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Why should diamond manufacurers still extend credit to their clients???

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CharlesJoseph

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Can''t diamond buyers see they need to put their own house in order rather than biting off the hand that feeds them and expect diamond manufacturers to offer credit services??

Credit services are generally offered by banks.
 

strmrdr

Super_Ideal_Rock
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couple questions...
1: Are you in the trade?
2: who are the clients your referring to? stores or consumers?
 
H

hlpkaixin3344

Guest
I worked in a polishing factory which recently shut.

I dont see why a diamond manufacturer has to offer credit services to their clients when it can be past to consumers.
 

Upgradable

Ideal_Rock
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Hmmmm..... interesting thread.

Could be drive by, could prove interesting.......... (sitting back with popcorn to see)
 

strmrdr

Super_Ideal_Rock
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ok, now I understand your anger.

The answer is memo is how the trade has been structured for decades.
Most jewelery stores could not survive without it because they are under capitalized from years of memo.
Asking them to raise capital right now is an impossible task for them to carry out so memo lives on.
The only place it has began to be removed somewhat is on the internet and virtual lists with net 14 or net 30 which is how the rest of the business world operates.
 

Rockdiamond

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I agree with Storm.
It''s important to remember that if you take away the internet model- where the cutters own the diamonds, and don''t "bill" them till a consumer buys one is different than a model where a dealer buys stones from the cutter on spec- before they are sold.
IN such an instance it really does serve the cutter to offer credit to the dealer as it will encourage more buying- and allow the cutter to get a slightly higher price.
In the diamond business, as in others, cash is king- when cutters extend credit, they usually get something in return..
 

CharlesJoseph

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This doesnt really answer the question.

There are so many cutters that if one company offers credit to their customer it probably wont directly influence his business in the long run because jewelers are just looking for the best price and there is no loyalty from the Buyers (jewelers) side.

Its seems to me jewellers take full advantage of cutters and have no care about what harm they are causing to the "the hand that feeds them". The cutters do all they can for downstream business and all jewlers do are take and give nothing in return. Cutters offer credit, marketing initatives all to support jewelers and all jewelers do is say that the lack of liquidity in diamonds is the cutters problem.

Rock Diamond what exactly do cutters get in return? except for losing money. Memo/credit doesnt work in the trade everyone sees this, why cant jewelers see this and support their suppliers by moving the his problem onto the consumer and taking a bit of responsiblity themselves for a change. Cutters are not here only to allow jewelers to make profits.
 

strmrdr

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opinion:
The history of memo is in a lot of ways a result of DeBeers historical efforts to control the market.
If jewelers didn''t toe the DeBeers line they didn''t get memo and went out of business.

Facts:
Fact there are many successful cutter/dealer partnerships by using such a broad brush you are insulting some of the most respected vendors on PS.
To name a few:
GOG - Partners with several cutters - Is the largest reseller for several by volume.

Paul''s Infinity network (Wink/Gary/Todd/Isaac/Indira and several others.) is a tight group.

Whiteflash - Until Brian left he was a production consultant for a cutting house that cuts most of their diamonds and Brian still likely is with his new company.

James Allen - partnered with a major wholesaler.

Pearlmans

All have mutually beneficial relationships with one or more cutters.
 

strmrdr

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Date: 2/12/2009 3:22:33 AM
Author: CharlesJoseph
"by moving the his problem onto the consumer"
What does that mean?
What do we have to do with a system that has been in place for decades and in some ways hurts consumers?
How are we supposed to pick up the slack, The entire supply chain is supposed to be in place to serve us it is not our fault that in some cases they serve themselves each other for dinner?
 

