AWDC Symposium "Confidence in Challenging Times"
An ADB view on the present situation

It is certainly clear to all of us that a difficult period may lie ahead for the diamond and jewellery industry.

• The recent turmoil in the financial sector has widely affected business sentiment and is unfortunately spilling over into the global economy. An increasing number of countries is already announcing, based on consecutive retractions of their economies, that they have entered a recessionary period. Moreover, borrowing in general has become more difficult, more scarce and more expensive.

• More importantly, we unfortunately start to see a recessionary impact on consumer spending in general and on luxury goods in particular. As such, the demand for diamonds and jewellery with consumers confronted with shrunk assets and sometimes broken lives, will inevitably also suffer in the next weeks and months to come.

I am talking about the 'next weeks and months to come' because, in order to have a clearer picture of the situation, we will have to wait for the final outcome of the sales season in the US and of the sales generated during the Chinese New Year.
Like in politics, the polls do not always correspond with the final results of an election.

In any case, our industry should prepare itself for a difficult period that will, almost inevitably, carry us into -at least- 2009.

A weakening of consumer demand for our products will entail a build up of inventory, create overcapacity in manufacturing centres, put pressure on the liquidity of the market and cause liquidation value of inventory and thus solvency levels to retract. Taking into account an already substantial industry bank debt and real interest rates still being relatively high, the capacity to service debt may - under these circumstances – also become under strain.

For sure not an exciting picture but, as always, panic is a very bad counsellor as we all have been able to witness what a collective irrational behaviour can do to the world’s stock markets and the financial system.

Therefore, let us not get dragged into exaggeration and collective despair, but rather unite in a responsible behaviour throughout the entire industry and which should be based on, primarily, patience and prudence.

In our opinion, such a responsible behaviour should be translated in:

- Firstly, raw material producers accepting that their clients only bid on goods that are sellable and profitable. Even if this would entail deferring sales or even stocking. As such, the today's announcement of our industry's leading producers, the DTC and Alrosa to cut back on production, certainly is quite a comforting message.

- Secondly, diamantaires having the courage to only buy goods that can be turned into profitable business while, at the same time, closely monitoring their inventories, their trade receivables as well as their solvency levels. Relating to the latter, your industry’s bankers can only but hope that the industry’s profits made in the past, and partially invested perhaps in other profitable assets, are still available to be re-invested in the diamond business in order to restore solvency levels whenever necessary.

- Finally, bankers accepting a temporary build-up of inventory, a possible slow down in business volume and of business cycles as well as a shrinkage of the asset base and solvency levels. And although it certainly is not the moment to further increase bank indebtedness, it is certainly not the moment either for bankers to introduce drastic measures that can bring the industry to a complete stand-still … or even worse.

In all, for all players in our industry and for the next few weeks and perhaps many months to come, ‘asset protection’ will have to prevail over ‘asset growth’.

Isn't there a wise proverb that says: “Diligence is the mother of good luck”.

As such, let us, after this Symposium, all go back to our business strengthened by the belief that a collective responsible behaviour – marked by patience, prudence and self-discipline, combined with the commitment of this industry’s bankers to support said responsible behaviour, carry all of us through the difficult period that unfortunately lies ahead.

Paul C. Goris
ADB Chairman

Antwerp, 17th November 2008

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Antwerp, 30th October 2008

Dear Customer,

We have the pleasure of announcing to you that on October 7th the ADB Group inaugurated in Singapore a new subsidiary and regional headquarters for Asia Pacific.

Antwerp Diamond Bank Asia Pacific Ltd. (Merchant Bank) (ADB AP) is a one hundred percent fully owned subsidiary of the ADB Group established under Singapore law.

Meanwhile, as you may already be aware of, our Swiss subsidiary, established in 1982, has ceased to be operational as from 30th September.

ADB’s Singapore Regional Headquarters will not only continue to service ADB’s international customers operating in or out of Switzerland and Dubai, thru its representative offices established in Geneva and Dubai, but will also steer and support ADB’s activities in Hong Kong and Mumbai in its role as regional HQ for the greater Asia Pacific region.

From an organization view point, Mr. Bruno Nelemans – appointed Group Head Asia Pacific at Antwerp HQ level – and Mr. Willy Laeremans – CEO of ADB AP and stationed in Singapore – will closely co-operate in managing the activities assigned to our new Asia Pacific regional headquarters.

Moreover, Mr. Karl De Borger has been appointed as CEO of ADB’s branch in Mumbai. Together with Mr. S.P. Tanwar, time-honoured COO of our Mumbai branch, he will manage our group’s activities in India.

ADB’s new organizational structure, as well as its new locations and contact addresses, are available to you on our website.

At ADB we do hope that with the creation of ADB Asia Pacific and the accompanying organizational changes, your “Banker of Choice” will be able to service you, even better than before, in all of our industry’s established as well as emerging diamond centres.

Meanwhile, we sincerely thank you for your confidence and the business entrusted to your “Antwerp Diamond Bank. Diamond bankers, Since 1934.”

Yours truly,

Paul C. Goris,
Chairman

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The general shareholders meeting of Antwerp Diamond Bank (ADB) has approved on 21st April the yearly figures 2007. ADB, the only bank in the world that focuses exclusively on the diamond trade and industry, is a full subsidiary of KBC Bank.

The continued restrictive credit policy, the growing competition in the diamond financing business and a persistently weakening US dollar - the reference currency in the diamond industry – have led to a decreased consolidated balance sheet total of € 1.7 billion per end 2007, compared to € 2.1 billion last year.

Notwithstanding these difficult circumstances, the bank was able to maintain the consolidated profit on a satisfactory level of € 28.9 million, a slight increase of 2.8% compared to last year, thanks to considerably lower provisions for credit risks.

In 2008, the bank will continue its diversification and geographical expansion by starting up a Private Equity Fund specialized in the diamond industry and the incorporation of a regional headquarter in Singapore.

Our annual brochure 2007 is now available under section Facts and Figures.

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The Antwerp Diamond Bank (ADB) will start operating in Dubai after signing an agreement with the Dubai Multi Commodities Centre (DMCC) enabling it to help finance the Dubai diamond community.

ADB, the second largest financier of the global diamond industry, will open a regional office in Dubai's Almas Tower, a DMCC development slated to open by the end of 2007, DMCC announced June 26, 2007.

Almas Tower will host the Dubai Diamond Exchange along with hundreds of local and international diamond companies and a wide variety of service providers to the diamond sector, DMCC explained.

“Almas Tower will soon stand as one of the world’s greatest integrated addresses for the diamond trade - and as another signal achievement by DMCC and the emirate of Dubai," said Ahmed bin Sulayem, executive chairman of DMCC. "The greatness of this tower, however, will not be judged by its external appearance but by the activities that take place within it. That is why we are so excited to welcome a leading international diamond bank like ADB. We are convinced that their expertise, comprehensive services and understanding of the market will be of great value to the growing diamond community here in Dubai.”

Paul Goris, chairman of ADB, noted the development of Dubai from being the "city of gold" into a hub for the global diamond and jewelry trade over the past few years.

“As one of the world’s leading diamond bankers, Antwerp Diamond Bank saw that the time had come to support this growing market by expanding our presence and range of services in the region," Goris said. "Clearly, there will be no better place to do that than at Almas Tower.”

By Avi Krawitz

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The diamond industry faced a difficult year in 2006. Although the first semester was relatively good, the increased volatility of rough prices put a significant burden on the profitability as well as the liquidity of the industry. As such, diamond bankers in some markets were not only forced to adhere to a somewhat more restrictive credit policy but unfortunately also had to create provisions for potentially bad loans.

The figures for 2006 of Antwerp Diamond Bank reflect that more difficult market, what was even enhanced by the decrease of the dollar rate, the most important currency unit in the diamond industry.

The consolidated balance sheet total was therefore € 2.1 billion compared to € 2.6 billion in 2005.

The consolidated profit of 2006 was € 28.1 million, a decrease of 12% compared to last year.

Meanwhile the beginning of 2007 gives, according to the Bank, reason for moderate optimism.

Antwerp Diamond Bank N.V. is a full subsidiary of KBC group.

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ADB chairman Paul Goris on Friday described 2006 as a “bumpy” year and said the bank’s main focus this year would be on monitoring profit margins, expansion and preparing for the implementation of new banking regulations.

