4 'C's in a Diamond and 3 'R's in a Singaporean

I am always fascinated by diamonds. It is not a rare commodity. It is not really precious because it is compressed carbon, after all. In fact, it is easier to find/mine/process diamonds than many other precious metals. Diamonds are the most incorrectly valued commodity in the world and they defy economic forces known as supply and demand. You can almost throw away your Economics 101 textbook when dealing with diamonds - ever wonder why economists teach economics using "widgets" (not the internet term but the old meaning to mean a hypothetical trade-able object) instead of real stuff? The idea is to prevent smart asses from asking too many questions.

This is one of my favorite questions at parties and functions especially when there are lots of women. What is the price of an unpolished diamond, say, 1 carat? A few learned ones (especially the rich tai tai) will say "It depends. You told me only the first "C" but there are 4 "C"s in a diamond. Carat, Cut, Color and Certification. Give me more information about the colour, any visible defect, the cut etc." My reply is average color, average cut and normal certification. In any case, it is your average unpolished, raw diamond.

And the answer is, "About US fifty-five dollars ONLY." If you read the Fortune magazine (article titled "Diamonds aren't forever"), it gave the answer in a round-about way. Deep down, it makes sense. Think about all the middlemen costs - the polishing and cutting (cant be too much because you KNOW craftsmanship cant be too expensive these days), the shop rentals, the advertisements, the ever-polite sales staff, the transport cost, insurance cost, the "wholesaler" and "distributor" costs and so on. And of course the fantastic profits made by the jewelry shops. Work backwards and you realise that Diamonds are not the Girl's best friends but the Middleman's and Marketer's

Another trick to impress the female crowd is that you, the nerdy PC-loving, gadget man can actually price any diamond-based jewelry, down to 15% price variation. Just take any diamond bracelet, ring or ear stud and the pricing rules work like this (in SINGAPORE DOLLARS). This works best when it is not a single BIG diamond (and not from Tiffany) but say, a diamond studded bracelet:

1. If the diamond is so small and you have trouble seeing it, add S$20.

2. If the diamond is big enough to be seen but not the "rock" level, add S$50

3. Add up all the small and big diamond and that is the retail price of that piece of jewelry. You don’t even need to compute the workmanship and other costs.

You will be amazed at how close you reach the retail price and the lady guests will see you in new light. A SNAG nerd that can price jewelry? Wow! Like the movie "Borat", you need not drive a Hummer to be a babe magnet, you are the Babe Magnet! (If you really need to be nice, price it incorrectly on the high side and you look smart and gentlemanly at the same time :-)

For more information about the diamond trade, please see http://www.theatlantic.com/doc/198202/diamond

Why talk about diamonds in Beyond SG? Because in the new, new economy in which “any manufactured product is a commodity”, perception may be everything. A China and India-based manufacturer can compete on pricing in terms of craftsmanship and logistics cost, but they really have no weapons against something like De Beers "A Diamond is Forever" marketing campaign that elevates diamonds to a luxury status symbol. You can easily cut a company’s operating cost by outsourcing to China and India but you can’t easily change the perception of your products.

Another quintessential example is Tiffany & Co. - the magical turquoise branded luxury goods company. Do you think they are selling jewelry? Nope. They are selling turquoise boxes because whatever you put inside the boxes will illicit a joyful reaction from the recipient. Sorry, Tiffany & Co and to all the girls who wear Tiffany proudly but that is branding at its best.

George Yeo wrote an article in Ephraim's site (emphraim.blogspot.com) about global competition in light of China, India and Vietnam's participation and how to stay alive in this new landscape. My 2 cents is this – for Singaporeans (or citizens of any small country), you need the 3 Rs – Reputation, Reliability and Resolution. Reputation is like De Beers or Tiffany branding. It is a perception that you can complete a project and do good job without any scam or cooking the books. Reliability is beyond pricing. I know my Swiss watch will outlast any cheap China-made watch and although quartz technology means a China watch is no different from a Swiss watch in terms of accuracy, somehow I feel it is more accurate and reliable. Again, perception comes in. Last but not least, I need to know you will stay and fight and won’t run off at the slightest difficulty or smallest improvement in monetary rewards. I need to know you are determined to win. My colleagues who behave like this in my company get the fastest promotions.

I think in the New, New Economy, people or countries that possess the 3 Rs will thrive despite the china and India “pricing bomb”. We are rare, we are precious and we last forever. That is the new thinkspace we need to occupy. This should be our global branding as a people and a workforce. Think Tiffany and De Beers. If you don't possess the 3 Rs, at least learn to fake it. (Think of all the Ivy League-schooled consultants and all the quick-talking Wall Street Market Strategists:-)

Diamonds may be the girl’s best friends but to entrepreneurs, the diamond trade can be our best tutors.

Harold Fock

"Diamonds are precious...... Not"

 

Comments

[Edwin T Y Yeo]

I have only recently discovered the BeyondSG blog, and wondered where I've been the past few months.

It is an interesting and intellectually stimulating read.

And your blog on this diamond "scam"...love it. Next Christmas, I shall go into Tiffany's and ask to buy just the box, then put in some el cheapo look-alike item...let's see if the wifey can tell the difference.

cheers!

Ed

[Harold Fock]

Dear Edwin,
Thanks for your nice comments. Your scam will work but make sure she does not find out. Spending a few nights on the sofa is no fun :-)
Incidentally, Beyond SG will be mentioned at the BlogTV programme on Tuesday (tonight) at 8.30pm. They will interview THE OTHER blogger on Beyond SG, Minister George Yeo.
Enjoy!

Harold Fock

[Leach]

As a Singaporean gemologist based in Bangkok, I'm thrilled that you've blogged about (what I like to call) the "Great Diamond Conspiracy". I agree that what De Beers has done is BRILLIANT. Perception is EVERYTHING.

By virtue of being Singaporean, my employers assume I am punctual, hardworking and of course, that I can and will do the job well. All in all, quite accurate *grin*!

I like to think that unlike Diamonds, we ARE precious and rare. It isn't a scam or conspiracy. We are like fine Red Spinel - rarer than fine Ruby and lovelier - but not so well-known in the market, underpriced and overshadowed by other more famous gems. We are halfway there already. We just need an extra push!

PS - Faking it is one of the most undervalued competencies in the world!

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