DeBeers
Case Study
The issue of synthetic diamonds is a valid concern
for DeBeers since with increasing technological refinement; ‘lab-grown’ synthetics
have become harder to differentiate from mined diamonds (Grynberg et al. 251).
This makes it easier for the synthetic gems to get into the natural diamond’s
market and sold as the original. The best quality synthetics are created
through a laboratory process known as Chemical Vapor Deposition (CVD). These
synthetics are harder to identify and can only be recognized through the
utilization of advanced spectroscopic techniques. As a consequence, diamond
dealers are faced with a verification problem that makes them more careful in
their dealings with the entities they source their diamonds. The concern for
DeBeers is driven by the fear that the synthetics from unethical producers or
dealers can be marketed in sufficient quantities to affect their sales.
Another concern for DeBeers arises from the
increasing perception that the mined diamonds are mined using inhumane, and
unethical practices. ‘Blood diamonds’ mined from conflict areas, can in many
cases be the cause of untold suffering and death for the communities near the
areas they are mined (Schlosser 161). Environmental degradation is also a
common consequence of diamond mining. Human rights bodies and environmentalists
opposed to unethical mining practices used to source natural diamonds,
highlight these shortcomings. These concerns drive the customer appeal for
natural diamonds among the conscious potential buyers down affecting their
appeal in the market. At the same time, the synthetic substitutes get marketed
as better alternatives devoid of human, environmental, and political costs. The
fact that the synthetics are almost identical to the mined diamonds becomes a
serious consideration for customers wishing to purchase diamonds (Schlosser
162).
To counter these concerns, DeBeers and the natural
diamonds industry in totality need to observe better ethical practices. ‘Proof
of origin’ certificates, to ascertain that products sold are from reputable
mines and are conflict free should be issued, as a standard. At the same time,
DeBeers and the diamond mining industry has failed to adequately publicize the
positive impact the diamond mining industry has on people and economies of
producing countries. Publicizing the positive impact of diamond mining on
countries like Botswana that have a significant portion of their GDP funded by
diamond mining, would help to improve the diamond mining industry’s image
(Grynberg et al. 254).
The market demand for status goods such as diamonds
is driven by perception (Schlosser 163). Consumers of these commodities empower
these goods through a subconscious process where they assign commodities like
diamonds with a symbolic value that is subsequently projected onto the
ownership of such commodities. The value assigned to diamonds is mostly
proportional to their rarity and perceived value (Schlosser 163). This means
that naturally formed diamond will always be perceived to hold more value to
the customers compared to the synthetic substitute. This gives DeBeers a
marketing advantage since the ethical producers of synthetic diamonds have to
declare their products as being ‘lab-grown.’
DeBeers can rely on having their products retaining
a perceived higher value compared to the lab-grown diamonds and should ensure
this is reflected in the marketing of their products (Richman). The strategic
marketing of lab-grown diamonds has ensured their products are seen as being
produced in an environment free of negative political, human, and environmental
costs. This strategic marketing has managed to grow their market while creating
an implied negative image for mined diamonds that effectively reduces customer
preference for mined diamonds (Grynberg et al. 253).
The production of synthetic/lab-grown diamonds is
however not as cheap as their labeling implies. The ‘synthetic’ label will
always serve as a qualification that distinguishes these diamonds as ‘inferior’
to the natural diamond. That is a challenge for the synthetic producers since
the ‘synthetic’ connotation creates an expectation for much lower prices than
is the reality. Market pricing comparisons indicate that the price variation
between the synthetic and natural diamonds in the market has never gone beyond
15% (Richman). The implementation of more transparency in the operations of
DeBeers would help to demonstrate to the public that their products are
produced ethically. This strategy would help to convince the market that the
industry is not as ‘evil’ and unethical as it is commonly held to be. DeBeers
is one of the largest players in the diamond mining industry and as such
cleaning up its public image would translate to an improved image for the whole
industry. A continued association of the industry with unethical conduct could
irreparably harm the marketability of mined diamonds, as it happened to the
once valuable mink fur industry.
Works Cited:
Grynberg, Roman, Margaret Sengwaketse, and Masedi
Motswapong. "Synthetic Gem Quality Diamonds and their Potential Impact on
the Botswana Economy." The Global Diamond Industry. Palgrave Macmillan UK,
2014. 251-290.
Richman, Barak D. "An Autopsy of Cooperation:
Diamond Dealers and the Limits of Trust-Based Exchange." Available at SSRN
2764470 (2016).
Schlosser, Kolson. "Regimes of ethical value?
Landscape, race and representation in the Canadian diamond industry."
Antipode 45.1 (2013): 161-179.
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