“Margins in the industry were under severe pressure as a result of rough price increases, which created larger exposure and more risks for the industry as well as for banks,” Goris said in an interview with PolishedPrices.

For ADB and several other banks financing the diamond industry, the margin pressure on banks culminated in a substantial write-off following the Chapter 11 filing by Fabrikant, a De Beers sightholder and one of the oldest and largest wholesale diamond companies in the United States.

Goris said he hoped that in 2007 diamond producers would take into consideration the profitability, or lack of it, in the wholesale segment of the industry.

“There is still a considerable polished overhang that needs to be absorbed, despite projected rough shortages.”

He added; “Honestly, if volatility in prices further increases, this could lead to a policy review at the bank. ADB is currently also studying the development of diamond derivatives."

Another factor that could affect the bank’s policies is increased competition.

“The diamond industry still creates considerable barriers for newcomers, but the arrival of ICICI bank and perhaps others could change the landscape for traditional banks financing the trade.”

Currently, ADB primarily finances purchases and sales of rough and polished diamonds throughout the entire diamond pipeline. Although in some centres, such as New York, it finances the jewellery industry as well.

Goris ruled out funding mining projects, but southern Africa would take prominence in the bank’s expansion plans.

The move comes as De Beers is moving most of its operations, including sales, to Botswana. In addition, several of ADB’s customers are setting up factories in the region to secure rough supplies.

“Traditionally we try to go where our clients are,” said Goris.

This also brings us to India where ADB is looking at expanding its services with credit facilities for the jewellery sector.

According to Goris, the creation of free trade zones for jewellery manufacturers in India made it an attractive area to provide credit.

On the regulatory side, Goris said a key focus would be implementing measures under Basel II, which he said was an internal matter, but could affect prices charged to customers.

The Basel II accord consists of recommendations by bank supervisors and central bankers and was set up to revise capital adequacy standards for banks in relation to their incurred credit risk.

Goris said some of the new measures could force ADB, as well as any other diamond banker, to review their pricing policies towards customers.

“Obviously, this will depend on the outcome of risk assessment models that, inevitably, will have to be installed in the next years to come by each and every financial institution,” said Goris.

“But ADB has planned a few initiatives aimed at guiding clients worldwide in ensuring a best possible fit to the new Basel II requirements and avoid a dramatic pricing policy impact.”

Asked whether Belgium’s new anti-money laundering act would have an impact on the bank’s policy in Belgium, Goris said; “For us this is nothing new. Belgian and international AML rules, including the Patriot Act, are a reality. Everybody will have to comply, including the diamond industry worldwide. So I don’t see any change.”

Goris refused to comment on speculation about his retirement, but said he expected to remain “another three years or so”, adding his replacement was hopefully to be picked “from within the bank.”

By Emma Muller.

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A few weeks ago our column started with: “Why the hell should we finance DTC sight boxes which we know to be overpriced and are causing losses to our clients,” fumed a diamond banker from his holiday resort somewhere on a Mediterranean coast. “That’s irrational behavior on our part. The time has come to put a stop to it. It is irresponsible from a banking risk perspective to make facilities available for the financing of an over-priced commodity.”

The article generated quite a few responses by bankers and others – mostly not for attribution or quotation. However, the highly respected Dean of the Diamond Bankers, the Chairman of the Antwerp Diamond Bank Paul C. Goris wrote a thoughtful reaction that we gladly reprint verbatim – followed by a short comment.

Dear Chaim,

It is not part of Antwerp Diamond Bank’s (ADB) tradition to respond to whatever article that may appear in the diamond industry’s specialized press. However, at the occasion of your weekly column on Idex “Sightholders losses may ignite banking revolt”, we – this time - do think it to be necessary to react.

Although at ADB we do not know what other committed diamond bankers think about your analysis, we can only but profoundly regret your accusing ‘responsible’ diamond bankers – as ADB thinks it is – as adhering to a ‘distorting credit culture’, by ‘bending over backwards for their clients (and seemingly even producers)’, by ‘comprising their credit principles’, by ‘their poor judgment of risks’ and by being, in the end, only ‘anxious over income’.

According to ADB, dear Chaim, your analysis is – somewhat unexpected from a reputed and usually poised industry watcher – somewhat biased and wrong.

First of all, your are somewhat biased because you are only picking on the DTC.

Indeed, how about the increasing number of new diamond producers that have entered the market and only seem to adhere, like meantime DTC too (why shouldn’t it), to a very simple “dig and sell to the preferred customer at the highest possible price” approach? And – here’s the rub – how many diamantaires would ever dare to discuss the price tag of rough offered when knowing that many other preferred buyers ‘elect’ are queuing up?

But, seemingly, those preferred buyers did start to speak up a bit because ‘deferred allocations’ are now seemingly ‘in’. But what, in the end, do these deferrals mean and how long will this new ‘fabrication’ last? Does deferral from producers’ end really means waiting for better times, i.e. rough and polished pipeline stocks being fully absorbed, flooded factories becoming operational again and bank debt being reduced to reasonable levels? From our end, we really do hope so.

Indeed, one of the basic (and unfortunate) misconceptions in our diamond industry is that rough is so scarce but money supply is so abundantly available. This time honoured misconception lead to a situation where diamond companies so much emphasized the importance of access … to rough that they forgot, as usual, to even ever consider the possible limitations of access to … money.

As such, diamond companies now being confronted with a clearly different approach between diamond producers (seemingly just digging and selling to the highest bidder, whatever market circum-stances are) and committed diamond bankers (focussing on price stability, reasonable inventories, sound demand and reasonable credit terms), could possibly witness a tremendous clash between both while, them, sitting in the middle…

Unless, of course, diamond producers would start to realize that (theoretical) credit facilities granted to their preferred buyers do not systematically mean that whatever allocation they present to their preferred customer will automatically be translated in a disbursement by their customer’s committed diamond bankers.

On the other hand, will diamond companies not be confronted with a heart breaking choice between perhaps loosing a preferred source or loosing the time-honoured support of their bankers?

And here we touch upon the second and basic problem where you may perhaps be wrong, dear Chaim.

You are suggesting, in fact, that diamond bankers are some kind of “silent lambs”, almost domesticated by clients and producers, continuously comprising, being poor judges of risk and – foremost – being the ‘Scrooges’ of the industry that are only anxious over their income.

I know that you’re now and then somewhat provocative, but I don’t know whether you realize what your somewhat offensive statements could eventually trigger. Let’s imagine…

The (more responsible) diamond bankers of the industry could, without any problem whatsoever, -and within a most perfect legal framework - almost immediately come up with enforcing a number of restrictive ‘credit principles’ (‘compromised’ as you’ve called them), that could completely block any further rough purchases or manufacturing activity, just because of a clear lack of ‘responsible behaviour’ shown by whatever producer, in case that behaviour would be translated in the slightest lack of collateral at our customers’ level.

At the same time, same bankers could almost immediately install very severe penalty fees for any lack of collateral caused by previous rough purchases (again from whatever producer) that could not have been turned – in time- into proven (profitable) sales of rough and/or polished.

Same bankers could, very easily, crack down on the ever increasing payment delays experienced throughout the entire diamond pipeline. Counterparties that have the intention ‘to ride their suppliers’, and suppliers consenting to this, could very easily be blocked for any further receivables finance as from the very first day of overdue. Whether related to local or international outstanding receivables.

Same responsible bankers could, easily, install a very meticulous import and export tracking system by scrutinizing on carats and values of imported and exported rough and polished, demand constant feedback on goods bought and sold, start to monitor price differences, install severe checks on inter-company imports and exports, and margins as well, etc. etc. Insufficient answers and the slightest lack of collateral may trigger a complete blocking of facilities. And so on, and on, and on.

Consequently, time may have come that the entire diamond industry should start to understand one important thing, as ugly as it may sound.

A diamond producer can very easily make or break a diamond company. But so can bankers - without any doubt and by just strictly adhering to the credit terms agreed upon with their individual customers and within a perfect legal framework.

As such, the entire diamond industry (from producer to jewellery manufacturer) should perhaps start to cherish a bit more the (still) prevailing ‘silence of the lambs’, i.e. the industry’s diamond bankers.

At ADB, we can only but hope that the industry cherishes indeed this ‘temporary’ silence.

