I’ve been reviewing the world diamond situation, as well my own challenges, and came to the realization that sometimes you can do everything right, and things still go wrong. And, there’s an answer for this situation.
The World Diamond Market
It’s weak. Very weak. But I believe that the industry as a whole is doing everything right.
China is in a very bad state, as the trade war has had quite severe impacts, especially on luxury purchases. As the second largest market after the USA, the current situation hurts every part of the diamond market. The demonstrations in Hong Kong have brought the jewelry trade to a virtual halt.
The US is still performing well, but as prices have fallen, jewelers have been reticent to build inventory. This puts additional pressure on cutters to move goods, hence falling prices. Not a pretty cycle of events.
Cut back supply. And that’s exactly what DTC, Alrosa, sightholders are all doing. The diamond pipeline is badly in need of a cleaning, and it is now happening. The effects of all the reduced rough buying will only be felt in Q4, when current polished gets depleted with little new production to replace them.
Other solutions: Increased marketing. And, the DTC and DPA are ramping up marketing as well.
My Micro Issues
The current China Tariffs. My diamond factory is in China, and I need to start looking for alternatives with the upcoming 15% China import Tariff coming very soon. I’m confident that I will find a solution, but I’m equally confident that it will cost our company time and money.
So, I can be doing everything right in terms of manufacturing, marketing and selling. Yet outside world events virtually out of my control, will have a tremendous impact on my business.
The Answer: Hope and Time
Interesting to note, this year, two separate trade education conferences spoke about hope. The GIA’s Harvard course and the DTC’s Business Excellence conference both shared one particular slide during their respective educational conferences. And, it read as follows:
Hope is not a strategy.
I can’t match any of the speakers’ resumes or titles, but boy, do I disagree. I’ve been in business 43 years. I’ve seen good times and better times, profits and losses, prosperity and recession. The one theme that kept me going through the tough times was, and is, hope. You’ve got to keep the hope up for yourself, your staff, your clients, and above all, your family. The stronger the hope, the better the chances that you’ll work your way out of the slump.
So, yes, hope is a strategy, or at least part of the strategy.
And, time is also a strategy. I think that all mistakes happen because people and markets react too hastily to short- term situations. The world diamond market is not nearly as bad as Indian Diamantaires say it is right now. By October, I’m convinced it will all blow over and it will be business as usual, and prices as usual.
The trade war will not last forever. It will probably end by Q4, in time to save the year for most of us. So the China, Hong Kong situation, and the tariff problem will probably all go away at the same time.
The hardest part is waiting for it to happen and the uncertainty in the meantime. The solution for that is keep busy. Review your business as best you can, and when you can’t find more to do there – go for a 20-mile bike ride. Clear your mind. I find it solves most anxieties. And, raises hope.
I’d love to hear your thoughts. Email me directly at firstname.lastname@example.org.