RAPAPORT... The International Jewellery Show Tokyo (IJT), held January 23 to 26, was as good as we could have hoped for under the circumstances,” said Michio Iwasaki, president of Iwaden Sangyo Co., Ltd. and also director in charge of public relations at Japan Jewelry Association (JJA). The “circumstance” he referred to was the fact that the timing of the Tokyo show was too close to the Macau International Jewelry Show, held January 10 to 13. Much attention was diverted to Macau because of its proximity to China, a market the whole world is watching for its potential.
The Macau show was reportedly lackluster, however. At IJT, foreign buyers were spotted looking for large stones of good makes and good qualities. “But such buying has greatly subsided this year compared to last year,” said Masahiko Akaike of Orient 4Cs, a stone and jewelry manufacturer/wholesaler. “The market for such stones has dried up.”
Who’s Buying?“The prices of precious metals and large diamonds have gone up so much that jewelry manufacturers are left with no room to breathe,” explained Akaike. “They fear that the prices may fall any time soon if they jump in and buy at such high prices now. Many of them choose to step aside.” Iwasaki questioned who was paying such prices: “Which countries, which economies can support such prices? Are the prices real? What are these prices telling us?”
In any event, the Japanese market appears to be as cold as it can get. The international name brands that landed in Japan and did very well during the past decade appear to be losing their edge. “There are just so many brands in the marketplace and they have lost the appealing identity they had with consumers,” said Teruo Kikushima, president of Kobo Gleam Co., Ltd. and also a director at JJA. The only sector that is making money in the jewelry industry is precious metal trading. Retail stores are buying back gold and platinum from consumers, or restyling consumers’ old jewelry to modern designs. “Sure, these people are doing well, but this is not something we consider a real business,” said Akaike.
Bigger Issues
“The steep price rises of precious metals are bad for jewelers but there are far more serious problems in this country with the current weak consumer spending,” said Kikushima. He explained: “Today, household incomes have diverged so far apart that a large number of families are making only a few million yen a year, while a handful are making tens of millions of yen. The government says that the country’s economy is expanding, but what it means is that corporations are making money on the sacrifices of the workers. The subprime housing loan problem that shocked the world’s financial sectors affected Japan the least, but the bad mood [from the subprime crisis] overwhelmed the country nonetheless.”
“In addition,” said Kikushima, “there are pension problems that surfaced several months ago. Just as millions of baby boomers are entering into retirement, starting in 2007, it was revealed that the Social Insurance Agency, which is responsible for workers’ social and national pension plans, had lost its records. The agency is in the process of reconstructing those records, but it is bad-enough news to make even those earning sufficient income feel uneasy. Will the agency pay them their pension money? Unless they are confident that there will be money for them, they will not spend.”
But not all hope is lost in the Japanese markets. “Indians are aggressively trying to form alliances with Japanese dealers,” said Iwasaki. “The India International Jewelry Show (IIJS) has invited us to come to the resort town of Goa for its Signature 2008 show, scheduled from February 29 to March 3. The show limits exhibitors exclusively to Indian jewelry manufacturers and no stone dealers are included. Their intention is to help Indian manufacturers make contact with foreign buyers, but at the same time, we would like to study the possibility of selling our products in the Indian market.”
Kikushima said that “An Indian sightholder who also operates retailing outlets in India has offered us an opportunity to work with them.” Kikushima is also head of Sokyo, a 17-member jewelry manufacturers’ association. “Japanese manufacturers are really cornered — there will be no future for us unless we step outside of Japan. Most major Japanese jewelry manufacturers have studied the idea of going into foreign markets. But it is not easy. I know a case where a major Japanese company tried to work with a major Chinese company to market its products in China. It ended up with the Chinese company manufacturing the products itself; the Japanese company is merely collecting licensing fees.”
The Marketplace• 4/4 round brilliants of good make and good quality are strong because foreigners are buying them. The Japanese are buying SI and piqué qualities.
• Demand for larger-than-5-caraters is extremely strong and they are difficult to replenish.
• Capes are relatively weak.
• Fancy shapes are not as strong as round. Princess and Asscher cuts are moving strongly. Radiants are weak.
• Quality pinks of 0.20 and up are selling steadily. Carat-size pinks are scarce.
• Good melees are strong.
Article from the Rapaport Magazine - March 2008. To subscribe click here.