Because, whenever the industry’s silent lambs would ever break their silence and start to take up the role of ‘new custodians’, then Dr. [Hannibal] Lecter rising out of Pandora’s Box may just look like an innocent Red Robin. And who will then be our beautiful Clarice?

As such, all of us can only but hope that all responsible players in our beautiful industry are conscientious of the fact that dealing in a luxury product necessitates rational behaviour and casts away any irrational exuberance. And this is the only way to ensure a further ‘silence of the lambs’ and, consequently, avoid a so-called ‘banking revolt’.

By the way, dear Chaim, none of ADB’s managing directors have been spending their 2006 holidays at some beautiful Mediterranean beach… Why, the ’hell’, should they have? It really was a beautiful summer in Belgium, wasn’t it?

Hopefully this will solve one of the (Antwerp) industry’s pressing enigma…

Paul C. Goris

Chairman

Antwerp Diamond Bank NV
Chaim’s Comments:

Wow – and you say that I am “so now and then somewhat provocative.” It seems that I have finally found my master. I wouldn’t dare to say that “the time may have come that the entire diamond industry should start to understand” that “a bank can very easily make or break a customer” by “just strictly adhering to the credit terms agreed upon with their individual customers and within a perfect legal framework”.

Paul, you really scare me when you suggest that my remarks could trigger banks to “enforce a number of restrictive ‘credit principles’ that could completely block any further rough purchases or manufacturing activity…” or that “insufficient answers [to banks] and the slightest lack of collateral may trigger a complete blocking of facilities.” I cannot comprehend how my writing could bring about such actions – and, surely, if I thought that this could be the result, I should have refrained from writing the article. However, it appears that the various theoretical actions you describe certainly warrant my fears about a “banking revolt”.

You charge that I am “somewhat biased because I am only picking on the DTC.” I regret if I gave that impression. You are absolutely right that other major rough producers also insist on cash terms – and in that sense the DTC is not an exception. My article wasn’t about suppliers, it was about banks. I cited the DTC as an example because the behavior of some banks is quite inexplicable to me. Maybe I failed to spell out my concerns in greater detail.

When DTC sightholders are unable to honor their payment obligations to (non-DTC, Rio Tinto or BHP Billiton) trade suppliers in the market, when they postpone payments to their suppliers in the business for periods of sometimes up to nine months, when they reach payment agreements with their suppliers on financial settlements, such actions definitely affect many diamond companies which also are clients of the diamond banks. The banks surely see both sides: the producer clients who get paid immediately - and other trade suppliers (of rough or of polished) who may have to wait for their money – presumably because the client doesn’t have sufficient facilities to pay them. However, these same banks don’t hesitate to continue to advance money to one particular supplier, the DTC, as well as to other major producers. I have no problem with producers having the ability to secure payments in advance – well before delivery. I merely don’t understand why banks consistently appear willing to allow the problematic client (which I labelled “higher risks” clients in my article) to pay rough sources like the DTC, even though that client is in default of his payment obligations to other colleagues in the trade.

Paul, I want to stress (as I did in the article) that I do have faith in you and your colleagues in other banks. Therefore, I wouldn’t mind it at all if the banks “break the silence of the lambs” and start to assume a “custodian” position in the industry. However, I honestly fail to comprehend your suggestion that the “breaking of silence” would lead banks to behave like Dr. Lecter. If my memory serves me well, Dr. Hannibal Lecter is a fictional character appearing in four novels by author Thomas Harris and their film adaptations. Lecter is an ingenious, cultured psychiatrist and resourceful serial killer, who practices cannibalism upon his victims. He has often been rated amongst the greatest villains in literature and film. I, personally, would never in a life time – even in my worst nightmares – dare to suggest that this could be a diamond banker’s role as custodian….

You ask whether diamond companies will not be confronted with a heart breaking choice between perhaps losing a preferred source [of rough] or losing the time-honoured support of their bankers. It is that time-honored support that I suggested should not be taken for granted – and you, in a very original and maybe quite scary way, seem to confirm that. That is very significant: at the end of the day I am only a writer. You, however, are the leading diamond banker. The significance of my views pale in reference to the weight of yours.

I pray that banking clients will never have to make that heart breaking choice.

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Debts levels rose dramatically in 2005 as rough price hikes, Supplier of Choice and compliance issues
increased costs. But diamond firms are not the only people concerned with the rising arrears, the banks are also edgy.
Indeed, the third largest of Antwerp's diamond banks, is withdrawing from the trade in June.

Could a decision by one of the main banks in Antwerp dealing in the diamond sector to withdraw its operations cause instability for the diamond trade? The decision by Dexia Bank to end its diamond sector operations in mid-2006 has caused some concern in the city, since bank debt rose considerably in 2005. But the Dexia withdrawal is not the only issue worrying Antwerp traders, since the two main banks dealing with the local gems industry, the Antwerp Diamond Bank and ABN AMRO, are also toughening up on credit.

Although Dexia's decision is unlikely to cause any earthquakes, since its share of the diamond market's debt-less than 5 percent- is small. But it puts the rise in the Antwerp diamond trade's debt into sharp relief and the debt issue back in the spotlight.

Philippe Steverlynck, manager of Corporate Banking at Dexia, said the bank will give its clients enough time to find other banks willing to take them on. "Our aim is to give clients enough time to
deal with their credit situation and we are negotiating this case by case," Steverlynck said.

Loet Kniphorst, Global Head of ABN AMRO Bank 's International Diamond and Jewellery Division, believes the extra compliance costs that diamond firms are facing may have been the reason Dexia has withdrawn from the sector. "Since the extra costs need to be monitored, the banks need to second an employee or two to the task and when you only have a small portfolio of around 4 percent of the market you are unable to leverage economies of scale as the larger banks can and thus it doesn't become worthwhile. Either you get heavily involved in the sector or you leave it alone. There's no other way to do it," Kniphorst said.

Steverlynck confirms that Dexia, which has been a player in the diamond industry for the past 20 years, realized that its small market share meant it was not worthwhile for it to carry on being involved in the industry due to the increasing internationalization of the business. In order to survive, diamond firms have to become more heavily involved all around the world, including New York and Dubai, Tel Aviv and Mumbai, which means the banks also need a presence in those countries.
Since Dexia "was only involved in a modest way" in the diamond industry, it simply was not worthwhile for the bank to invest heavily in creating a global network to service its clients.

Regarding the anti-money laundering compliance regime in Belgium, Steverlynck said that, although this played a role in the bank's decision to withdraw from the diamond trade, it was not a major reason.

Among the factors increasing general debt levels in the industry is the sharp rise in rough prices in the past two years, the price of polished goods stubbornly refusing to rise in line with rough costs, and a rise in retail jewellery sales that has been far lower than that of rough prices. Add to that the effect on the diamond industry of Supplier of Choice, which is battering many companies with high costs, and the new requirements concerning anti-money laundering, and the reasons for the rise in debts becomes all too clear.

A look at the statistics of the diamond sector's debts does indeed show a worrying rise. In 2000, the global debt stood at $7 billion, but in just five years it has risen to $11 billion, according to Paul C. Goris, chairman of the Antwerp Diamond Bank, one of the Belgian industry's major financiers. That equates to a rise in debt of 10 percent annually, a worrying figure by any standards. As for Antwerp, diamond debts in 2005 jumped by more than $500million to over $3 billion.

But of more concern is the much smaller annual rise in jewellery sales, from around $57 billion in 2001 to a forecast $65 billion in 2005, a rise of just 3 percent annually, and around the same figure for
2006. "The gap between 3 percent and 10 percent is becoming larger and larger," Goris said. "If bank debt keeps growing faster than diamond jewellery sales then the banks will have a problem. If we have a problem then the diamond trade will also have a problem."

As Kniphorst says the financiers re closely tracking the way clients are using their credit, to ensure that the maximal use is being made of it. This is a relatively new way of operating, and it allows the banks to see the scale of the extra costs diamond firms are facing, which Kniphorst describes as "phenomenal."

Clearly, a major reason explaining Antwerp's debts, in line with other centres, is the rise in rough
prices last year. In particular, the large DTC sights of the late summer and autumn, with the August sight estimated at $800 million, forced some companies to take on extra credit to finance rough purchases. For many manufacturers, constantly worried about the shortage of rough, this was considered a golden opportunity to buy goods, even though prices were extremely high. For the banks, however, it was generally regarded as the point at which clients needed to be told some home truths.

