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RAPAPORT... Alex Popov, the chairman of the World Diamond Mark Foundation, discusses plans for the organization in 2015 and beyond. The World Diamond Mark Foundation was established to promote consumer demand and confidence in diamonds. The goal of the foundation is to run generic marketing campaigns and provide information through its World Diamond Mark and Authorized Diamond Dealer programs. Rapaport News recently sat with Alex Popov, the foundation’s chairman, to discuss plans for the World Diamond Mark in 2015 and beyond:
Rapaport News: How did the World Diamond Mark Foundation come into being? The idea of the mark has been around for a while and came from the executive committee of the World Federation of Diamond Bourses (WFDB). The foundation was formally established in 2012 as a non-profit organization headquartered in Hong Kong. 
We invited everybody in the industry to join. The first to come on board was the International Diamond Manufacturers Association (IDMA) and then India’s Gem and Jewellery Export Promotion Council (GJEPC). We still have a few open spots on the board and several serious people have expressed interest in joining. We are looking for people who can help promote our cause, such as potential business partners, investors or major charity personalities. What does the World Diamond Mark represent? The World Diamond Mark represents the midstream diamond manufacturers and dealers, with the intention of uniting them with the retail and mining sectors. Being the brainchild of the WFDB, and with IDMA on board, the mark represents a vast majority of the trade. We’ve taken the conscious decision to go downstream and tackle the most important issue facing the industry, which is the desirability of diamonds to consumers. Therefore, we’ve focused on the relationship between the consumer and the diamond and diamond jewelry retailers. We’ve built a value proposition for retailers to participate in the program known as Authorized Diamond Dealers. The package includes benefits and obligations for the retailer, in addition to the marketing component. The program’s primary function is to run an industry-wide generic marketing campaign directed toward the consumer. Since the retailer is the link between the entire diamond pipeline and the end-consumer, we need retailers at the heart of our marketing strategy. Do retailers pay a fee to participate? Retailers pay an annual fee to be an Authorized Diamond Dealer. Pure Gold Jewellers, which has stores in the Middle East and India, recently signed on as our first Authorized Diamond Dealer. We signed a general agreement with them and now our legal and compliance team will examine each of its stores. We are not in the compliance business like the Responsible Jewellery Council that looks at a company’s overall activities. We focus on making sure that each store meets the appropriate standard in terms of selling diamonds and diamond jewelry. Primarily, we check their diamond-selling knowledge and whether they engage in responsible retailer behavior. What sort of compliance is required of retailers? One of our criteria is that the applicant should be a member of a respected industry organization, such as Jewelers of America or the GJEPC. This makes our job easier because we require a recommendation from reputable members of the trade, and these memberships can serve as a type of recommendation. How do you monitor the standards of the retailers? We maintain the right to conduct random checks. Our representatives examine how diamonds are presented in the store. They also check the sales personnel’s ability to explain diamonds to consumers. For example, a salesperson might not know how to read the grading report, or how to explain the differences between the various laboratories’ reports. We also assess their sales techniques and look around for any signs of false display. We are looking at ways to develop a peer review system through our online platform. As we direct people to Authorized Diamond Dealers and give assurances that they are trustworthy, consumers will be able to respond with their feedback. What does the Authorized Diamond Dealer gain from joining the program? They receive the World Diamond Mark. This gives retailers additional recognition based on our shared set of values. Retailers also receive training. We have possibilities for online training and programs with the labs HRD and Gemological Science International (GSI), which we are already adapting to fit the needs of retailers in areas such as diamond trading, gemology and sales techniques. The third benefit we are offering is a tremendous value proposition. We’re seeking to enlist industry service providers into the program, including grading laboratories, trade show organizers, magazine publishers, equipment providers, logistics companies, insurance firms, banks and others. Through us, these service providers can offer something to the retailer to increase their business and we can offer their services to retailers as part of our package.
