Bain: Antwerpen still market leader in diamond industry

24 October 2013 Consultancy.uk

Antwerpen still is the diamond-walhalla of the world, concludes a new market analysis of the diamond industry by Bain & Company. Yet the consultants have a mild warning for the Belgian diamond capital – competition is expected to intensify from the upcoming diamond hubs of Dubai, Hong Kong and Mumbai. Strategic focus is key in order to remain the market leader.

On a yearly basis hundreds of billions pass through the diamond industry. Yet the main points of sale to wholesalers and retailers is concentrated in just six ‘diamond hubs’: the traditional hubs of Antwerpen, New York and Tel Aviv and the emergent hubs of Dubai, Hong Kong and Mumbai.

Bain Revenue of Diamond Hub

Antwerp is with a distance the largest diamond hub, with an annual turnover of $50 billion to $55 billion. The second-largest hub is now Dubai, with an annual turnover of $40 billion to $45 billion. Over the past years it has displaced New York ($35 billion to $40 billion), the primary trading venue of the major US-based diamond companies. Dubai’s growth has been fueled by a favorable tax regime and transfer pricing legislation, and Dubai’s proximity to India’s competitive cutting and polishing sector.

Hong Kong is a major sourcing center for Southeast Asian cutting and polishing companies, with annual turnover of $30 billion to $35 billion. Mumbai mostly handles the import-export trade of India’s cutting and polishing industry, with annual turnover of $25 billion to $30 billion. Tel Aviv has a long history as a diamond center and is primarily used by highly skilled Israeli cutting and polishing companies, with annual turnover of $22 billion to $27 billion.

Bain Global Diamond Report 2013

Competition heating up

Driven by the high margins in the retail segment of diamonds, Bain finds that competition between the diamond hubs has heated up. For instance, the upcoming diamond hubs of Dubai and Hong Kong are luring trade with zero taxes on imports and exports. In addition, they have a structural competitive advantage in the fact that they are closer to the strongly growing cutting and polishing industry in China and India and to the rising middle-class consumers base in those countries. The consultants have an advice for the traditional hubs: focus on high-value stones, a better-developed infrastructure and critically review taxation schemes to boost competitiveness.

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