The headlines of the Wall Street Journal of October 26 read: "Diamond Industry Makeover Sends Fifth Avenue to Africa". This article, however, only concerns Tiffany: the U.S. luxury brand has set up a factory in Botswana, through its subsidiary, Laurelton Diamonds, company responsible for cutting and polishing diamonds. This is the result of a strategic choice that consisted of establishing vertical integration in order to ensure a supply of diamonds for the brand at a time when producers such as De Beers have entered the retail market by creating their own brand. Since an initial investment in mines proved risky, Tiffany decided to invest in production units for cut and polished diamonds in Canada, Belgium, South Africa, Vietnam and China.
The case of the Botswana factory is interesting. This country has two advantages: it is one of the largest producers of diamonds in the world AND one of the least corrupt in Africa. Tiffany found a considerable advantage: not having to obtain supplies of "blood diamonds" from countries such as Angola, the Ivory Coast and the Congo. Indeed, the United Nations (since 1997) and world opinion relayed by the media have questioned these sources of supply. But in 2006 Botswana authorized new companies to buy uncut diamonds ... if they built units for cutting and polishing them and trained local workers in these techniques.
The factory associated with Tiffany opened in 2007 and Indian and Mauritian artisans came to train the Botswana employees. But the article tells us that the workers went on strike, in protest against the working conditions: they say the plant is "prisonlike", they are threatened by the managers and have no right to variable salaries like other employees.
Tiffany is faced with a real ethical dilemma: to avoid "blood diamond" sourcing, the brand has to transfer know-how to African employees. However, if the contentions regarding working conditions are true, the brand has merely replaced one evil with another. When the newspaper raised the question of the origin of its diamonds to Tiffany's CEO Michael Kowalski, he replied: "We really want the focus ... to be on the quality of the diamond ring, not how it came to be". Here is a CEO who does not understand the paradigm shift that we are living today: customers want both excellent diamonds AND to know where they come from. I wager that they will also keep an eye on the working conditions of the Botswana factory workers. I urge Michael Kowalski to read the 15 questions asked to Walmart's suppliers in its "Sustainability Product Index". The 4th chapter titled "People & Community: Ensuring Responsible and Ethical Production"; question 4 of this chapter is: "Do you work with your supply base to resolve social issues found during compliance evaluations and also document specific corrections and improvements?". If Walmart, the iconic American company, raises the question of responsibility and ethics amongst its suppliers, how does Tiffany, another iconic American company, think it can avoid it?
The case of the Botswana factory is interesting. This country has two advantages: it is one of the largest producers of diamonds in the world AND one of the least corrupt in Africa. Tiffany found a considerable advantage: not having to obtain supplies of "blood diamonds" from countries such as Angola, the Ivory Coast and the Congo. Indeed, the United Nations (since 1997) and world opinion relayed by the media have questioned these sources of supply. But in 2006 Botswana authorized new companies to buy uncut diamonds ... if they built units for cutting and polishing them and trained local workers in these techniques.
The factory associated with Tiffany opened in 2007 and Indian and Mauritian artisans came to train the Botswana employees. But the article tells us that the workers went on strike, in protest against the working conditions: they say the plant is "prisonlike", they are threatened by the managers and have no right to variable salaries like other employees.
Tiffany is faced with a real ethical dilemma: to avoid "blood diamond" sourcing, the brand has to transfer know-how to African employees. However, if the contentions regarding working conditions are true, the brand has merely replaced one evil with another. When the newspaper raised the question of the origin of its diamonds to Tiffany's CEO Michael Kowalski, he replied: "We really want the focus ... to be on the quality of the diamond ring, not how it came to be". Here is a CEO who does not understand the paradigm shift that we are living today: customers want both excellent diamonds AND to know where they come from. I wager that they will also keep an eye on the working conditions of the Botswana factory workers. I urge Michael Kowalski to read the 15 questions asked to Walmart's suppliers in its "Sustainability Product Index". The 4th chapter titled "People & Community: Ensuring Responsible and Ethical Production"; question 4 of this chapter is: "Do you work with your supply base to resolve social issues found during compliance evaluations and also document specific corrections and improvements?". If Walmart, the iconic American company, raises the question of responsibility and ethics amongst its suppliers, how does Tiffany, another iconic American company, think it can avoid it?
