[Dubai] The New Diamond Capital – by Stian Overdahl (Bloomberg Businessweek – April 1, 2015)

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Dubai closes in on rival centres such as Mumbai and Antwerp

When India’s diamond manufacturing industry began to grow quickly in the 1960s, members of its family-run businesses had to travel to Antwerp, Belgium to buy the rough stones from diamond traders. Since the 15th century, Antwerp had been the centre of the diamond world, its Diamond Quarter bustling with buyers and sellers of rough and polished stones, conducting their trade among a host of cutting and polishing workshops.

With cheaper manpower than the traditional manufacturing centres of Antwerp and New York, and new machines that made the process easier, India’s cutting and polishing industry boomed. By cutting smaller stones that hadn’t been considered profitable previously, Indian manufacturers made greater returns.

Over time, Indian buyers moved higher up the ladder, able to buy directly from producers, rather than from wholesalers or dealers. Today, India dominates the manufacturing sector, responsible for more than 80 per cent of the world’s output of polished stones. But nowadays there’s less need for India’s diamantaires to make the long journey to Antwerp. Dubai—a new global hub for diamond trading—is only three hours away.

In a conservative industry that has long valued secrecy and close-knit partnerships, the rise of Dubai has been staggering. The emirate’s diamond trade—which was virtually nonexistent, worth less than $5 million in 2001—has grown to an industry worth nearly $35 billion in 2013 and 2014, according to Peter Meeus, the chairman of the Dubai Diamond Exchange (DDE).

Antwerp remains the largest diamond-trading hub in the world, exporting $15.7 billion of rough stones in 2014—compared with $8.3 billion sold out of Dubai—but its market share has been steadily eroded. Dubai’s diamond exchange is housed in the glimmering Almas Tower in the Jumeirah Lakes Towers area of the city. The tallest commercial building in the Middle East, many of the companies associated with the trade occupy space on one of its 68 floors.

As to precisely why Dubai’s stature has grown so quickly, Meeus is well-placed to evaluate its strengths compared with other diamond-trading hubs—the DDE’s chairman was formerly head of the Antwerp World Diamond Centre. He cites Dubai’s business-friendly atmosphere as being one of the key differentiators for the diamond trade. Within the Almas Tower, traders have access to a boiling facility to remove dirt and other trace materials from both rough and polished diamonds, and vaulting services in a secure vault situated several floors underground (perhaps the most secure storage room in the Middle East).

Companies are also able to quickly register themselves online with the Dubai Multi Commodities Centre, whether they’re based in India or New York; centralisation means less paperwork. Bureaucracy isn’t just a hindrance to businesses in Europe, but in India too. Many of the diamantaires who once came to Dubai to buy and sell have now established their headquarters to buy and sell have now established their headquarters in the emirate.

“It’s easier,” explains Meeus, pointing out the large pool of skilled workers available in Dubai. But the main reason for the influx of Indian companies may be prosaic: They like the lifestyle. Housing in Dubai is more affordable than in Mumbai and in other large cities in India, which means better living circumstances for company staff and management.

“You can have a very beautiful place for a reasonable amount of money, compared with Mumbai, where everything is expensive. Many of these huge Indian firms prefer to be here rather than crowded Mumbai,” says Meeus. It is not uncommon for diamantaires to work seven days a week, he says. With around 20 flights per day between Mumbai and Dubai, they can work Saturday and Sunday in the UAE, and then fly into the Indian trading centre, fresh for Monday morning.

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