dubai.

 

iKuria worked with recycled gold for its Age of Discovery Collection

iKuria worked with recycled gold for its Age of Discovery Collection

 

But in the midst of all this excess and expense, could a more ethically minded luxury consumer be emerging in the Middle East? According to research released by Chalboub Group, a consultancy that advises brands venturing into the region, only 35% of luxury shoppers in the Middle East take sustainability into account when making purchase decisions, however 83% of those asked said that they expect the companies they are buying from to be proactively engaging in sustainable practices.

 

Cred is a pioneer of the ethical jewellery industry working in gold and silver

Cred is a pioneer of the ethical jewellery industry working in gold and silver

 

And perhaps this should not come as a surprise. After all, the region is home to two of the world’s largest eco cities – the low-carbon, zero-waste Masdar City in Abu Dhabi and the Desert Rose in Dubai.

 

Chopard has created a green carpet collection of ethically created high jewellery

Chopard has created a green carpet collection of ethically created high jewellery

 

More questions being asked by luxury jewellery consumers in one of the world’s biggest jewellery markets could lead to an increase in demand for jewels made from Fairtrade Fairmined gold or set diamonds from Canada, for example, where the environmental impact from mining is reduced. While the region will no doubt hold on to its love for all things bling, any luxury jewellery brands looking to do business in the Middle East should take this into account and have answers at the ready, as well as sustainable and ethical options available for these inquisitive, socially-aware shoppers with deep pockets, because it seems they are out there.

 

Arctic Circle works exclusively with Fairtrade gold and Canadian diamonds

Arctic Circle works exclusively with Fairtrade gold and Canadian diamonds

 

Ute Decker creates unusual jewels in Fairtrade Fairmined gold

Ute Decker creates unusual jewels in Fairtrade Fairmined gold

 

 


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2015/07/29

The two largest diamond companies in the world each reported a decline in rough diamond sales due to a slowdown in demand from manufacturers and consumers.
 

De Beers, the world’s largest diamond company, said sales in the first-half of the year totalled $3 billion, a year-over-year decline of 25 percent.
 

“It can be explained pretty easily,” said Philippe Mellier, Group CEO of De Beers.

“The rough demand was weaker because the demand at the end of last year and the beginning of this year for diamond jewellery was weaker than anticipated.”

 

As a result of this decline, the diamond giant announced recently that it reduced its production by 6 percent year-over-year in the second quarter of 2015. 

 

Diamond Demand Continues To Decline

Diamond Demand Continues To Decline

 

“We had to trim down production a little bit. We worked on our costs … We tried to minimize the impact on profit. But despite all of that, we have seen our revenue decline versus last year and also our profit decline.”


Diamond manufacturers are practically demanding that De Beers cut its prices for rough diamonds. De Beers so far has refused. Instead it reduced the amount of diamonds available for buyers at its last sight as I reported a couple weeks ago. Still these manufacturers and dealers refused to purchase a third of the product. Rapaport estimates that the goods left on the table succeeded 65% of the initial sight value.
 

Meanwhile, the world’s second largest diamond company, ALROSA, didn’t fare any better. The Russian diamond company reported a year-over-year decline of more than 22% to $2.1 billion in the first half of 2015. The amount of diamonds sold fell 14.7% to 18 million carats.
 

The company said its rough prices declined by 3% during the three months ended June 30 and by 6% in the first half of the year. Production, however, was up 13% compared to the first half of 2014.
 

The US, which accounts for 40 percent of diamond sales, is doing well enough, Mellier said. The major decline in consumer demand is in China.
 

Mellier seems to think that demand in the US will remain “pretty good” with growth in the mid-single digits for the second half of the year. The China market is much more unpredictable but sales will be either flat or show minimal growth. He said in 2015, Chinese consumers who used to shop at Hong Kong and Macau now mostly buying from Japan and South Korea.
 

“I think that the Chinese buyer is, in terms of purchasing, are going to buy this year than last year. But not in Kong and Macau and maybe less in Continental China.”

He also said the strong dollar is having an impact on diamond sales in much of the world.
 

“All in all, if we look at the world market, we believe that in H2 we should have a little bit of a growth but not much,” he said. “And for the year we are now looking at a market in dollar terms, which is going to be either stable or with a very small growth versus what we saw last year.”
 

The question I have is when this down cycle end and what will it take for it to come to an end.