Is the idea to develop another diamond brand? No, diamonds are already a brand and we should sell them as such. People should sell the diamond, not their own brand name. That is what authorized dealers are about. It’s similar to Rolex, for example. Rolex selects partners and provides them with all of the necessary support. The company then tells consumers to buy a Rolex from its list of reputable dealers. How do diamond manufacturers and dealers benefit from this? The two biggest concerns in the midstream are profit margins and inventory, which also relate to issues with the banks. The World Diamond Mark cannot solve these challenges. What we can do is increase consumer awareness about diamonds. We know that diamonds have lost market share in the luxury space. Our mandate is to take back the industry’s share of the luxury market. The midstream will benefit if and when we recapture even a small portion of consumer spending. But those in the midstream will have to capitalize on this opportunity or they will still be squeezed even as consumer spending increases. Manufacturers must come with the right products and behave in the right way. They need to behave like a brand and stay firm on their prices. The first rule of a brand is to be confident enough in your own product not to give discounts. Everyone has their own place in the market and if each negotiates correctly, including with the miners on rough prices, then everyone should be happy. What are the biggest challenges you face? Our first challenge is credibility. We now have relationships with players in the industry and all of the bourses are on board, and we’re now starting to prove to them that their investment was worthwhile. We showed everyone what we can do at the World Diamond Conference in India, which was a World Diamond Mark event. Our second event will be at the Dubai Shopping Festival in January, where we have negotiated to receive 20 percent of the advertising space initially allocated for gold jewelry. We’ll also be giving away 40 carats of diamonds, provided and graded by GSI, which will be presented in a beautiful blue box with the World Diamond Mark logo and a brochure explaining the story of the mark. This will be our first event in Dubai and we will organize another two events in April. What are some other examples of the activities you’re involved in? We’ve formed a working group between the World Diamond Mark, Fiera Di Vicenza, the Dubai World Trade Centre, the Dubai Multi-Commodities Centre, the Dubai Department of Events and Retail, Turkish Jewellery Exporters’ Association (JTR) and the GJEPC. We’re looking at hosting a diamond jewelry fashion extravaganza just before the VicenzaOro Dubai show, where jewelers from India, Italy, Turkey and the Middle East can demonstrate their designs on the catwalk. Everything we are already doing we want to take further. The conference in India will be held in Asia next year and in other countries thereafter. The World Diamond Tour is a diamond exhibition, which we will start in Dubai and then take to other centers. It will be a three-week diamond exhibition open to the public. We will also publish a catalogue for this exhibition that will be available online. Part of our focus on Dubai is to tie into activities around the World Expo that is set to take place there in 2020. In Turkey, we have a partnership with HRD and JTR. They connected us with Borsa Istanbul, with whom we signed a memorandum of understanding and plan to sign an agreement in the coming month. We will be launching in Istanbul at the beginning of the Istanbul Jewellery Show in March. Whoever wants to enjoy tax-free imports of diamonds to Turkey has to become a member of Borsa Istanbul. Whoever becomes a member of Bourse Istanbul will be a member of the World Diamond Mark and we will share the revenue to reinvest in generic marketing. Also, JTR is publishing our magazine, World Diamond Magazine. What is your budget? We enjoy considerable support but it’s still not enough. We need about $5 million for our operations this year, excluding our promotional events, in order to hire a full-time CEO, put a team together and hire a leading advertising agency on contract. Currently, everyone who works with us is either a volunteer or working on a freelance basis. I'm the chairman of the board and CEO, but we need to hire a permanent CEO as there should be a separation between the two. What are the foundation’s goals? Our goal is to have 20,000 Authorized Diamond Dealers worldwide by 2020. We want the mining companies and large manufacturers to contribute to a fund, matching dollar for dollar whatever we bring in from retailers and service providers. We want the World Diamond Mark to lead the generic promotion of diamonds with representation from every segment of the industry. I envision a think tank and supervisory board that will provide the strategy and hiring a CEO who can implement it. Where do you stand on the road to achieving that goal? We’ve started two pilot projects in Turkey and Dubai which will enable us to check the effectiveness of our value proposition and solidify our operational structure. Our initial plan was to launch in China and Hong Kong, but we decided to postpone our rollout in East Asia and instead focus on areas where we have greater resources at the moment. Nevertheless, we plan to launch in China and Hong Kong by the end of 2015. We are also planning to open an online platform where jewelers can apply to become Authorized Diamond Dealers. I believe that with these initiatives we will be able to reach our goal of 20,000 dealers by 2020.
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