The Covid-19 global pandemic has brought much of the world to a standstill in recent months. JNA looks at the outbreak’s impact on the international gem and jewellery industry and the measures adopted by the trade to sustain business during these challenging times.
The Covid-19 global pandemic may arguably be the international gem and jewellery industry’s biggest challenge to date. Since emerging late last year, the virus has spread like wildfire across the world, paying no heed to boundaries of geography, class and race.
At press time in late April, the global toll stood at over 3 million cases and more than 200,000 deaths, with almost every country in the world making an appearance in the tally of infections. The fight against this global threat has drastically altered people’s lives and thus industries at large. Global consumption, particularly for luxury items such as jewellery, has fallen as people hunker down at home amid virus-containment efforts.
From lockdowns and social distancing regulations to remote work procedures and digital tools, life in the time of Covid-19 is forcing businesses to rethink priorities, operations and strategies. Cost-cutting measures are in full swing, with many jewellery firms adopting temporary store and office closures, work-from-home arrangements, salary cuts, rent restructuring and shorter work weeks to stay afloat – essentially exhausting all possible avenues before considering closures and retrenchment.
Yoram Dvash, acting president of the World Federation of Diamond Bourses (WFDB), said the impact of the coronavirus pandemic far outweighs that of any other challenge the international gem and jewellery industry has faced in the last few decades, including the various financial crises and the SARS outbreak in 2003.
“The Covid-19 outbreak wiped out business in one fell swoop – the industry went from 100 to almost zero. Over the course of a week or so, everything ground to a halt. Nobody is selling; nobody is buying. Manufacturing has shut down; consumer sentiment is extremely low. Deliveries are hampered by travel restrictions and border closures, while wire transfers to and from certain countries have been suspended,” Dvash revealed. “Payments are not coming in because clients have shuttered their business for now or allocating funds to more immediate needs such as rents and payrolls. But the international jewellery industry is being patient and bearing it because we are all in the same boat.”
Trade fairs and industry events were among the first casualties, given travel restrictions and social distancing regulations to contain the spread of the coronavirus. Losing these all-important business platforms have dealt a severe blow to many sectors. With physical containment of the virus being the order of the day, the business focus has shifted to the digital space. Online platforms, virtual fairs, educational and market webinars, and sustained digital marketing and communications have emerged to help keep businesses going during the downturn.
Virus-led disruptions have significantly impacted the diamond trade, causing both a substantial drop in business due to supply chain challenges and a momentous shift in business paradigms.
Diamond miners Alrosa and De Beers have adjusted their business schedules in light of travel restrictions and market circumstances. Both allowed their clients to defer 100 per cent of their April purchase allocations to later in the year.
Alrosa saw its March 2020 sales of rough and polished diamonds fall nearly 60 per cent year-on-year to US$152.8 million. Overall sales from January to March 2020 came up to US$904.2 million. Difficulties also emerged at the manufacturing and export levels. WFDB’s Dvash, who is also president of the Israel Diamond Exchange, estimated that Israeli diamond exports fell by 75 per cent from mid-March to late-April. This comes on the heels of a 28 per cent decline in Israel’s polished diamond exports in 2019 to US$4.9 billion due to the US-China trade war and the protests in Hong Kong.
Preliminary figures from the Antwerp World Diamond Centre (AWDC) showed that Belgium’s diamond business in the first three weeks of April fell to around 4 per cent of its trade levels in the same period last year. Exports of polished diamonds in the first quarter dropped 45 per cent to around US$1.7 billion, compared to US$3.1 billion in the same period last year.
The coronavirus pandemic is indeed exacting a heavy toll on the diamond sector, said Lawrence Ma, president of the Diamond Federation of Hong Kong, China (DFHK). Top Hong Kong retailers are reporting sales declines of 50 to 60 per cent for March 2020, while the wholesale trade is down by 80 to 90 per cent. Production has stopped in India and other manufacturing centres that are on lockdown.
Ma stated, “The impact of the virus is quite significant. We need to assess the situation every two months and see how things unfold. Major concerns include cash flow, the supply of goods, surpluses, liquidity and bank regulations.”
SOCIAL RESPONSIBILITY EFFORTS IN THE FIGHT AGAINST COVID-19
- De Beers Group contributed US$5 million across Botswana, Namibia and South Africa to aid response to the Covid-19 crisis.
- Chow Tai Fook Jewellery Group Ltd began manufacturing surgical masks using its high-standard dust-free cleanroom technology at its T MARK diamond processing factory in Lunjiao, Shunde.
- French luxury conglomerate LVMH Moët Hennessy Louis Vuitton SE repurposed its Perfumes & Cosmetics laboratories to manufacture hand sanitisers.
- Bulgari started manufacturing hand sanitisers. The jeweller also gave monetary aid to Lazzaro Spallanzani Hospital in Rome to acquire a modern, high-definition 3D microscope to help study coronavirus infections.
- Surat-based STPL developed a ventilator, IndoVent, aimed at boosting efforts to combat the Covid-19 pandemic.
- India’s Gem & Jewellery Export Promotion Council or GJEPC shelled out Rs 50 crores (around US$6.62 million) to assist daily wage workers in the country’s gemstone and jewellery industry.
- Luxury group Kering donated US$1 million to the CDC Foundation.
- In the US, Chanel has committed US$2 million to support urgent medical and healthcare needs.
-News from JewelleryNet