Few countries have a better reputation for enterprise than
Israel. The nation was ranked second in the world for innovation — behind
Switzerland — in the World Economic Forum’s “Global Competitiveness Report
2016-17.” Israeli hi-tech companies raised a record $4.8 billion last year, an
11% jump in capital, according to Tel Aviv’s IVC Research Center and law firm
ZAG-S&W.
Yet Israel’s diamond trade has only gained limited benefit
from this culture. In stark contrast to some of their neighbors in the
commercial city of Ramat Gan, where the Israel Diamond Exchange (IDE) is based,
many technophobic diamond dealers were, until recently, missing out on business
because they had no software for managing their inventory. Some diamantaires
were forced to sell their stones to other traders who were savvier with
technology and could market the goods more widely, according to one senior
bourse member.
The Israel Diamond Exchange (IDE) noticed this trend and
offered free access to stock software, and in May this year opened an internet
marketing room to help get members online.
But the latest move by the IDE is bolder, and could help the
diamond industry compete more proudly with some of Israel’s other sectors. The
bourse is in the process of opening a Diamond Tech Innovation Center, an
incubator for new companies in both the traditional diamond and jewelry trade,
and sectors that make alternative uses of diamonds, such as semiconductors,
medicine and space technology.
The bourse is pitching to the government to receive funding
for the facilities, with the IDE still set to retain full equity. Several
potential investors are also involved, including China’s Pantheon Pacific,
which could back startups relevant to its specialization in robotics, and Ramat
Gan-based Plus Ventures, an early-stage investment firm with experience in both
incubators and diamonds.
The initiative underlines a fact that IDE managing director
Eli Avidar is keen to point out — that the old way of running a diamond
exchange no longer works.
“Since December 2015, when Yoram Dvash was elected [as IDE
president], he has changed the approach of the IDE, from a bourse providing its
members with a platform to do business, to a bourse that is heavily involved in
the pipeline and actively supporting its members in their business,” Avidar
explained.
The project could help change the Israeli industry’s entire
mind-set. Traders in Ramat Gan are not stuck in the past, but do tend to adopt
technology more slowly than their counterparts in India, according to David
Block, CEO of Sarine Technologies, a supplier of diamond-manufacturing
equipment and one of the IDE’s partners in the initiative.
“There’s still a concept [in Israel’s diamond industry] that
the knowledge and experience passed down from generation to generation is what
provides value,” Block said. “But technology also provides something that adds
value.”
Some changes have taken time. In July, the IDE board amended
its rules to allow companies from outside the traditional diamond sector to
rent office space on the exchange’s premises — something that had not been
allowed since the first bourse building opened in 1969. Advances in the diamond
trade are slower than in other Israeli industries, but this may be the first
step to changing that.
Article from the Rapaport Magazine - August 2017. To subscribe click here.