CharlesJoseph

Rough_Rock
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Feb 11, 2009
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So you are suggesting it is DeBeers is fault that jewelers generally USE diamond cutters and exploit their postion on the market. If you would like to elaborate on that I would be interested to hear what exactly you mean by "toe the DeBeers line". You may be right that this happened in the past but should we all just keep looking back in anger at what happened in the past or begin to look forward in this time of uncertainty on collectively how we can help each other out to ensure that diamond cutters and jewellers arent going out of business one by one week by week. By jewelers accepting credit and memo they are only helping themselves in my eyes and this is not because the are "toeing any type of line" to stay in business. They help themselves without a care in the world what effect this is having on their suppliers. Its sounds to me like the jeweler uses their supplier for what they can then move on to new suppliers and using them for the same reasons. No wonder we find the situation we are in today.

Your facts sound very nice.. Im sure I can find some examples where memo/credit works well for the jeweler and maybe also their suppliers but i am talking about the majority that are suffering now not the few who are able to stay afloat.

Can you not see how this is effecting the diamond cutters (and the trade as a whole) and the threat to their age old profession and if you can realise this what would you suggest they do to protect themselves??
 

strmrdr

Super_Ideal_Rock
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You are blaming one segment of the supply chain for a problem created by the entire supply chain.
Study the history of the diamond market and you will know exactly what I am talking about with DeBeers.
Right now the entire chain is stuck, jewelers can not get the capital they would need to change over to a different model in today's credit marketplace.
The only source of credit right now is memo.
The cutters are in the same boat they will have to live on reserves and a lot of them are not going to get lines of credit renewed and they are going to go under.
It is happening in many industries right now.
The construction industry is getting very hard hit.
One of my construction clients which has been very very profitable every year for the last 25 years just had to close its door because they could not get their line of credit renewed despite having perfect credit and a history of making money even in bad times.
The way the construction market works is they take out a line of credit in the early part of the year and use it for working capital and then pay it off when the jobs are complete.
Even if they have the cash they can not get contracts without the line of credit!
It is very profitable both for the companies and the banks but the banks are not lending!

For a jewelery store to go out and get a LOC for stock is very much impossible right now.
The entire chain is stuck with the monster it created.
 

CharlesJoseph

Rough_Rock
Joined
Feb 11, 2009
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This is what I see.

Diamond cutters have to pay for their rough - Cash
Diamond cutters have to pay to polish the goods - Cash
Diamond cutters have to support their client base in hope that they will stay loyal to them (even though they know they wont) - Cash
Diamond cutters have to offer memo or creit to their customer otherwise they wont receive the support their are after - More Cash
Diamond cutter have to put up with late if at all payers and have no klout to go after them if they do deafauly - more and more cash

Jewelers have their overheads of their shops and staff.

So my question remains. How can the jewelers help diamond cutters in this market so everyone can enjoy a more stable future rather than this mess we find ourselves in at the moment? Can diamond cutters look to their clients for support or is that door going to remain firmly closed??

Do jewelers even care about diamond cutters?

If banks are not dishing out credit why on earth should diamond cutters?

Would I be right in suggesting if all diamond cutters held onto their goods and only sold in cash. They would have a much better chance of not going under in the long run even though in the short term this may cause a cash flow issue??
 

strmrdr

Super_Ideal_Rock
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Date: 2/12/2009 8:33:39 AM
Author: CharlesJoseph

So my question remains.

How can the jewelers help diamond cutters in this market so everyone can enjoy a more stable future rather than this mess we find ourselves in at the moment?
sell diamonds is the only answer

Can diamond cutters look to their clients for support or is that door going to remain firmly closed??
I repeat the entire industry is stuck in the model it is in


Do jewelers even care about diamond cutters? yes I think a lot do


If banks are not dishing out credit why on earth should diamond cutters?
because it is the only way to move diamonds right now


Would I be right in suggesting if all diamond cutters held onto their goods and only sold in cash. They would have a much better chance of not going under in the long run even though in the short term this may cause a cash flow issue??
if they have the reserves to sit it out then fine but many don''t. They are better off trying to sell even if they have to extend credit
I''m not going to even try and explain both the diamond industry and economics here.
I am done in this thread.
 

