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DE BEERS

De Beers is a market maker in the diamond industry as it acts as a liaison between the producers and retailers of diamonds. It captured and coordinated the market of distribution of diamond production through a reliable and stable stream of quality diamonds. DeBeers has been a highly successful and effective controller of the diamond market, having developed a unique purchasing and marketing cartel that has influenced prices in the market for almost a century. Since the company was founded in 1888, De Beers followed a strategy of supply control. In addition to mining its own diamonds, it bought diamonds from other producers controlling about 90% of the world's diamonds. The United States was far and away the world’s biggest purchaser of diamonds accounting for 46% of total demand followed by the Middle East with 12% and Japan with 9%. De Beers has advertised, for a long time, using the caption ‘A diamond is forever’, does the same apply for De Beers’ business model and strategy?

Over 80% of the world’s diamonds were traded through the De Beers CSO until 1990s. De Beers’ tight control and regulation over a vast amount of supply and optimization of the timing of release through the CSO enabled it to keep prices high for diamonds successfully creating a notion that diamonds are scarce. The CSO served as a clearinghouse for the entire industry. Suppliers were forced to sign an exclusivity requirement with the CSO. It regulated the quantity and price in the market. Producers are charged a handling and marketing fee, ranging from 10% to 15% per cent, depending on the amount purchased and the general demand situation. CSO blended different grades of diamonds and the packages are bought and sold at sights at non-negotiable prices. The buyers from CSO are mainly diamond dealers who have the stones cut and polished and resell them at one of the world’s main

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