With credit stretched to the limit, ABN AMRO started telling some customers that it was time to cool down. As Goris said: "We like to see sales and we don't like to see customers sitting on inventory. If a client has bought goods, particularly if he has paid too high a price, and finds it difficult to shift them-meaning he is unable to turn his purchase into a sale-then he and I are sitting on goods. We regard that as a lack of collateral."

Although the banks are willing to bridge the time between the purchase of goods and their sale, there is inevitably a limit to how much finance the bank is willing to give. To put it more candidly, the banks are starting to move more forcefully to protect their interests.

"First we close the money tap and if that is not sufficient we ask our client to put his inventory in our safes," Goris explained. Indeed, Goris says the latest joke doing the rounds in the diamond trade is that there are two new sight holders: the Antwerp Diamond Bank and ABN AMRO. "They are saying that because they think we are sitting on piles of rough and polished diamonds," Goris said.

Since it is an ill wind that blows no good, the huge amounts of rough released onto the market have had at least one positive effect in that the premiums paid by the secondary market have shrunk, thereby reducing bank debt to some extent.

It is not just the manufacturers who are being told to cool down. The credit squeeze by ABN AMRO, the single most important diamond banker, was also a blunt message to the miners, and De Beers in particular, to keep its sights to levels that the industry can soak up without getting into financial difficulties.

However, it is not simply a rise in rough prices that is causing problems, according to Nihil Kujur, CEO of the State Bank of India's Antwerp branch. Although the rise in rough prices and fierce
competition, which has slashed profit margins, were largely behind the growth in debt, Kujur
points to the American market, which he describes as being "dead" and was that way even before Hurricane Katrina wrought its physical destruction and financial damage, as playing a significant
role in increasing debts.

Interestingly, diamond industry debt in India is growing at a faster rate than the global average of 10 percent annually. The country's debt is growing at around 15 percent per annum, without causing heart-flutters in the boardrooms of its banks.

Not surprisingly, this has led to strong pangs of jealousy in other diamond centres and calls for local
banks to take a more progressive stance regarding debt. For their part, the banks point out that these demands ignore the fact that India, with its cheap labour supply, the overwhelming position it has built as a polishing centre, and the substantial flows of foreign currency that oil its diamond sector.

A major cause of the increased debt in the industry according to both diamantaire and bankers
is Supplier of Choice. As traditional diamond companies have expanded into jewellery manufacturing
and established branding and marketing campaigns, so expenses have multiplied.

Although the banks are clearly well aware that these are necessary investments aimed at increasing the overall size of the diamond jewellery market, their concern is when the pay-off is going to arrive, Kniphorst explains.

With branding drives needing a period of years in order to take off and start showing results, assuming
the promotional efforts pay off, the banks are showing signs of losing the patience to wait. Indeed, the moment may not be far off when the banks demand that diamond companies ring fence their marketing and branding campaign expenses from their regular working capital needs.

What does the future hold? Well, in some respects there is positive news. It looks likely that rough prices are going to stabilize after their mad rush upwards in 2005 and strong rises in 2004. That may be because they have reached a limit in proportion to what is happening in the rest of the industry and because, as already stated, the banks are reluctant to extend more credit, especially when rough is turned into polished and the polished goods can't be sold quickly.

The industry also continues to hope that sales in the United States will remain robust and that there are no shocks to the U.S. economy. But with constant terror threats, the prospect of rising oil prices as geopolitical concerns continue to mount, particularly regarding Iran's nuclear development program, and a mixed economic outlook, jewellery sales may not rise strongly enough to rescue many diamond firms. This means that debt levels may well be set to continue their relentless upward climb.

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(tijd) - De Antwerpse Diamantbank, een dochter van de bankverzekeraar KBC, realiseerde vorig jaar een nettowinst van 31,1 miljoen euro. Dat recordresultaat is 13 procent beter dan een jaar eerder. Het rendement op eigen middelen bedroeg 22,5 procent. De Antwerpse Diamantbank omschrijft de recordwinst als 'enigszins opmerkelijk' gezien de daling van de dollar, nog steeds de munteenheid bij uitstek in de diamantsector.

De diamantbank verklaart de winstgroei door de grotere klantenfinanciering als gevolg van de fors gestegen prijzen voor ruwe en geslepen diamant. Voorts verwijst de bank naar toegenomen synergieën met haar moederbank KBC en naar haar groeiende marktaandeel op de internationale markten. Het aandeel van de buitenlandse vestigingen in de groepswinst groeide tot 22 procent.

De Antwerpse Diamantbank koos in 1998 voor een strategische heroriëntering en besloot de klanten te volgen in hun internationale ontwikkeling. De bank opende kantoren in New York, Hongkong en Mumbai. In Zwitserland heeft ze al sinds 1982 een kantoor.

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In the previous issue of ADL International Magazine, we reported on the emergence of Dubai as a diamond hub. In our opinion Dubai constitutes one of the 3 great challenges in Antwerp’s near future, besides the relocation of the diamond industry towards the primarily African rough diamond producing countries and the survival of the small and mid-sized companies on the market.

We clearly outlined some of the advantages Dubai has to offer: its strategic geographic location at the crossroads of commerce between Europe and the Far East and its attractive tax system with a guaranteed 50-year personal income and corporate tax exemption. In this issue, however, we have decided to give the ‘floor’ to some of the industry players, so that they can express their view on the Dubai challenge.

A leading Diamond Bank (Paul Goris Managing Director Antwerp Diamond Bank)

Which interesting perspectives Dubai has to offer as a diamond centre?

Better would perhaps be to ask how it all started in Dubai? Dubai already has a rich past as a gold trade centre and used to be a large oil producer. But as oil reserves were expected to significantly reduce in future years the Emirate state started to think of ways to replace oil revenues. That is why it has been aggressively promoting tourism, with the construction of a huge number of hotels, shopping malls, race tracks etc., while setting up large and specialised free zones which focused on communications, L.T., financial services, industrial assembly plants, etc. Dubai also had the idea to do something around gold, diamonds and minerals which eventually lead to the creation of the DMCC (Dubai Metals and Commodities Centre).

Dubai clearly has some assets. First of all, its regulatory environment. Dubai not only offers foreign companies a corporate tax exemption for a period of no less than 50 years but it also relaxed e.g. his real estate and corporate ownership rules, visa policy, etc. Secondly, its location. Dubai is situated at the crossroads of commerce between Europe and the Far East, while also serving regional Middle East markets. The latter links up with the DTC’s efforts to stimulate its clients to promote diamonds in this region. A couple of years ago, when strolling down the gold soukhs, you could only find gold jewels, but today 25% of all purchased jewellery is said to be studded with diamonds. “Diamond addiction” thus has clearly grown. But not only Dubai, the entire Middle East region has tremendous growth potential. That is why so many diamantaire feel it is interesting to go there.

Could anyone have predicted the emergence of Dubai as a global diamond centre?

Dubai’s diamond related ambitions have indeed been developing for a couple of years and this has probably been somewhat underestimated by Antwerp.

Of all emerging diamond markets, why does Antwerp fear Dubai most?

Dubai will most probably focus on developing itself as a trade centre, rather than as a manufacturing centre as the labour cost will be too high compared to e.g. India. Of course, jewellery will be manufactured locally to serve the local market.
In all, one could imagine that one day Dubai may become an internationally oriented rough and polished trade and
distribution centre as well as a hub for the Middle East region, like e.g. Hong Kong is for the Asian region. That is
why Dubai is a greater threat to Antwerp than let’s say India or China.

One question could be: how will Dubai succeed in getting the leading diamond banks?

That is pretty simple: banks have to follow their clients. As a result, ABN AMRO already started a diamond desk in Dubai some time ago and the Antwerp Diamond Bank Group is now busy with setting up a representation in Dubai which should be operational some time soon in 2005.

What can be done to assure Antwerp’s leading position?

It is pretty clear that Antwerp will have it very difficult to fully smooth away the differences between itself and Dubai. Only think about Dubai’s favourable regulatory environment, its attractive location and the future potential of the Middle East market. What can be done, perhaps, is to work together with the government to create a more balanced “level playing field”, meaning that the same rules should be applied everywhere.

