As the sixth generation of a family of diamantaires, and as the CEO of SBMH Group DMCC in Dubai, Serge Neiger is a man with his finger firmly on the pulse of the diamond trade, both out of Africa and flowing eastwards to the key Asian markets.
Now in the emirate for nine years, Neiger says SBMH’s success and durability rests on his presentation of a “quite unique” business proposition involving the provision of highly specific assortments of rough diamonds to African producers and clients in Asia, Europe and North America.
“The core of our business is the diamond business, from the producer in Africa to my office here in Dubai where we assort the goods in different qualities, sizes, purities and colours before re-selling them to the major manufacturing centres, including India and China,” says Neiger.
“Normally, the manufacturer has to buy a whole mixture of goods from the market, but most factories don’t handle everything – they specialise in a size, in a shape – and this forces them to re-sell what isn’t needed, and be left with a much smaller quantity of usable carats.”
By assorting the diamonds more thoroughly than other traders based out in Dubai, SBMH offers the manufacturers with an ultimately less redundant product, while providing a streamlined alternative to more traditional channels of the global supply chain.
Straight from Source
One of the first private diamond business in Dubai, SBMH has also swiftly grown into one of the largest in the emirate since establishing in the region, with clients demanding a “regular supply and consistent assortment” from the firm’s rough and polish division headed up by Neiger.
“All of my business is built on supply, and because clients know my assortments they don’t even need to come here – they will give me a quote and buy it from me over the phone. We have a reputation, so we can go in to big producers and present ourselves,” he explains.
“We source our supply from all of the big producing countries: Angola, Botswana and South Africa. I need to know that I have a regular supply, and to be able build connections. Tenders are not part of our business model, because we believe in consistency and we want to work with our producers throughout the year, not just on one-off occasions.”
Then for the second part of the business, SBMH handles the manufacture of the higher carat stones itself, polishing them in operations across Hong Kong, Australia and North America before their sale at a premium to many of the largest jewellers in the industry.
The company is, of course, in full compliance with the Kimberley Process (KP), which in Dubai is regulated by the DMCC free zone authority, though Neiger notes that his preference for business with larger producers has always kept him well away from disputed resources.
“We couldn’t imagine doing business without the KP – we are fully transparent, they’re doing a fantastic job here in Dubai and we have a fantastic relationship with them. There is really no issue, but it is good for the commodity to be controlled,” he says.
“Trading and politics don’t go together in my opinion, and I prefer not to get involved. I have my business and I just keep fully compliant and transparent by working with big producers.”
Old World to New World
When Neiger rapidly relocated from Antwerp to Dubai, it was both for the softer tax regime and for the geographical advantages of the Gulf, which he had the foresight to anticipate as the next big hub for the diamond industry – a potential that is still under active development.
“I have Africa as the largest producer on one side, and India as the biggest manufacturer and polisher on the other, so I am just in the middle for my distribution, and the infrastructure – the buildings and the airport – is great, and most things are pretty easy,” he nods.
Neiger also points out that Dubai is exceptionally convenient and popular with his Indian customers, some of whom can, for example, leave from Mumbai at eight in the morning and be in Dubai within hours, before making their purchase and being back home by the evening.
“I operated out of Antwerp for many years, but all the big players now have representation in Dubai, so it makes sense to continue to focus our energy here. Over the last 12 months there has been a visible increase in the volume and variety of goods being traded, and it just needs to continue in this direction.
“Frankly, I feel more comfortable in Dubai and I don’t think that Europe is or should be an example any more. If you look at the economy in Europe and you look at the economy in the Middle East, they are not in the same world, and it is depressing when you go to Antwerp.”
However, it hasn’t all been smooth sailing for SBMH, and Neiger faces a daily battle to maintain his supply in the face of stiff and often confrontational market competition.
“We are not the only one on the market – there is tough competition. We don’t just arrive with a nice story and secure business. It’s about personal relationships and proving your financial capacities and being able to honour your commitment to the suppler,” he says.
“We have enjoyed long term relationships with most of the diamond producers in Africa. The constant challenge for us is to grow in tandem with the demand from our clients – to grow volume with partnered mines and to find new producers to cooperate with.
“We are fortunate to have a wide range of clients, who we know very well and who are equally familiar with our way of assorting rough diamonds, but they need to grow to remain competitive, and they rely on us to fuel that growth with more volume and assortments.”
But certainly as far as Dubai goes, Neiger is all smiles, where he notes that if you are willing to work and you have some interesting relations, there will continue to be great potential.