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The industry should stop soliloquizing – it is time to talk to consumers

12 december 2016

andrey_polyakov_xx.jpgThe global diamond industry, while discussing the situation on the market within its own circle, sometimes does not pay enough attention to the dialogue with its main counterparty - the end buyer of its goods, natural diamonds, which are embodying not so much the value attached, but most of all genuine feelings of people towards each other. Learning to communicate information about the industry and its products to consumers is now becoming an urgent task. This and many other issues were touched upon by Andrey Polyakov, President of the World Diamond Council (WDC) in his interview to Rough&Polished.

WDC faces many ambitious tasks built in its Strategic Plan till 2020. The main goals relate to strengthening industry positions in the KP. But there is another task, which you constantly mention – education and informing of stakeholders and public. Could you tell us more about this goal? What does it mean and why did it become relevant?

This is a complex task, subdivided into two areas. One area is directly related to the WDC activities within the Kimberley Process. The efficiency of the KP depends on how well the participants of the diamond trade and its stakeholders, primarily State representatives, understand the principles of this market, and the KPCS mechanism. Today the WDC continues to convey this information to stakeholders, it might be guidebooks, seminars or any other various forms of education. The central focus of these materials is to explain what the KPCS is, why is it necessary, and which requirements should be met to participate.

The second area of this education effort is more global. The WDC must educate those outside of the diamond industry as they typically do not have a large understanding of mining and polishing technologies, the life of a miner or cutter, the vigilant regulation of the industry as well as its contribution to the global economy.

Of course, I understand that the situation in many other industries is the same. Many people all over the world drive cars without any idea about how it works. Additionally, people use computers, but are hardly interested in where and how it was assembled. Conversely, our product is one of the kind and requires a special and unique production approach. The diamond has a symbolic meaning; it expresses a person’s emotions. Global polished diamond sales depend on the consumers’ perception of our product. As a result, one of our major focuses is to educate consumers about all of the good that the diamond industry does throughout the globe. It is very unique business and the branched structure currently employs more than 10 million people and supports the economy of several countries across the globe.

As I understand, this is the main goal of the Diamond Producers Association, created a couple of years ago.

This is only somewhat true, the main task of DPA is to implement generic marketing programs in an effort to reinstate the symbolic meaning of a diamond among the younger generation. This is a huge challenge in itself. However, the symbolic meaning is not the only information the consumer needs.

Today's consumer is not similar to its predecessors. It is less concerned about wealth and status, and thinks more about proactive behavior, social responsibility, the contribution to making the world a better place to live. The modern consumer wants to be sure that he or she buys the goods produced in accordance with ethical and environmental standards, and, of course, a product that is not associated with any conflict or violence.

The diamond market is a role model in this field. It is one of the most science-driven, socially responsible and transparent sectors. As a result, we must continue to educate the world about these efforts. Individual diamond mining companies or big retailers often interact with the media, but talk primarily about their performance or advertise their own brands. Industry organizations are primarily occupied with the issues of regulation within the industry, so they are more concentrated on B2B activities. Thus, it is the WDC’s role to tell the broader story of diamond production, in an effort to educate the growing groups of socially responsible consumers.

For example, the industry world is educated about what the Kimberley Process is and what the KP Certificate is. But if you ask the same question to a man on the street, you will see the opposite result. People have a superficial knowledge about the existence of conflict stones from the Hollywood movies and scandalous publications, but have no idea that this problem has been eliminated and in fact more than 99% of all diamonds in the current supply chain have a confirmed conflict-free origin as a result of the industry’s continued efforts.

In theory, there is the possibility for interaction between the DPA and the WDC. DPA unites diamond miners to conduct generic marketing programs through modern communication technologies. The WDC brings together the entire industry from mining to retail in the framework of the Kimberley Process. We have not yet discussed any specific events, but I think there is an opportunity for potential synergy between us.

You did not discuss specific events, but maybe you have some ideas?

Our major focus is on transparency. One way in which we can achieve this goal is to arrange a global press tour for journalists of the world media to all areas of the diamond business. We can show them diamond mining in Russia and in Africa, trading in major diamond hubs, cutting in Surat, retail in the US. People need to understand the stories behind the people involved in this process and to see firsthand the true beauty of the diamond industry. The diamond industry is a high-tech business, which provides millions of people with jobs, gives them social security, and allows them to get an education. We can talk about it, but it is better to let people see it with their own eyes.

Overall, education is not a quick process, but it is vital for the future of our industry. Today the consumer does not typically see this information in the media and cannot get it in the jewelry store. As the industry voice within the KP it is our job to supply them with this information.

I’ll say, synthetics manufacturers overtake you in the field of informing. Recently we prepared an analytical review on synthetic stones sales and found that in their advertising they often compare their product with natural diamonds, openly calling natural stones bloody and polluting.

I understand the logic of synthetics manufacturers. They need to bring a new product to the market, which has existed for hundreds of years and has been a major economic producer for many nations across the globe. The market is already extremely saturated, actually, there are other products aside from synthetics that are seen as a substitute for natural stones – like cubic zirconia. Once I stumbled upon an interesting discussion on one of the popular US forums. The user asked whether they should buy a synthetic stone. There was a lot of replies like «What is synthetic diamond? Is it real? You'd better take zirconia, at least it is well-known product, not a pig in a poke! »

It is clear that synthetics producers need to come up with something that would attract everyone's attention. In such cases, young companies on any market often use «scandalous» techniques, including comparisons with competitors and their discredit.