CharlesJoseph

Rough_Rock
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Feb 11, 2009
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7
Karl - If diamond cutters are to extend credit at what price should this be done at?

does anybody else have a less bias view as Karl is done with this thread?
 

purrfectpear

Ideal_Rock
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4,079
Since this is mostly a consumer site, you aren''t thinking that we are going to jump for joy at your theory that consumer prices should raise to solve your cutter problems are you?

Sounds like you have the solution. If you don''t like dealing on memo, then don''t. Hold out for cash if you think that''s the right thing to do. Your problem is if the rest of your fellow cutters don''t fall in line. Then you stick out and lose sales. You should be angry at your fellow cutters, not retailers or consumers.
 

Rockdiamond

Ideal_Rock
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What a timely post Purrfectpear!!

Charles- you are ignoring all the points raised.
Maybe you're not doing this on purpose, but I find your characterizations to be purposefully insulting towards dealers.

MANY dealers work incredibly closely with cutters.
Of course each of us must prioritize to take care of our own business.

10 years ago, when I started Rock Diamond, it was a few major cutters that put me in business by giving us diamonds on memo and or credit.
Was this charity? Considering the many many millions of dollars we have bought and paid for I'd say they don't regret the decision. Basically they built a customer for themselves.

Keeping what purrfect mentioned in mind, a dealer must keep both supplier and consumer in mind. This means that sometimes I've sold diamonds and accepted a lower margin on stones that cutters did not "come out on". That is to say: the cutter expected to get a G color, but ends up with an H. If we can find a buyer for the H- knowing we'll be paying a higher price than we normally would and absorbing that to help the cutter moving the stone.
It' s a two way street. Dealers that try to "rape" cutters are not going to stay around long.
 

CharlesJoseph

Rough_Rock
Joined
Feb 11, 2009
Messages
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Date: 2/12/2009 10:03:49 AM
Author: purrfectpear
Since this is mostly a consumer site, you aren''t thinking that we are going to jump for joy at your theory that consumer prices should raise to solve your cutter problems are you?

Firstly, I dont really care if you will be jumping for joy or not. I am looking for suggestions on how you all think diamond cutters can survive in this crazy world of Memo/Credit.


Sounds like you have the solution. If you don''t like dealing on memo, then don''t. Hold out for cash if you think that''s the right thing to do. Your problem is if the rest of your fellow cutters don''t fall in line. Then you stick out and lose sales. You should be angry at your fellow cutters, not retailers or consumers.
I know that this isnt really the solution but I am interested to hear what suggestions jewelers have.
 

CharlesJoseph

Rough_Rock
Joined
Feb 11, 2009
Messages
7
Firstly, I don’t really care if you will be jumping for joy or not. I am looking for suggestions on how you all think diamond cutters can survive in this crazy world of Memo/Credit.

Why are you insulted about my comments? maybe because you know i have a point and you care more about your own business than the trade as a whole.

I still haven’t heard any suggestions (except for mine which you aren’t impressed with) come up with something guys.

FOR THE SAKE OF THE FORUM READERS I WOULD ASK ALL YOU SELF SERVING PS JEWELERS TO STOP POLLUTING THE MINDS OF CONSUMERS WITH YOUR PACK MENATLITY OF TRYING TO DISCREDIT ANYONE WHO IS NOT PART OF YOUR "GANG".

THOUSANDS OF JOBS HAVE ALREADY BEEN LOST AND MANY MORE WILL FOLLOW DUE TO THE TERRIBLE STATE THE INDUSTRY IS IN.