However, it is pretty obvious that Dubai will not see great benefit in adopting more rigid legislation. Why, in the end, should it as it is recognised to be KP compliant, member of the World Federation of Diamond Bourses and making clear efforts to comply with WTO regulations? As such, we can all but hope that the planned round table talks between the government and the industry may render some results.

Is Dubai’s way to success already paved?

This is a bit too early to tell.
One of Dubai’s uncertainties is perhaps its relationship with Israel. If Dubai wants to promote itself as an international diamond trade centre, then it must trade all sorts of goods without being limited to Indian goods for example. But practical progress has already been made in this respect. Another question mark could relate to Dubai’s political and legislative structure. But it is unquestionable that the country is lead with great vision and in an intelligent way.
On the other hand, as already said, Dubai has a number of unquestionable potential strengths like its regulatory environment, location, infrastructure and financial capacity which allows it to attract international expertise to further and continuously improve its competitive advantages.
Overseas competition is a logical consequence of evolving markets nowadays and should therefore not be catalogued as a surprise. The ‘threat’ from Dubai as emerging global diamond centre is real and should not be underestimated.

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(tijd) - KBC Bank is van plan een privé-uitkoopbod te lanceren op alle aandelen van de Antwerpse Diamantbank die nog niet in haar bezit zijn. KBC Bank bezit 99,998 procent van de aandelen en wenst via het uitkoopbod ook het saldo van 0,002 procent te verwerven.

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ANTWERPEN (tijd) - 'Dank zij onze vrij recente internationalisering kwam vorig jaar al een vijfde van de groepswinst uit het buitenlandse netwerk. We kijken nu met veel belangstelling naar Dubai en China. Die markten hebben een enorm potentieel en de buitenlandse diamantairs staan klaar. Wij ook', zegt Paul Goris, de directievoorzitter van de KBC-dochter Antwerpse Diamantbank.
2003 was een turbulent jaar voor de wereldwijde diamantindustrie en voor de Antwerpse in het bijzonder. Vooral de invoering van de 'supplier of choice'-strategie door de Zuid-Afrikaanse diamantgroep De Beers zond een schokgolf door de markt. Een derde van de 45 Antwerpse bevoorrechte afnemers van ruwe diamant van De Beers werd geschrapt. De overblijvende 'zichthouders' moeten meer marketinginspanningen leveren. De Beers wil immers zelf diamant promoten en verkopen aan de eindgebruiker en niet langer uitsluitend als prijscontroleur van de markt voor ruwe diamant optreden. 'Branding', of het vermarkten van de merknaam, is het nieuwe codewoord. Een neveneffect van de nieuwe strategie is dat mogelijk 500 jobs verloren gaan in de Antwerpse diamantsector.
De invoering van 'supplier of choice' in juni vorig jaar leidde tot heel wat onrust in het Antwerpse diamantmilieu. Hebben de diamantairs de nieuwe marketingstrategie al verteerd?
Paul Goris: 'De supplier of choice is nog niet verteerd, ik denk dat de industrie nog heel wat aanpassingstijd nodig heeft. De Beers wil om de twee jaar een grondige evaluatie van zijn zichthouders doorvoeren. Het zal voor de diamanthandelaars telkens afwachten zijn of ze er nog bij zijn.'
Is de 'supplier of choice'-strategie volgens u een goede zaak?
Goris: 'Ik denk dat zowat iedereen ervan overtuigd is dat het basisidee achter supplier of choice niet slecht is. Het is de bedoeling om via branding en marketing meer diamanten te verkopen. De diamantsector kan niet om de vaststelling heen dat ze amper 1 procent van de omzet aan marketing spendeert, tegenover 10 procent voor andere luxeproducten. Dat zet een rem op de groei van de diamantverkopen. Vooral in de duurdere prijsklasse en in specifieke markten is een merk belangrijk als kwaliteitslabel.'
'Maar in de praktijk zit je wel met enkele belangrijke problemen. De bijkomende marketinguitgaven drukken natuurlijk op de winstmarges. Dat is niet echt onoverkomelijk voor bedrijven die verticaal geïntegreerd zijn en dus actief zijn in de handel van ruwe en geslepen diamant tot en met de distributie van juwelen. Die spelers beschikken over de hele toegevoegde waarde van de productiepijplijn en kunnen de extra inspanningen dus aan. Maar niet iedereen is zo geïntegreerd. De Beers raadt de handelaars aan meer activiteiten naar de eindconsument te ontwikkelen, maar daar zijn aanzienlijke investeringen voor nodig. De financiering is niet altijd voorhanden.'
Glamour
Is dat niet de taak van de diamantbanken?
Goris: 'Momenteel betrekken de diamantairs vooral kortetermijnfinanciering bij de banken. Als je die financiering gaat gebruiken voor investeringen op middellange tot lange termijn, kom je in de problemen. Alvorens wij hiervoor financiële middelen ter beschikking stellen, moeten we als bank natuurlijk de zekerheid hebben dat die marketingprojecten goed in elkaar zitten. Het probleem is dat de diamantsector daar tot op heden weinig ervaring mee heeft. Je hebt marketingspecialisten nodig. Er zijn maar weinig diamantbedrijven die daarover beschikken. Als je een extern bureau in de arm neemt, kun je je afvragen of het wel de relevante expertise heeft. De risico's van een 'branding'-project blijven trouwens groot. Studies wijzen uit dat slechts één op de tien projecten succesvol is, al kan dat in de diamantsector iets meer zijn omdat er nog maar weinig merken bestaan. Onze bank zoekt mee naar een oplossing om de diamantairs bij te staan.'
'Een bijkomende moeilijkheid is dat de zichthouders na elke tweejaarlijkse evaluatie door De Beers uit de boot dreigen te vallen. Ze hebben dus geen echte zekerheid over de bevoorrading met ruwe diamant, maar moeten wel investeringen doen. Dat klopt niet. De Beers lijkt dat te beseffen en bekijkt blijkbaar of er aanpassingen mogelijk zijn.'
De Hoge Raad voor Diamant, de koepelorganisatie van de Antwerpse diamantindustrie, borduurt voort op de strategische ommezwaai van De Beers en wil van Antwerpen een internationale juwelensupermarkt maken. Dat zou de derde pijler moeten worden naast de bestaande handel in ruwe diamant en geslepen goed. Is dat een realistische ambitie?
Goris: 'Het plan voor een juwelenhoofdstad heeft iedereen in de sector enigszins verrast. Er bestaat heel wat twijfel over het idee, dat vooralsnog zeer vaag blijft. Om te beginnen denk ik dat Antwerpen niet beschikt over een locatie met de gepaste glamour, zoals de Parijse Place Vendôme. Bovendien is er geen juwelenindustrie in België. Wat zal dan de toegevoegde waarde van de verdeelhuizen in Antwerpen zijn? Vergeet ook niet dat de Verenigde Staten en de Indiërs al eigen distributiekanalen hebben opgebouwd.'
'Ik heb de indruk dat het idee van de juwelenhoofdstad is afgezwakt. Men begint nu meer te spreken over een distributiecentrum voor juwelen.'
Laten we het even over de Antwerpse Diamantbank hebben. Uw bank realiseerde vorig jaar een nettowinst van 24,2 miljoen euro, 8 procent meer dan in 2002. Het rendement op eigen middelen steeg tot 20,5 procent, bijna een verdubbeling tegenover vijf jaar geleden. Wat is de verklaring voor die vooruitgang?
Goris: 'We plukken nu de vruchten van de strategische heroriëntering die we in 1998 hebben doorgevoerd. We hebben toen een antwoord geformuleerd op twee belangrijke vaststellingen. Ten eerste merkten we dat onze klanten steeds meer de internationale toer opgingen. Omdat het aangewezen is om zoals elk goed bedrijf de klanten te volgen, hebben we onze filosofie van 'de bank van hier' begraven. We hadden al wel sinds 1982 een kantoor in Zwitserland, maar dat was onvoldoende om jezelf een 'globale bankier voor een globale industrie' te kunnen noemen. Daarom openden we in 1999 een vertegenwoordigingskantoor in New York. De Verenigde Staten zijn nog steeds de grootste retailmarkt voor diamantjuwelen en de belangrijkste importeur van geslepen diamant uit Antwerpen. In 2000 volgde een kantoor in Hongkong, de toegangspoort tot de Aziatische markt. En in 2002 kreeg Mumbai een filiaal van de Antwerpse Diamantbank. India is een belangrijke diamantmarkt. Ter illustratie: 60 procent van de Antwerpse diamantsector zou in handen van Indiërs zijn.'
'Het gevolg van onze internationalisering is dat vorig jaar al 20 procent van de groepswinst uit het buitenlandse netwerk kwam. Naast een hoger rendement heeft dat ook het voordeel dat je je risico's geografisch kunt spreiden.'
'De tweede strategische bijsturing betrof de uitbreiding van ons productengamma. Ons aanbod was te gelimiteerd voor die internationale spelers. We boden enkel kredietverlening, wat nog steeds de hoofdactiviteit is, en diensten in verband met internationaal geldverkeer en goederenverrichtingen. Nu bieden we ook onder meer gespecialiseerde producten voor het indekken van wisselkoersrisico's aan, of een commercial paper-programma, waarbij grote spelers zich via de geldmarkt kunnen financieren.'
KBC Diamant
Jullie nieuwe strategie viel ongeveer samen met de vereenvoudiging van de aandeelhouderstructuur van de Antwerpse Diamantbank. Was dat een van de succesfactoren?
Goris: 'Zeker. KBC nam midden 1999 de belangen van Fortis en de toenmalige BBL over en kreeg zo 87 procent van de Antwerpse Diamantbank in handen. De Beers verkocht in 2002 het resterende belang aan KBC. Vooral het feit dat KBC al snel de enige bancaire aandeelhouder werd, was belangrijk. Voor de activiteiten in onze buitenlandse kantoren heb je immers een lokale bankpartner nodig, en dat is gemakkelijker te organiseren als je één bank als aandeelhouder hebt. We bieden onze klanten sinds drie jaar ook retailbankieren aan via KBC. KBC heeft hier in onze Antwerpse zetel een speciaal retailkantoor opgericht - KBC Diamant - en dat draait goed. Onze klanten kunnen er terecht voor spaarproducten, maar ook voor bedrijfsproducten zoals investeringskredieten, leaseproducten of een bedrijfsleiderverzekering.'
Plant de Antwerpse Diamantbank nog nieuwe buitenlandse kantoren?
Goris: 'We kijken met zeer veel belangstelling naar Dubai. Het emiraat kampt met terugvallende olie-inkomsten en heeft daarom ambities ontplooid op een reeks andere domeinen, waaronder de diamantindustrie. Dubai wil uitgroeien tot de draaischijf voor diamant in het Midden-Oosten, en het kan daarvoor op de volle steun van de overheid rekenen. De infrastructuur is er schitterend en het belastingklimaat voor bedrijven is er uiterst mild.'
'Dubai mikt op drie segmenten. In de eerste plaats kijkt men naar diamantjuwelen. Vandaag domineren de goudjuwelen nog, maar de diamant komt op. Omdat er een groot marktpotentieel is, neemt de interesse van buitenlandse diamantairs toe, ook in Antwerpse kringen. Voorts wil Dubai zich opwerpen als internationaal distributiecentrum voor diamant, en daaruit kon op zijn beurt weer een handelscentrum groeien. Ze doen momenteel veel moeite om handelaars aan te trekken. We houden er daarom rekening mee dat mogelijk een deel van het Antwerpse handelsvolume naar Dubai zou kunnen verhuizen. Om te vermijden dat onze bank daaronder zou lijden, moeten we de klant wellicht volgen. Dat bestuderen we nu.'
Ook China is aan een opmars in de diamantwereld bezig. Hebben jullie daar ambities?
Goris: 'China is de volgende groeimarkt. Er zijn in de Volksrepubliek al heel wat diamantslijpers en fabrikanten van diamantjuwelen actief. De geslepen diamant is van een goede kwaliteit en steeds meer Antwerpse bedrijven doen een beroep op Chinese onderaannemers voor het slijpwerk. Die slijpers zouden graag voor eigen rekening werken, maar daar heb je ruwe diamant voor nodig, en die is er niet. Daar ligt een enorme opportuniteit voor ruwhandelaars. In Sjanghai heeft men al een heuse Diamand Exchange met veel leden, maar voorlopig nog lege bureaus. De hoge BTW voor geslepen goed voor de lokale markt blijft voorlopig een belangrijk obstakel, samen met de onduidelijke juridische omkadering en de taalhandicap van de Chinezen. Maar de lokale markt heeft onmiskenbaar een enorm potentieel en de buitenlandse diamantbedrijven houden zich klaar. Ook wij houden de ontwikkelingen dus goed in het oog.'
Kris VAN HAMME

