In Antwerp’s highly globalised diamond industry, the Jewish diamantaires have been overtaken by Gujarati entrepreneurship, causing not a little heartburn.
The typically grey Antwerp sky accentuates the drabness of the slab-like buildings that line Hoveniersstraat, an L-shaped street by the city’s central train station. There is little to indicate the mounds of glittering treasure that lie behind the anonymous walls of these office blocks. For this unimposing street is the pulsating heart of the global trade in diamonds.
When a smitten youth slips a diamond engagement ring on to the profferred finger of his beloved, he is rarely aware of the story the stone hides at its twinkling centre. Diamonds that make it to jewellery almost always travel a criss-crossing road from the mines of war-torn Africa to the haute-luxury retail stores of New York. Whatever the route of the road, the odds of it having passed through the Belgian port city of Antwerp are overwhelming. Eighty per cent of the world’s rough diamonds and half of all polished stones change hands in this city. The business conducted by the 1,500-odd, family-owned diamond companies in and around Hoveniersstraat was worth $42 billion last year.
The diamond trade is possibly the world’s most globalised industry. On Hoveniersstraat, Yiddish, English, Mandarin, Armenian, Arabic, Gujarati and Dutch churn along in a special diamond patois that is a language unto itself. But over the years it is the Gujarati accents that have become dominant.
With little fanfare and a lot of patience, Gujarati, primarily Jain, diamond merchants have gradually eroded the once overwhelming dominance of the orthodox Jewish community in the business. So that although the Jews, not Gujaratis, remain synonymous with Antwerp’s diamond trade in the European imagination, it is the Mehtas and Shahs rather than the Epsteins and Finkelszteins who are the 21st century high priests of Hoveniersstraat. Indians control up to 70 per cent of Antwerp’s diamond trade today, a figure that was associated with the Jews only a few decades ago.
The first wave of Indians began to wash up on Antwerp’s shores in the 1970s. They started at the bottom of the business with low-quality roughs that were of little interest to the established diamantaires. These stones were sent to family members back in India, where labour costs for cutting and polishing were a fraction of those of Antwerp.
Three decades on, the Indian community in Antwerp consists of around 400 families, a majority from the single town of Palanpur in Gujarat. Companies that began as one-man operations dealing with a handful of diamonds at a time, have been transformed into billion-dollar-plus global enterprises, employing thousands of workers with factories and offices dotted across the world.
The ingredients for this Indian success story include cheap labour, large families and a willingness to work harder than the competition. The cost of polishing and cutting diamonds in factories in Surat, the diamond manufacturing centre of India, are up to a tenth lower than in Europe. “For most of the world, India is synonymous with outsourcing, but for us it’s all about home-sourcing,” quips Dilip Mehta, CEO of Rosy Blue, an Antwerp-headquartered company that bills itself as the world’s largest diamond manufacturer.
“When we started out in the business, we had no competition at all because we were the only ones interested in the lower-value diamonds,” adds Santosh Kedia, a diamantaire who is chairman of the Antwerp Indian Association. Given India’s historical connection with diamonds — the world’s first diamonds were discovered here around 800 BC — the country’s labour force had the advantage of embedded skills that, when properly channelled, transformed it into a world-beating force.
The large families typical of Gujarati Jains were the other trump card that allowed for the expansion of these businesses. “We always had the possibility of global distribution because a cousin or nephew who could be blindly trusted, could always be sent to any country to set up operations,” explains Mehta, whose Rosy Blue has a presence in 14 countries.
And, finally, it was the Indians’ “24x7 work ethic” that allowed them to pull ahead of their competitors. “We are prepared to work till late in the evening and over weekends if necessary,” says Hiren Shah of Sauraj Diamonds. “No one can withstand our competitiveness because we are always willing to work harder,” agrees Mehta. “We are married to our business,” he adds.
For the Jewish community, this combination of factors has proved unassailable. “Business has always been important for the Jews but we cannot pursue it with the single-mindedness of the Indians,” says Abraham Pinkusewitz, an orthodox Jew who runs Pinkusewitz Diamonds. “We must focus on our (religious) studies and families and we simply cannot be open at nights or on weekends.” Due to religious reasons, all Jewish establishments in Antwerp are shut from Friday sundown to Monday.
Antwerp used to boast some 25,000 specialist polishers and cutters a few decades ago. This number is now down to less than 1,000. Every year, hundreds of young Jewish people leave the city for Israel or the United States. Many of their parents or grandparents had arrived in Antwerp via concentration camps in the aftermath of World War II, and built up substantial businesses from scratch. But for the younger generation, opportunities are increasingly scarce. “In Antwerp, there is nothing for us (Jews) but diamonds. If we cannot work in diamonds we must leave,” says Pinkusewitz, whose own children no longer live in the city.