THIS IS THE TIME FOR REAL DIALOGUE TO FIND A SOLUTION!!
 

strmrdr

Super_Ideal_Rock
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Messages
23,295
fyi I am not in the trade and researched the issue for myself from dozens of sources.
Go away troll.
 

oldminer

Ideal_Rock
Trade
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Sep 3, 2000
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The ineffecient aspects of the traditional supply chain of the diamond business are being tested in this ever more efficient world economy. Besides, now we have a world wide slow down of commerce and lending. There are many good reasons why this economic crisis has happened, but primary among the reasons was the willingness of commercial banks to take huge risks on low value debt. Once the cards started to fall from the house of cards, no one could prevent nearly a total collapse of confidence. Here we are and that is how we got here in the short version.
One can cite greed, stupidity, and financial blindness in the equation, but what matters is how we get back to a reasonable position without totally giving up the profit motive to big government loans and regulation of our capitalistic system where innovation, and hard work still retain a potential bigger payout than laying about and working like a zombie.

Diamonds are a product which certainly can be put off for when things improve. They have been artfully promoted as if they were necessities and a storehouse of value. We'll see if this floats in today's new world or not. There will be loss of jobs not only in cutting, but in the mid-level distribution pipeline and at the retail level in diamonds and all of jewelry. No one will be exempt. Complaining about it is not going to make it better but we sympathize with those who have felt the pain by losing long held jobs. I hope for them that things improve soon.

As far as running businesses with ready cash and not by taking terms from vendors, I doubt that model will work at all. There are very few businesses which have sufficient operating capital. The biggest, most successful business models owe tons of money. If you want to survive, then a cash business might work. If you want to make lots of money and employ many other people, then debt and terms are going to be the better model. Those who can provide longer terms with fair costs, will do better than those who are strapped for cash and must insist on immediate payment. This is a model for all business, not just diamonds. You may not like it, but the world does not care about the individual who is not willing to be a part of the global economy. Diamonds are a global business in spite of all the personal effort small firms contribute.
 

John P

Ideal_Rock
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Date: 2/12/2009 11:03:26 AM
Author: CharlesJoseph



Date: 2/12/2009 10:03:49 AM
Author: purrfectpear

Sounds like you have the solution. If you don't like dealing on memo, then don't. Hold out for cash if you think that's the right thing to do. Your problem is if the rest of your fellow cutters don't fall in line. Then you stick out and lose sales. You should be angry at your fellow cutters, not retailers or consumers.
I know that this isnt really the solution but I am interested to hear what suggestions jewelers have.
Actually, I think it points to the heart of one solution.

First I agree that when a diamond is sold the jeweler should pay the cutter. Jewelers who abuse memo by selling memo goods and holding money back from the cutter for weeks or months are scallywags.

But taking diamonds on memo is no crime. If a cutter gets upset with a store where his goods aren't moving he should find another store. In fact there's more to it. Why should cutters be disinterested? If jewelers are the selling arm of the trade cutters are part of the body and should take active interest in the health of the selling arm.

A jeweler who simply flips diamonds to the public with no added value doesn’t engender loyalty in clients. So why should a jeweler be loyal to a cutter who flips diamonds to him - even on memo - with no added value?

A solution? Cutters should select their downstream partners wisely. Don't deal with a seller who holds back money and treat those who pay on time like gold. Offer incentives for stock purchases over memo if you want cash up-front, just be aware not everyone can make that happen. Finally, regardless of purchase or memo, cutters can become active in supporting their jewelers. They can go onsite to train salespeople (education is a first-order problem downstream) understand regional markets and brainstorm solutions. This integration will build loyalty and increase sales so that, hopefully, everyone gets paid.
 

Upgradable

Ideal_Rock
Joined
Aug 15, 2004
Messages
5,537
For viewers that just tuned in.........



Opening had potential,

then the tension built,

we lost a key player and it looked like the plot was falling apart,

new characters enter just in time to save the day!



Grab a bowl of popcorn and stay tuned. More exciting action to come!!
 

beauty queen

Rough_Rock
Joined
Feb 12, 2009
Messages
5
Diamond Dealers are not banks. We cannot any longer extend terms. Cash & Carry
Date: 2/11/2009 4:42:45 PM
Author:CharlesJoseph
Can''t diamond buyers see they need to put their own house in order rather than biting off the hand that feeds them and expect diamond manufacturers to offer credit services??

Credit services are generally offered by banks.
 
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