Weekly Digest: Budget hikes, big tax cuts and e-commerce collaborations
In our weekly round-up of the biggest news headlines from the international diamond and diamond jewellery industries, we uncover the DPA’s budget hike, assess rough diamond demand and consider the Israel Diamond Exchange’s new partnership with e-commerce giant Alibaba.
DPA annual budget rises to $70 million
Funds available for the Diamond Producers Association (DPA) to spend on generic marketing will jump to $70 million this year following an increase in contributions from its members, Rapaport News reported.
The extra cash will enable the organisation to grow its U.S. marketing and expand campaigns around the world, according to DPA CEO, Jean-Marc Lieberherr.
“Last year, we invested about $50 million in our first real year of investment, which was significant,” Lieberherr told Rapaport.
“In 2018, we’re looking at investing about $70 million, which means we’ll be able to slightly increase the level of effort in the U.S.”
Israel Diamond Exchange to launch partnership with Alibaba
The Israel Diamond Exchange (IDE) will launch a partnership with Chinese e-commerce giant Alibaba Group, enabling traders to sell goods online to businesses and consumers in global markets, Rapaport News reported.
IDE president, Yoram Dvash, explained that some 150 bourse members have formed an online store that will sell diamonds on the retail site.
The Israel Diamond Exchange IDE has partnered with Alibaba Photo Credit IDI Archive
Starting on February 6, the business - operating out of a room inside the exchange in Ramat Gan, Israel - will sell to jewellers and dealers, before extending the service to consumers after a few months.
“It’s a big jump for us,” Dvash was quoted as saying by Rapaport. “You don’t need expansion or offices, or to fly over. You have hundreds of millions of potential customers.”
India’s GJEPC welcomes cut in Goods and Services Tax (GST) for diamonds
The new Chairman of India’s Gem & Jewellery Export Promotion Council (GJEPC), Pramod Agarwal, has welcomed an announcement of a cut in the Goods and Services Tax (GST) rate on diamonds to 0.25 % from 3%, the GJEPC website reported.
The new tax rate came into effect on January 25.
Agarwal said the bulk of raw material used in India’s diamond manufacturing industry is imported, and that more than 90 percent of cut and polished diamonds are exported.
He added that since the manufacturing involved high-value products, the low tax rate will enable the industry to “function smoothly without blockage of working capital”.
Rough diamond demand strong at De Beers Sight
De Beers reported brisk sales of $665 million in its first cycle of the year in January, with manufacturers planning to raise their output in anticipation of orders from retailers after the recent holidays.
While the sales figure was 9% lower than the $729 million-worth of rough De Beers sold a year earlier, it represented a 46% jump compared with the miner’s previous sight in December.
“Following positive early signs for diamond-jewellery sales over the holiday season in the U.S., the need for the industry to restock led to increasing demand for our rough diamonds in the first sales cycle of 2018,” De Beers CEO Bruce Cleaver said in a statement.
“This seasonal restocking demand does usually see a larger share of annual purchases being planned into the first sales cycle of the year by our customers, resulting in an encouraging sales performance.”
Cleaver added, “In the equivalent sales cycle last year, sales levels benefited from purchases that had been deferred from late in 2016 as a result of the initial impact at that time of India’s demonetisation programme.”
De Beers reported sales of 665 million in its first cycle of 2018 Photo Credit De Beers Group
Words by David Brough
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