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(tijd) - De Antwerpse Diamantbank (ADB), een volle dochter van KBC Bank, realiseerde vorig jaar een nettowinst van 22,4 miljoen euro. Dat is 58,5 procent meer dan een jaar voordien. Maar dat resultaat is deels te verklaren door de verandering in de consolidatiekring. Operationeel is de winststijging een stuk minder spectaculair. De Antwerpse Diamantbank is als nichespeler uitsluitend actief als financier en dienstverlener van de diamanthandel en -nijverheid. Ze verstrekt hoofdzakelijk kredieten aan ruwhandelaars en slijpers. Een nichemarkt die het ondanks de slechte economische conjunctuur 'niet zo heel slecht' deed. 'Operationeel steeg de winst ongeveer met 10 procent', verduidelijkt afgevaardigd bestuurder De Bosscher. De sterke groei van de nettowinst geeft een vertekend beeld, onder meer door de gewijzigde consolidatiekring. 'De winstgroei is hoofdzakelijk te danken aan de sterk gedaalde afschrijvingen, die in 2001 uitzonderlijk hoog lagen', knikt De Bosscher. En ook andere factoren bemoeilijken een vergelijking. Zo werden de inkomsten uit de commerciele bankactiviteiten negatief beinvloed door de lage stand van de dollar. 'Vergeet niet dat meer dan de helft van onze inkomsten afkomstig is uit de VS. Een deel van het wisselkoersrisico dekken wij in door hedging, maar daar zijn limieten aan', aldus de topman van ADB. Netwerk Om bovenstaand risico op te vangen probeert ADB zijn activiteiten geografisch te diversifieren. Na Geneve, New York en Hongkong, werd vorig jaar ook een kantoor geopend in het Indiase Mumbai. Een internationaal netwerk dat stilaan zijn vruchten begint af te werpen. 'Met name India en China zijn zeer interessante markten', aldus De Bosscher. Al baart de snelle verspreiding van de besmettelijke longziekte SARS wel zorgen. Een belangrijke diamantbeurs in Bazel weerde recent alle handelaars uit Hongkong.