 

 


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2015/07/29

Once again the jewellery industry is faced with a diminished market due to an economic downturn.  As money gets tight, jewellery buying is one of the first things consumers abandon.  After all, jewellery is a luxury and not a necessity.  Here are a few tips to help you stay afloat during a recession

 

1.  Take steps now.

The biggest mistake you can make is to sit back and wait for things to get back to normal.  It may take longer than you think for the economy to recover.  There is also a very good chance that the business landscape may be radically different after the recovery.  Make changes now while you still have strength.  Waiting until later may be fatal.

 

2. Turn dead inventory into cash.

Now is the time to get rid of any non-performing items.  In difficult times cash-flow is more important than profit.  Be brutal. Gather up your dead inventory and sell it at a deep discount.  Don’t be afraid to take a loss.  Pull stones and send the gold to a refiner if necessary. Potential profit that never leaves the case can drag you down but ready cash can save the day.  

 

3. Trade goods with other jewellers.

Items that are old to you can be new to another store and their stale goods might sell in your store.  It is a way to freshen your inventory without a cash outlay.

 

4. Buy over the counter

Think of buying scrap from the public as a way to mine gold and diamonds in your store.  Broken chains and mangled rings are still as good as cash to you.  Buy at a price low enough so you can send the gold to the refiner for an easy profit.  Harvest diamonds before going to melt.  Offer little or nothing for melee.  Know what your diamond supplier is willing to pay for larger centre stones and buy accordingly.  You are not looking for a long profit, just a fast flip.  You will find some well-made, beautiful goods in the scrap.  Keep them if you have a market for them, but don’t be afraid to send them to melt if you need to cover some bills.

 

5. Focus on repair services

While some customers may not be buying new jewellery, they will have goods that are in need of repair or refurbishing.  This is a good way to bring in cash with minimal cost.  It keeps your customers coming into your store.  You want your customer to stay in the habit of visiting you.

 

6. Don’t run out of active inventory

Don’t forget to keep buying your steady movers.  If you let your “bread and butter” goods fall below critical inventory levels you will lose your customers and your business.

 

7.  Adjust price-points

This may be a time to look to lower price-points to keep your customers buying.  If you don’t carry silver jewellery, give it a try.  It is very profitable and moves well in any economy

 

8.  Never give up

Always remember to keep your attitude positive.  Things will eventually get better.  If you are proactive in taking steps to keep your business alive, you will survive.

 

 


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2015/07/28

I have been asking many diamond industry leaders about the prospective threat of synthetic diamonds to the natural ones since last 7 years but most of them have failed to assess it. Now (not all of a sudden) when the global diamond industry has been facing crisis since a few years (with peak period at present) many of them blame the increasing circulation of the synthetics (as one of the reasons) for the present dire status of the industry.
 

The global diamond industry is battling poor demand of polished diamonds in key markets including the US, the Middle East, China, Hong Kong etc. High priced rough diamonds have squeezed the profit margins of traders. If we talk about the Indian industry, inventories choked with diamonds worth over Rs. 300,000 crore, financial insecurity prevailing in the industry due to many cases of defaults reaching Rs. 2,000 crore since November ’14, much narrowed bank finance, reduction in the credit period from 180 days to 60 days by the rough diamond dealers in Antwerp and the severe liquidity crisis are some of the factors leading to the present dismal status of the global industry.
 

Industry analyst Mr. Chaim Even-Zohar of Tacy Ltd. says,

“It was a record amount when the global diamond industry spent USD 80 billion on diamond jewellery last year but the manufacturers are expecting to share profit of just USD 100 million in 2015. That is half last year's total and down from $900 million in 2010. 300,000 Chinese and Indian workers have been laid off out of nearly 1 million employed in gem-cutting in these two countries, where most manufacturing is done.”

 

Critical phase for global diamond industry

Critical phase for global diamond industry

 

A report published in bbc.com says that mining companies Anglo American and Lonmin are cutting thousands of jobs as commodity prices fall. Sources from Anglo say the Company would cut 6,000 posts from office and other roles not directly related to production.
 

The Company, which has some 150,000 employees globally, said employee numbers would be reduced by 35% after the job-cuts, which would also be accompanied by asset sales. Anglo posted a pre-tax loss of

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.9bn for the six months to 30 June.
 

Industry sources in India say,

“Rough diamond prices have swelled by 65% during last three years, while on the other hand, the polished diamond prices have either remained stagnant or reduced by 15 to 20%.”


It may be because of the same reason that about 65% of the rough were rejected by De Beers’ sightholders at the Company’s July 2015 sight. One of the sightholders said that even if De Beers offers the same goods at 5% reduced price, it will not be affordable to them.
 

