RAPAPORT... There are virtually no appraisal businesses in Japan. The reason may be that “distribution margins vary so widely in Japan from one distribution channel to another,” said Masahiko Akaike of Orient 4Cs, a gem stone and jewelry manufacturer/wholesaler. Within the Japanese distribution system, there are so many levels of wholesalers and retailing business models that the margins each level is making cannot be easily categorized. “For example,” said Akaike, “a keystone price in the U.S. may be double the wholesale price, while in Japan, it could be several hundred percentage times more.”
“By nature, the appraisal business is only feasible when it is coupled with the property insurance business,” said Nobuyuki Harada, a director at Suwa & Son, Inc. The company is a major player in many phases of the jewelry trade, including buying gemstones at producing countries and cutting centers and manufacturing jewelry; it also wholesales and exports finished pieces to overseas markets. In addition, the company provides evaluations of gemstones and jewelry — the type of service closely identified with appraisal in the U.S. — for the major auction houses and Suwa’s own ho-seki.com, which helps individuals buy and sell used jewelry on the internet.
No PurposeHarada recalled that several years ago Chubb Group of Insurance Companies announced plans to market property insurance to the Japanese public and he was approached by Chubb to provide evaluations of gems and jewelry, should such demands arise. “We were ready, but not a call came from Chubb,” said Harada. Eventually, Chubb retreated from the property insurance business in Japan, although it continues to provide other insurance services in the country.
“Without property insurance, the appraisal serves no purpose,” said Harada. Asked why there is no property insurance industry in the country, Harada said, “We just don’t have the habit. Perhaps because Japan has been a very safe country, people do not see the necessity of buying property insurance, or perhaps it is because our jewelry history is short. It was not until 50 or 60 years ago that jewelers started mass marketing.”
Training Needed
A piece of jewelry has many prices at different levels, Harada pointed out. There are prices at the source in the producing countries, import prices, wholesale prices, retail prices and the prices in question, the resale prices. And what prices does Harada quote to his clients? “It depends on what the client wants to do. If he wants to sell, we quote a seller’s price. If he wants to buy, we quote a buyer’s price. And you’ve got to be comfortable with the prices so you can close the sale. You will get this skill only after getting acquainted with all levels of jewelry transactions. All in all, wholesale prices are easier to quote than retail prices, as retail prices vary widely, confessed Harada.
Historical pieces, such as those manufactured by famous jewelry houses decades ago and auctioned by major auction houses like Sotheby’s and Christie’s in Europe, New York and Hong Kong, may require historic and artistic evaluations beyond the price of the loose stones and per-gram metal prices. Such pieces, however, rarely show up at ho-seki.com, said Harada.
Kenichi Hata, president of the Japan Jewelry Business School (JBS), said he was inspired by Kyoichi Suwa, the president of Suwa & Son, Inc., to start teaching appraisal courses for the trade. It took six months for Suwa and Hata to structure the curriculum. Currently, most of his students are second- and third-generation jewelry store owners, who believe that one day the demand for appraisals will increase in Japan, too. “If they aren’t able to quote ‘resale prices,’ what good are jewelers for consumers?” said Hata.
Knowledge of gemstones is the prerequisite to becoming an appraiser, said Hata. “Fortunately, Japanese labs are doing good jobs. There are many in the trade who have acquired the Gemological Institute of America (GIA) graduate gemologist (GG) credential and the Fellow of the Gemmological Association of Great Britain (FGA). In addition to these basics, JBS has devised its own system to evaluate the beauty and rarity of gemstones.”
To date, there are only 30 or so students who have graduated from JBS. But Hata sees the future of the appraisal business as promising. He admitted one student from Hong Kong in 2007, and is admitting one from Korea and another from Taiwan in 2008.
Marketplace • 4/4-grainers in SI1 and better grades are steadily increasing in price.
• 4/4-grainers in piqué and SI qualities, 6/4-grainers in SI2 qualities and
½-grainers in piqué qualities are moving relatively well because of stable
supply.
• 3- and 5-carats and larger stones of VS qualities and better colors are
difficult to find.
• Pointers of SI qualities are weak, especially 30 pointers.
• Fancy shapes of well-made stones are strong, while poorly made stones
are sold at a huge discount.
• Heart-shaped pointers are very popular.
• Capes of 4/4-grainers and 2-caraters are weak, while 3-caraters+ are
sustaining their prices.
• Smaller star-size melees are expensive.
Article from the Rapaport Magazine - June 2008. To subscribe click here.