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Leading players in the international luxury goods and diamond and jewelry industries gathered in Antwerp in early November to discuss what really is the buzz behind the brand game. Throughout the past couple of years companies have been branding their goods like there’s no tomorrow. To begin with we were all highly excited over what appeared to be a new, and many thought, extremely lucrative niche in the market that the industry hadn’t yet cornered. Finally, companies in the diamond industry thought they’d discovered an avenue that would afford greater premiums, greater market share and a chance to curry favor with their ‘Supplier of Choice’. But as we all know, nothing that’s worth having comes easily. Unfortunately for many companies they have discovered this the hard and very expensive way over the past twelve months.
It has though been brand mania this year. Everywhere you look, every magazine, every meeting and every industry event has been extolling the virtues of branding. Last month what must have been the ultimate in diamond, jewelry and branding conferences took place in Belgium’s diamond capital. A host of industry and marketing experts took the podium providing their expert views on marketing, promoting and publicizing what has been a disgracefully under marketed product - diamonds. From the geniousity behind Hidetaka Kato of Kashikey Co., Ltd’s innovative push behind brown diamonds in Japan, to DTC’s sales and marketing guru Gareth Penny’s jaw-dropping presentation on the does and donts of diamond marketing, it was a two day conference that afforded all who attended a complete A-Z of the best and the worst in luxury goods and jewelry marketing.
The Conference kicked off with one of the industry’s leading bankers telling the audience of some 600 industry players that now is not the time to ‘schofarberer’ - (paint a somewhat rosy picture of a somewhat bleak landscape). Peter Gross, global head of ABN Amro Bank’s Diamond and Jewelry Division, stressed to the packed auditorium in Antwerp’s Provincehuis that the lengthy credit terms, excess polished inventory, artificially influenced prices of rough diamonds has resulted in a rapidly declining quality of debt. “Companies must realize that they increase their own risk when agreeing to excessive payment terms going beyond these conventions. Requests for terms going up to one year in some markets are not reasonable and the trade, and here I am particularly referring to the manufacturers, must learn to say no. Even if it means that a sale is lost.” “We need to return to business basics,” he urged. “It’s time for long term strategies and a closer focus on the bottom line”. Gross also noted that the industry’s banking indebtedness had risen over by $2 billion since 2000, now standing at $8.663 billion compared to $6.11 billion. (For further details on Gross’s highly talked about speech turn to page 101). In his opening remarks, Gary Ralfe, MD of De Beers, expressed “regret” for the distress caused in the industry over the implementation of Supplier of Choice. But, no surprise when he repeatedly stated that SoC will ultimately prove a greater benefit to the industry as a whole. Branding too came into Ralfe’s address, the De Beers MD even briefly mentioned the De Beers LV brand. By all accounts, the launch of the high-end jewelry line has not lived up to expectations. Sales are far below forecasts, the opening of the De Beers LV stores in Tokyo has proved to be less than successful and the company is currently running into problems with production.
“Because marketing and branding are relatively new concepts in our industry, let us take time to reflect on them and not get dragged into the turmoil of the ongoing marketing hype. Secondly, let us take time to reflect on the benefits of gradually building up experience by ‘starting small’ in order to, hopefully, ‘end big’,” thus spoke another of the industry’s most revered bankers, Paul Goris of the Antwerp Diamond Bank. “A well-known saying in marketing circles, seemingly dating from 1923, is: I know that half of the money I spend on advertising is wasted; the trouble is I don't know which half.” In doing so, we may find ourselves an answer to that Hamlet like enigma: “To market, or not to market? That’s the question. And hopefully, we will be able to avoid the somewhat depressing end of Hamlet’s play where nearly all characters died before the curtain fell,” he so poignantly concluded.
During a panel session, BHPB’s Graham Nicholls, Rio Tinto’s Nigel Jones, Alrosa’s Sergey Oulin and the DTC’s Stephen Lussier found themselves defending the current high prices of rough. Dave Lappa of Overseas Diamonds faced the miners and asked in a most direct manner, “after the DTC dropped its custodian role, why didn’t prices of rough fall?” Lussier took up the gauntlet responding that it’s all about supply and demand and at the present there is a very strong demand for rough. Earlier in the conference Peter Gross had addressed the issue of the disparity between what is generally considered the artificially inflated prices of rough and polished prices. “During the past ten years more and more small, medium and large polishing plants were built in India and elsewhere to process the initially huge supplies from the Argyle mine and the releases of the large Russian and De Beers stockpiles. These stockpiles are gone now and Argyle’s production reduced by about one-third from its peak, but the manufacturing capacity is there. To keep these plants going we are now seeing an artificially high demand for rough. The competition for rough is now in the price, pushing it to unrealistic levels. At the same time high stock levels in polished resulting from the past overproduction have kept polished prices stagnant,” he noted.

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Antwerp Diamond Conference over marketing en merken

De diamant is, letterlijk en figuurlijk, een kleurloos product. De sector is nu pas aan het ontdekken hoe doeltreffende marketing reliëf en kleur aan het aanbod kan geven. In Antwerpen discussieerden de afgelopen twee dagen vijfhonderd diamantairs over hoe dat precies moet gebeuren.
Kijk'', wijst reclamemaakster Carol Potter van J. Walter Thompson naar een dia van een langoureuze blondine in een sensuele pose. ,,Dat is een attractieve vrouw. Maar dìt'', en ze tovert een dia van Marilyn Monroe met opwaaiende rok tevoorschijn, ,,is iets heel anders. Dit is niet alleen een aantrekkelijke blondine, maar eentje die de ultieme vrouwelijkheid vertegenwoordigt, die meer is dan louter fysiek, die een emotionele meerwaarde heeft. Daarvoor zijn mensen bereid geld te betalen''.

De boodschap is duidelijk. De anonieme blondine vertegewoordigt de diamant is zijn huidige staat: een aantrekkelijk product, maar zonder identiteit. Monroe staat voor de diamant van de toekomst: een product dat dankzij uitgekiende marketing een duidelijker profiel heeft gekregen en de consument niet alleen fysiek, maar ook emotioneel zou moeten aanspreken. Carol Potter heeft de boodschap van de Antwerp Diamond Conference in twee beelden samengevat.

Marketing is momenteel het buzzword bij uitstek in de diamantindustrie. Menigeen is ervan overtuigd dat de hele sector, ,,van de mijn tot de vinger'', aan de vooravond van een revolutie staat. De diamant bevindt zich namelijk in een identiteitscrisis. Het is, om de woorden van directeur Peter Meeus van de Hoge Raad voor Diamant aan te halen, een wit product geworden. De enige eigenschap die mensen er spontaan mee associëren is de prijs. Diamanten zijn duur, maar daar lijkt alles wel zo'n beetje mee gezegd. Zijn diamanten hip? Ouderwets? Traditioneel? Innovatief? Elegant? Vulgair? Protserig? Een bewijs van goede smaak? Of juist niet? Geen mens die het weet. Diamanten hebben geen duidelijk profiel. Er wordt bijna geen reclame voor gemaakt. De diamantindustrie besteedt tien keer minder aan advertenties dan andere producenten van luxegoederen. En als de diamantindustrie eens in het nieuws komt, is het negatief. De kranten hebben volgestaan over bloeddiamanten en witwasoperaties.

De Beers, de grootste diamantproducent ter wereld, besloot als eerste dat er iets moest gebeuren. Het bedrijf, grotendeels eigendom van mijnreus Anglo-American, kampte met toenemende concurrentie, een stagnerende beurskoers en krimpende marges. De Beers liet zich een paar jaar geleden doorlichten door de consultants van Bain & Co. De conclusie was vernietigend. Het bedrijf was helemaal verkeerd bezig. Het moest zich meer gaan bezighouden met de activiteit waar het meeste geld te verdienen valt: de verkoop aan de consument. Terwijl de marge in de handel en de fabricage, traditioneel de domeinen van De Beers' dochterbedrijven, hoogstens enkele procent bedraagt, gaat het in de detailhandel om tientallen procenten. De Beers keek met jaloerse blikken naar bijvoorbeeld de parfumindustrie, die er bij uitstek in slaagt om dromen, imago's en aspiraties te verkopen door middel van uitgekiende marketingstrategieën. Of naar de mode-industrie, waar succesrijke merken hun waardevolle merknaam aan de meest uiteenlopende producten te hechten.

De heroriëntatie van De Beers leidde tot een joint venture met het luxe-imperium LVMH van Bernard Arnault, met de bedoeling een keten van exclusieve juwelenwinkels op te zetten waar het merk De Beers centraal zou staan. Tegelijk ging het bedrijf strenge eisen stellen aan zijn afnemers (de zogenaamde zichthouders). Zij worden voortaan streng geselecteerd en mogen zich, als ze het examen doorstaan, supplier of choice noemen. Van hen wordt verwacht dat ze zich actief gaan inzetten voor de diamantmarketing. Het hele proces zou op termijn de vraag naar diamant, en dus de omzet van De Beers en bij uitbreiding de hele sector, met 50 procent moeten doen stijgen.

Maar het hele proces verloopt niet probleemloos. Dat een aantal traditionele zichthouders het predikaat van supplier of choice om onduidelijke redenen aan zich voorbij heeft zien gaan, heeft al geleid tot klachten bij de Europese Commissie. En de opening van de eerste De Beers-winkel, in Londen, was met zoveel schandalen omgeven dat het duurbetaalde boegbeeld van de nieuwe onderneming, topmodel en Bowie-eega Iman, verstek liet gaan.

