For about seven years now, industry, academia, and many other fields of human activity have begun talking about “Tipping Points“. That is a result of an influential book by Malcolm Gladwell called The Tipping Point: how little things can make a big difference. A tipping point, he says, is “the moment of critical mass, the threshold, the boiling point“. A negative example might be when a virus reaches critical mass, and turns from an infectious disease that can be handled into an all-out epidemic.
On a grand scale, tipping points happen in politics, where omnipotent empires slowly start to crumble. As the power of the grand rulers slips away, the invisible tipping point is reached and at that point the whole ruling structure simply crashes
The same phenomenon can be seen in business, where once mighty companies see their products lose relevance and market share to leaner newcomers with innovative approaches.
In sport, the rise and fall of great players and teams is clearly seen. In tennis, the imperious Roger Federer is clearly on the way out. In soccer, it appears that the once unstoppable Spanish national team may have started a decline.
Inevitably, in the diamond business, firms also come and go. Similarly, national diamond industries are also transformed. Countries that once led the way in diamond polishing, such as Israel and Belgium, are now trading centers with relatively tiny manufacturing sectors. In the past 30-40 years, manufacturing has shifted to low labor cost countries: India, China, Vietnam, Thailand and other states. And as costs inexorably climb due to rising wealth in those countries, manufacturers will shift their plants. Could Cambodia, Laos and Mongolia be next?
And in Africa, used for hundreds of years by the West as a source of rough diamonds – and many other valuable minerals – in the past eight years or so a tipping point has clearly occurred. Within the next two to three months, Botswana will be home to the Diamond Trading Company’s operations. After generations of London being the base for the world’s diamond aggregation, the shift southward is almost complete. You have a sight? Then you will need to fly to Gaborone to view and collect your diamonds.
And De Beers, too, has passed a tipping point. Little more than 20 years ago, De Beers monopolized the global diamond trade and accounted for more than 80 percent of worldwide rough output. That figure has plunged to about 38 percent, and possibly even a little less. Unable or unwilling to make the large investments needed to lengthen the lifespan of its smaller mines, it sold them off to junior miners. And it has been overtaken in terms of volume by Russia’s Alrosa, though in financial terms it remains the largest diamond producer. A diamond may be forever, but staying top of the pack is only ever a temporary phenomenon.
Another tipping point? Since the start of the global financial crisis, the United States share of the world’s jewelry market has declined while the new powerhouses – China and India – see their shares rising. Has Pax-Americana ended and the Chinese era of dominance become firmly entrenched? It is estimated by serious economists that the economy of the eastern giant will overtake that of the United States in two decades or less.
One of the U.S. Founding Fathers, President Benjamin Franklin said that nothing is certain in life except for death and taxes. Perhaps the time has come to add the word “change” to that cliché.
