Strategic advantage to diamond India

Traditionally strong in large stone

manufacturing, relinquishing positions to India

Four strategies to sustain

in Cutting and Polishing!

Healthy growth in the diamond jewelry retail market supported a 2% increase in cutting and polishing revenue, putting the segment on positive ground in 2017. While the cutting and polishing segment grew overall, profit gains in 2017 were mostly limited to producers of small stones. Companies that specialize in large, high-quality stones experienced pressure from retailers in 2017. 

That trend reversed in the first part of 2018. To sustain profitability, cutting and polishing companies are focusing on four strategies: managing inventory levels, shortening production cycles, optimizing yields and expanding operations. 

Technology is leading improvements in the cutting and polishing segment, from digitally mapping and modeling stones to automating cutting processes. Because of its low labor costs, favorable regulatory environment and relatively easier access to financing, India continued to gain market share in 2017. India’s growth came primarily at the expense of China and other countries. 

India accounts for more than 90% of global polished diamond manufacturing by value, and it dominates in all size segments, including the value-add segment of larger stones.

In China, cutting and polishing revenue increased in 2017, backed by strong domestic jewelry demand. Access to affordable financing continues to be an issue for some midstream players. 

Following several defaults in India, some banks have tightened credit requirements. However, transparent and financially healthy players in the cutting and polishing segment reported only limited influence on their ability to secure funding. It is being said in the Global Diamond Industry 2018, A resilient industry shines through! The report was commissioned by AWDC and prepared by Bain & Company and AWDC. It is based on secondary market research, analysis of financial information available or provided to Bain & Company and AWDC, and a range of interviews with customers, competitors and industry experts.

Comparing different diamond cutting & polishing center the report says, “Differences in cost efficiency accounted for regional market-share changes in the cutting and polishing segment!”  

India, Continuous cost optimization attracted volumes from other regions, advancement of technologies and skills led to share gain in larger stones. Relatively more developed diamond financing infrastructure is in place (India accounted for ~40% of all borrowings), but affordable financing remains an issue.

While China and South East Asian cutting and polishing sector grew in line with domestic diamond jewelry demand in 2017. China is the No. 2 country by cost efficiency, but its relatively higher cost structure proved sensitive to margin pressures in 2015.

And African market stagnation occurred due to relatively low productivity and high cost structure despite efforts to increase role in global cutting and polishing industry! Increase in volumes available for beneficiation due to production growth in region in 2018.

Peeping up rest other centers the report says, traditionally strong in large stone manufacturing, but slowly relinquishing positions to India even in more expensive categories due to aging workforce and high costs! Lack of affordable financing available to cutting and polishing companies in selected countries like Israel, US, Russia its cutting & polishing has slowed! Efforts are underway in Russia to consolidate local cutting and polishing industry to make it more competitive!