RAPAPORT... The Israeli diamond industry participated as an official delegation to the India International Jewellery Show (IIJS) in Mumbai for the first time in 2008. While sales may not have been up to expectations, the delegation’s presence furthered the Israel Diamond Institute Group of Companies’ (IDI) strategy to penetrate the Indian market.
“It was our first time at the show and part of our strategy for ‘the year of India,’” said Alissa Goren, IDI’s marketing director. “It was a first step for us and, hopefully, we can build on that now.”
Since IDI decided to focus on building its relationship with India in 2008, Israel has seen a significant rise in trade with the subcontinent. Israel’s polished diamond exports to India jumped 315 percent to $170.65 million in the first seven months of 2008. While that increase may have boosted expectations for the Mumbai show, many Israeli attendees left disappointed at the lack of serious buyers they met there.
“There was a lot of traffic but very little business,” said Rami Seren, a managing partner at Seren Diamond, a manufacturer of special fancy color and white diamonds that was a first-time participant in the show. “Indian buyers would ask for prices and make an offer that was generally too low.”
Expressing similar sentiment, Shlomo Bichachi, president of Shlomo Bichachi Diamonds, a specialist in manufacturing baguette, taper and all other square cuts, said the show was not profitable, adding that he felt like he was “back in school” with all the questions he got from visitors to the show. Having met only about 30 percent of his preshow expectations, Bichachi said, however, that he would return in 2009, given the potential of the Indian market.
Well-Suited PartnersGoren explained that tapping this potential was the philosophy behind IDI’s current focus on India, noting “it is phenomenal how well Israelis and Indians work together.” She recognized that although it is a difficult market for newcomers to break into — which was evident at the show — developing a presence in any new market takes time.
Some Israeli exhibitors who had attended IIJS previously noted that the lack of serious buying this year may have more to do with the global economic slowdown than with the state of the Indian market. “The global crisis has hit India as well,” said Yigal Hausman, chief executive officer (CEO) of Hausman Diamond Manufacturers and Online Diamond Trade and a former president of the International Diamond Manufacturers Association (IDMA). “The stock exchange is down and diamond prices have risen, so demand was a bit down from other Mumbai shows I have attended in an official capacity — and we saw that difference.”
Hausman said Israelis were encouraged by reforms that have been implemented by the Indian government — especially lowering duties on rough imports and creating a special economic zone (SEZ) in Surat — and that have boosted business between the two countries. He added, however, that there were still limitations on doing business in India that were evident at the show, pointing out, for instance, “We were still not allowed to sell directly at the show, so we took orders and had to bring the goods back to Israel to be re-exported, which adds to our costs.”
Most Israeli IIJS attendees agreed, however, that despite the lack of business done, the investment to attend Mumbai was worth the effort. “India’s a developing market and a very strong traditional jewelry market, so those who stick it out and persist will see the rewards,” Goren said.
Clamping Down on SmugglersFollowing a spate of diamond dealers failing to declare goods brought into Israel, Shmuel Mordechai, the country’s diamond controller, raised the penalty on undeclared goods from 15.5 percent to 20 percent of the value of the goods. Mordechai met with customs officials at Ben-Gurion Airport after the Israeli newspaper Ma’ariv published an “unflattering” article about the occurrence of diamond smuggling through Tel Aviv.
In the two weeks following the story, Mordechai said, nine more diamantaires were caught for nondisclosure of goods, one of which was for rough diamonds. He estimated that between 30 and 50 are caught each year, adding that “even if it were an insignificant number, they are giving the industry a bad name.”
“We decided to increase the severity of the punishment and, in the future, will raise the penalty to 25 percent,” Mordechai explained. Second-time offenders will lose their trading license and, in the case of rough diamonds, first-time offenders will lose their license, he added.
“There’s simply no justification for smuggling diamonds into Israel because there is no customs duty or value-added tax (VAT) on these imports,” he said. “We increase our call to members of the industry to be vigilant in declaring your goods. In doing so, you will save yourselves a lot of money and save us all any unpleasantness.”
The Marketplace • Activity in Tel Aviv is slow through the August vacation.
• There is rising concern about the U.S. economy.
• Expectations for the Hong Kong show are low, given global economic conditions.
• High rough prices are keeping companies in limbo. They can’t sell expensive due to slow demand and they can’t sell cheap because they will lose out when buying again at higher prices.
• There is some demand for H-J colors in clean commercial goods out of India and the Far East.
• Strong fancy colors such as intense and vivid yellow are in demand.
Article from the Rapaport Magazine - September 2008. To subscribe click here.