In de diamantsector zijn heel wat partijen sceptisch over de initiatieven van De Beers. Niet alleen omdat ze als zichthouder uit de boot gevallen zijn of omdat ze de gigant ervan verdenken het hele marketingverhaal als dekmantel te gebruiken voor het vergroten van het eigen marktaandeel. Maar ook omdat ze vinden dat diamant geen marketing nodig heeft. ,,Het woord diamant is op zichzelf al de beste merknaam die je je kan indenken'', zegt slijper Gabi Tolkowski, een voormalige werknemer van De Beers die zijn zelfontworpen Zoë-slijpvorm (genoemd naar zijn kleindochter) nochtans als merk heeft geregistreerd. Gary Ralfe, de topman van De Beers, ziet het anders. ,,Als je een oosters tapijt of een paar loopschoenen koopt, is het merk niet zo belangrijk. Maar een diamant is zo'n speciaal product, dat het merk de garantie voor integriteit moet zijn. We moeten voorbeeldig zijn, zowel op ethisch als op financieel gebied''.

De diamant mag dan als luxeproduct het nec plus ultra zijn, hij schittert lang niet meer zo fel als enkele decennia geleden. De prijs staat onder druk door de opkomst van nieuwe producenten en de ontdekking van nieuwe mijnen, er is de dreigende concurrentie van synthetische diamant, maar vooral heeft de edelsteen der edelstenen zijn functie als statussymbool grotendeels verloren. Vroeger, ongeveer tot de jaren '70, was de diamant uitsluitend weggelegd voor de rijken der aarde. De adel, het oude geld en de jet set bevestigden hun status met diamanten. Daar kwam in de jaren '80 en '90 verandering in. De samenleving individualiseerde, er kwam een hele generatie nieuwe rijken, die luxeproducten niet zozeer associeerde met status en afkomst, maar met succes in zaken en joie-de-vivre. De diamantindustrie speelde daarop in door modieuzere producten aan te bieden in een bredere prijsvork, en door meer aandacht te besteden aan communicatie. ,,Toegankelijkheid en kortstondigheid vervingen het exclusieve en tijdloze element'', zegt Stéphane Truchi van het Franse marktonderzoekbureau Ipsos, dat het fenomeen in kaart heeft gebracht.

Maar de groei van de diamantindustrie is de laatste jaren fors afgenomen. ,,Voor 1991 groeide onze sector sneller dan het bruto binnenlands product in de meeste landen'', zegt topman Vladimir Kalitin van de Russische producent Alrosa. ,,Sindsdien is het omgekeerd''.

,,Het evangelie van marketing volgens De Beers'', zegt directeur Paul Goris van de Antwerpse Diamantbank met enige ironie. Goris is als bankier bezorgd over het financiële plaatje. Marketing kost veel geld. De kans bestaat dat diamantbedrijven, die hun activiteiten traditioneel met kortetermijnkredieten financieren, dit geld gaan gebruiken om projecten op middellange termijn te gaan bekostigen. Dan kunnen ze in financiële problemen komen. De schuldgraad van veel diamantbedrijven is er de laatste jaren sterk op verslechterd.

De wereldwijde diamantbranche staat momenteel voor 9 miljard dollar bij de banken in het krijt. Drie jaar geleden was dat nog maar 6 miljard. In Antwerpen is de gezamenlijke bankschuld van de sector gestegen van 1,8 naar 2,3 miljard dollar. De recente faillissementen van twee Antwerpse diamantbedrijven, de slijperij Sonydiam en de ruwhandelaar Avi Gems, spreken wat dat betreft boekdelen.

Een andere vraag die de sector zichzelf stelt, is of de consument wel op merkdiamanten zit te wachten. ,,Bijna alle initiatieven op dat gebied zijn mislukt'', zegt Pierre Gurdjian, die voor McKinsey de diamantmarkt volgt. ,,De tientallen slijpvormen waarmee iedereen zichzelf nu wil onderscheiden, zijn voor de modale consument niet te herkennen. En het verbinden van een merknaam aan diamanten als een speciaal juweleningrediënt, zoals Intel heeft gedaan voor computers, werkt alleen voor de bovenkant van de markt''.

Toch blijven De Beers en zijn groothandelsfiliaal, DTC, erin geloven. Gareth Penny, de directeur van DTC en de drijvende kracht achter alle marketinginitiatieven, toont met cijfers aan waarom. Tussen 1980 en 2000 groeide de omzet van de luxegoederenbranche met 400 procent, terwijl de verkoop van diamant met maar 300 procent toenam. Dat komt, zegt hij, doordat de sector van oudsher te veel op de aanbodzijde gericht was. ,,We moeten omschakelen van supply management naar demand management''. Met andere woorden: beter gaan aanvoelen wat de klanten willen en daarop inspelen. ,,Wie een diamant koopt, doet dat niet omwille van het steentje'', weet Penny, ,,hij doet dat omwille van de symboliek''.

DTC wil dat de suppliers of choice en de juweliers meer gaan nadenken over de manier waarop het product aan de klant wordt aangeboden. Zo blijkt dat veel vrouwen niet alleen diamanten sieraden krijgen van hun partners, maar ook juwelen voor zichzelf kopen. DTC heeft daar op ingespeeld door veel reclame te maken voor de ,,ring aan de rechterhand''. Die symboliseert de persoonlijkheid van vrouwen. Het is maar één van de marketing-initiatieven die de laatste tijd van de grond gekomen zijn.

Maar efficiënte marketing gaat verder dan het aanboren van nieuwe markten, koopmomenten en productcategorieën. Het gaat soms om simpele dingen als de verpakking, de opleiding van het winkelpersoneel, de manier waarop prijskortingen verleend worden (,,Gucci en Louis Vuitton doen dat ook niet''), de ligging van de winkels en de aandacht van de media. Als voorbeeld van dat laatste toont Penny trots foto's van Sex & the City-actrices die hun ,,ring aan de rechterhand'' laten zien.

,,De marketing revolutie gaat niet noodzakelijkerwijs om merken'', zegt Penny's collega Stephen Lussier. ,,Het gaat erom dat iedereen in de sector nadenkt over wat we aan het doen zijn, zodat er uiteindelijk meer diamanten verkocht kunnen worden''.

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(tijd) - KBC Bank neemt de 12,83 procent over die de diamantgroep De Beers in de Antwerpse Diamantbank (ADB) had. Op enkele aandelen na is de ADB nu volledig in handen van KBC. Een prijs voor de transactie raakte niet bekend. De Antwerpse Diamantbank financiert bijna 50 procent van de bankschuld in de Antwerpse diamantsector. Wereldwijd is dat 20 procent.

KBC is sinds de oprichting van de Antwerpse Diamantbank in 1937 aandeelhouder. Midden 1999 nam KBC het belang van BBL en Fortis Bank over en kreeg zo 87,17 procent in handen. Henfin, een van de holdings uit de Zuid-Afrikaanse De Beers-groep, behield 12,83 procent. Henfin verkocht dat aandelenpakket nu aan KBC Bank. Een prijs raakte niet bekend. Maar het is een faire prijs, gezien de marktomstandigheden, verklaarde een woordvoerster van KBC cryptisch. Anthony Oppenheimer, die voor De Beers in de raad van bestuur van de ADB zat, treedt terug. Hij wordt niet vervangen.Buiten enkele aandelen in handen van privé-aandeelhouders is KBC nu volledig eigenaar van de Antwerpse Diamantbank. Dat zal niets aan de strategie veranderen, zegt Paul Goris, directievoorzitter van de ADB. We blijven werken aan de internationalisering van ons netwerk. We hebben nu kantoren in Antwerpen, New York en Hongkong. En normaal krijgen we zeer binnenkort een vergunning voor een filiaal in Mumbai. We volgen onze klanten in het buitenland.De Antwerpse Diamantbank behoudt haar naam. Dat is een merknaam, zegt Goris. Die gooi je niet zomaar weg. Wel zijn we in het buitenland bekend als de Antwerp Diamond Bank Limited.De ADB is een nichespeler. De bank is financier en dienstverlener van de diamanthandel en -nijverheid. Wereldwijd financiert de ADB ongeveer 20 procent van de bankschuld in de diamantsector. Enkel ABN AMRO doet beter met 40 procent. In Antwerpen is de ADB marktleider met bijna 50 procent. In 2000 haalde de ADB een geconsolideerde nettowinst van 23,9 miljoen euro. Het balanstotaal bedroeg 1,5 miljard euro. De resultaten in 2001 zullen volgens Goris wel lager liggen. De diamantmarkt kende een moeilijk jaar. Er werd minder een beroep gedaan op bankfinanciering. Hoeveel lager de winst ging, kon Goris nog niet zeggen.

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