What worsens the situation further is that the global diamond manufacturers and dealers are at mercy of just a handful of miners, which control most of the world's diamond production. So they don’t have any choice but to pass on high costs further down the supply chain. No major diamond mine has been discovered during last two decades. The miners say they have to invest heavily to keep supplies coming. According to an estimate, production in 2013 was down by 26% since 2005. Now it has risen but very slightly.
 

Coming back to India, space booking date for the ambitious project of Surat Diamond Bourse (SDB) has been postponed for the third time in a row recently because of the prevailing ‘poor’ conditions over the industry. According to SDB Committee, some 12,000 players had shown interest a month ago to book an office space there but none of them turned up on the booking date last week to book a space, a Times of India report says.
 

So, it’s not the only issue of synthetics being mixed with the natural ones, there is a gamut of issues (mentioned above) which has ‘rotten’ the entire supply chain of the global diamond industry. Of course, doyens know well the worsening condition of the industry, but it would not be easy for a few leaders make it healthy again. The need of the hour today is that the global industry leaders should come together on a one common platform urgently to introduce some short as well as long term measures to address these issues, because it is not problem only of India, Israel, Belgium, Botswana or South Africa, it is a problem of the entire global diamond industry.

 

 


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2015/07/27

The first edition of Mineral & Gem Asia concluded on a positive note at AsiaWorld-Expo, Hong Kong on 30 June 2015, with over 4,600 local and overseas visitors attending the fair. Organiser UBM Asia expressed that more than 1,900 of the total number of visitors were trade buyers including exhibitors and visitors from June Hong Kong Jewellery & Gem Fair.
 


“The launch of Mineral & Gem Asia was an important milestone in UBM Asia’s fair history. We were glad that the fair had received great support from the industry. Over 100 exhibitors showcased the world’s rare and invaluable minerals & fossils as well as decorative gemstone products. It gave global buyers a platform to source effectively from suppliers from around the world without having to travel to many overseas shows,”
 

said Mr Wolfram Diener, Senior Vice President, UBM Asia. He excited the extraordinary exhibits featured in the fair.

 “It was a privilege for UBM Asia to have been given the opportunity to showcase rare and well-preserved fossils at our show, thanks to the Stephen Hui Geological Museum of The University of Hong Kong. Among these exhibits were the Permian invertebrate fossils and Jurassic and Tertiary plant fossils unearthed from Lantau Island and Dong Ping Chau in Hong Kong,” Mr Diener continued.

The fair featured 103 exhibitors from 27 countries & regions while the visitors came from 55 countries and regions in Asia Pacific, Africa, Europe, Oceania, Middle East, Central, North & South America. Mineral & Gem Asia is recommended by The Munich Show.
 

"As the world's No 1 hub for gems and jewellery Hong Kong is the perfect place to establish an international mineral show. UBM did a great job in organizing this first edition of "Mineral & Gem Asia". With its modern venue, a high quality exhibitor list and the attracting special exhibition this was an excellent start with the potential to become Asia's leading mineral show,"
 

said by Mr Christoph Keilmann, CEO of Mineralientage München Fachmesse GmbH, the fair organiser of The Munich Show.

Hong Kong-based visitors totalled 2,981. The largest group of visitors from outside Hong Kong came from mainland China, the number recorded being 835. The mainland was followed by Taiwan, with 126; India, with 83; Thailand, with 82; Japan, with 62 and Australia, with 41.

Dino World
Apart from the spectacular display of rare mineral specimens, the showcase of three dinosaurs – Tyrannosaurus rex-King Kong, the Allosaurus and the Suuwassea – was also well-received by the visitors as they were being displayed to the public for the first time in Asia. A three-dimensional model of the Thermopolis Archaeopteryx and an Archaeopteryx fossil were also very popular among the visitors.
 



Panel of Experts
Seminars conducted by prominent speakers from around the world were popular among the attendees.  Six seminars discussed a variety of topics, including minerals, gemstones and gold specimen collecting.  Among the speakers were Mr Bryan Lees, Miss Monica Kitt, Mr Dougal Pitt, Mr Wayne Leicht, Mr Mark Mauthner and Dr Edward Liu.  
 

      
The fair will be renamed Mineral, Gem & Fossil Asia and will be held from 24 to 27 June 2016 at AsiaWorld-Expo.   The June Hong Kong Jewellery & Gem Fair, meanwhile, will be held from 23 to 26 June 2016 at the Hong Kong Convention & Exhibition Centre.  This special arrangement will enable gemstone exhibitors at the June Fair to attend the Mineral, Gem & Fossil Asia.  In addition, an enhanced advertising and promotion campaign will be executed to attract more trade buyers to the fair.

 

 


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