The bitterness Pinkusewitz feels about the Indians spills over despite the presence, at the interview, of Eli Finkelsztein, the company’s public relations manager. “The Indians care mostly about grabbing customers from others. They are even willing to sell for a loss to get customers,” Pinkusewitz charges. “Perhaps that is the new way,” interrupts Finkelsztein in an attempt to smooth over the outburst.
And indeed there are others who are adjusting well to the “new way”. Ziad Al-Ahmadi, a British citizen of Iraqi origin, and Paul Van der Steen, a Flemish Belgian, are two such entrepreneurs. They recently established Matrix Diamond Technologies, a company that marries high technology to Antwerp’s traditional competence in diamond manufacturing. Using software programmes that enable them to eliminate the guesswork involved in diamond cutting, they have a small team of workers specialising in high value, large stones.
Among their customers are several Indian companies who prefer to have their more valuable stones worked on in Antwerp, where they can keep an eye on things, rather than “home-source” them to factories back in India. “This is the future,” smiles Al-Ahmadi.
But Antwerp’s Jews appear less focused on the future than the past. Handcuffed to their painful histories, they are in danger of becoming anachronisms. Pinkusewitz hopes to persuade one of his sons, who works in the diamond trade in Israel, to return to Antwerp and take over the family business. “But who knows what will happen after we are no longer here,” sighs Finkelsztein.
On Hoveniersstraat, Jews remain highly visible with their long, dark frock-coats, black hats, uncut sideburns and full beards. But a closer look reveals faces lined with age. The Indians, on the other hand, are bubbling with youth, dashing up and down between offices, and making swift telephone calls.
The cleavages within the city’s diamond trade are not between the Jews and the Indians as much as the old and the new. For the Jewish community however, the adjustment to the new order is wrenching. It is not inconceivable that a decade down the line all that will remain of their legacy in Antwerp’s diamond business will be the word “mazel”, the Hebrew term for “luck” and one with which all sellers, irrespective of nationality, close a sale.
|The colonisation of Antwerp
The port city of Antwerp was a key facilitator of European colonialism, serving as the entry point to the continent for silver from the Americas, diamonds from the Congo, and spices from India. But the 21st century has seen an ironic reversal of fortunes for the city. No longer the coloniser, Antwerp is in the novel position today of having been colonised. It remains at the centre of the global diamond business with eight out of 10 rough diamonds in the world changing hands here, but the traders in question this time round are Gujarati diamond entrepreneurs.
Antwerp’s modern diamond trade dates back to the aftermath of World War II with the Belgian government facilitating the business. The industry was given a great deal of flexibility, including tax breaks, an accessible and friendly diamond office and supportive banking regulations. But from the 1970s onwards, diamond manufacturing operations began an inexorable march out of Antwerp to Asian rivals like Mumbai and Dubai. More recently, diamond-producing countries have also begun attempting to transform themselves into international centres for the trade rather than remaining content at the bottom of the value chain.
To add to Antwerp’s woes, international scrutiny and legislation have forced the local authorities to enforce stricter regulations to combat tax evasion, money laundering and trade in “blood diamonds” — stones from war zones in Africa that are illegally sold to fund insurgencies — as a result of which contenders for the Belgian port’s status as leading hub of the lucrative trade have been strengthened.
“Impossible,” says Freddy Hanard, CEO of the Antwerp World Diamond Centre (AWDC), the body that represents the city’s diamond industry. “We cannot be replaced because what we have here is critical mass and the infrastructure to support it,” states Hanard. “We have political stability, social and financial stability and, most importantly, multi-cultural stability,” adds Ari Epstein, AWDC’s deputy CEO. “Where else can you find Jews, Indians — both Jains and Marwaris — Armenians, Lebanese — both Maronite and Shia — all working together on a single street?” he asks.
Many within Antwerp’s Indian community share this prognosis. “In Israel, Muslims are not welcome, in Dubai, Westerners don’t always have an easy time, in Hong Kong, it’s primarily the Chinese, and in Mumbai, it’s Indians,” says Mihir Shah of Jayam NV. “India is simply not so open for foreigners to come and work and this is something essential to the diamond business.”
Its lack of multiculturalism is not the only obstacle to the success of Mumbai’s bid to replace Antwerp. It is also plagued by lax security, sluggish bureaucracy, lengthy red tape, in addition to lacking the infrastructure, physical and financial, to support the international diamond trade. The Bharat Diamond Bourse project, intended as a one-stop shop and dedicated custom house for the trade, has taken almost two decades to complete. Value added tax has to be paid — only to be returned, although only after the government has held on to it for a while. “In Mumbai, you still have to pay octroi, and it isn’t possible to import or export goods on consignment,” complains Jayam’s Shah.
Antwerp’s Gujarati traders are quick to voice their appreciation of a slew of helpful policies the Indian government has implemented in recent years, including the removal of duties on the import of polished diamonds. But when asked about Mumbai’s prospects as a leading hub in the business, they smile uncomfortably and shake their heads.