The most obvious way for them to achieve their goal of entering the market is to say that natural diamonds are bad. For example, there have been claims that buying the natural stone brings with it a bad energy. Despite the fact that it's not true, reading such a statement or seeing it on a picture, one might have a negative impression or begin to doubt. And then he/she is offered an alternative to buy a lab-grown stone, which cannot be conflict because it has not even been mined.

Besides, the main part of such an aggressive Ad is published in social networks and streaming videos where young people can see it. Millennials have mosaic thinking, they perceive the world in short and vivid images. Therefore, the imagery of a “blood diamond” will be more convincing for them than a long article about the fact that conflict diamonds are no longer a problem. In this regard, I can say that synthetic producers professionally use modern methods of communication.

It seems that no one deals to protect the reputation of natural stones injured by these Ads.

No one really does at the moment. But it certainly needs to be done. As I understand from conversations with colleagues in the sector, soon we'll see some concrete steps in this direction. In particular, the intention is to appeal to the judicial protection, because in some cases this advertising contains deliberately false information, discrediting the natural stones and their manufacturers. There are industry organizations, which could be the claimants. We don't have an aim to forbid synthetics or to adjudge some astronomical amount of compensation. The point is to maintain the current civilized marketplace that has been established with the help of the KP and all of its stakeholders.

Does it mean that you perceive synthetics as a full-fledged competitor to natural stones?

It looks like synthetics producers perceive themselves this way. I believe that synthetic stones are a separate niche product, and worth someone’s attention. There are many other products with "alternative" options. There is a market of natural fur and leather, and its artificial counterparts. There are precious metals jewelry and fashion jewelry. As well, there are natural diamonds, and there are Swarovski crystals, which have their own followers. Synthetic diamonds can also find the consumer.

I just insist on the synthetic producers providing full information about their products. At the moment, synthetics is often connected with some concealment or misrepresentation of information. Previously we’ve seen unfair practice of mixing synthetics with natural diamonds in parcels. This practice is a direct fraud against buyers of diamonds – those jewelers who purchased the parcel to create a jewelry and those retail customers who decided to buy a ring. Imagine how you'll feel if you were sold synthetic fur coat under the guise of natural. Now we see another issue dishonesty and unfair advertising of synthetics, which does not describe the advantages of their product, but just denigrates natural stones.

However, I don't think that this “aggressive” rhetoric against natural stones is the principled position of synthetics producers. I’d rather say this is carelessness of their marketing specialists. But in the end, it can backfire all over the diamond market, not only natural stones. The modern consumer is surrounded by huge amounts of information. What he or she could learn from this informational flow? There are natural stones, which are either good or not, there are some artificial stones, which cannot be called diamonds. At some point the consumer may simply turn away and say, "I’d better avoid diamonds at all, it's a too murky subject."

Don’t you think that any documentary confirmation would reassure the consumer much better than words and Ads? Today the consumer has little to learn about the stone in the retail store. In the best case, he will be offered a certificate with 4-Cs.

This is another complicated moment, which is associated primarily with the complex structure of our business. For example, you can confirm the non-conflict origin of the stone by the KP certificate. But the KPCS applies to rough diamonds only. Everything that happens on the next stages of jewelry production is not subject to regulation and remains on the conscience of diamantaires. Of course, today many cutters and retailers voluntarily declare that they support responsible business and are committed to use only conflict-free stones. But again, let's think about the consumer: could he or she believe on sellers’ bare word, especially if he makes a purchase not in a large branded shop but in one of the one door stores? The modern consumer needs more guarantees than just loud statements, which surround us on TV a hundred times a day.

Within the WDC, we have created the System of Warranties, which aims to extend the proof of non-conflict origin of stones through the diamond pipeline down to retail consumers. Now it's just a voluntary system of disclosure of information, when each member of the chain guarantees the usage of non-conflict stones only. Now we are thinking about how we can extend this scheme to obtain a document, available for retail consumer. This could be either a single cross-cutting document that goes with the stone from the production to the counter, or a common mark, which would be put on invoices. In any case, the consumer in the store would obtain documentary assurance that the stone that he is going to buy is not associated with any conflict.

Many retailers and industry organizations today also offer their own guarantee systems. Won’t it confuse consumers?

In general, I believe that there couldn’t be “too many guarantees”. If a retailer was confirmed by the WDC SoW and by several other systems, it should only strengthen consumer confidence in the product. Moreover, the SoW could simply be harmonized with other guarantees. The SoW advantage is its official status. The WDC is a Kimberley Process Observer, participating in review missions and developing of the KPSC mechanism. The unique structure and expertise of the WDC is the best guarantee for the consumer.

As for another system, I would specially mention RJC because they are doing unique work. RJC conducts a special independent audit to confirm both origin of stones, and also responsible business practices. The auditor checks not only the standard issues of financial transparency and regulatory compliance, but ethical business principles – anti-corruption, human rights, decent labor conditions, social responsibility programs, the protection of the environment.

I think the best way to make the consumer confident in diamond is to somehow combine both of these systems, use them together. In particular, I would be happy if RJC became a WDC member. I think their invaluable experience would be useful for the entire diamond market.

Elena Levina for Rough&Polished


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