RAPAPORT... Like many diamond manufacturers today, the Israel-based Yerushalmi Bros. Diamonds believes the up-and-coming markets in China and the Far East are the future for the next generation of the diamond industry. Unlike most companies, however, Benny Yerushalmi, the company’s chief executive officer (CEO), foresaw the growth of the Chinese market more than ten years ago and the company is now richly reaping the rewards of his vision.
In 2007, according to Israeli government figures, Yerushalmi exported $45 million worth of polished diamonds to Hong Kong out of a total $161 million worth of exports worldwide. In the first six months of 2008, Yerushalmi sent $50 million worth of goods to Hong Kong — surpassing its total for all of 2007 by nearly 10 percent.
Yerushalmi’s steady growth — it posted a 9 percent increase in total exports between 2006 and 2007 — earned the firm the 2007 Exporter Excellence Award from Israel’s Ministry of Industry, Trade and Labor. It also won the award in 2005, making it the only company to be recognized twice since the award was reinstated for the jewelry category. Shmuel Mordechai, Israel’s diamond controller, noted why the company deserves the award. “It’s not easy to continue to grow, especially in hard times,” he said. “In the past ten years, their export totals were never down, not even once.”
The company was founded in 1975 by brothers Aharon and Tzion Yerushalmi, who are still active in the business. Younger brother Benny joined the company in 1982 and became CEO in 1996, bringing to the company a long-term vision for developing the commercial side of the business. The Yerushalmi brothers became Diamond Trading Company (DTC) sightholders in 1998.
The company now owns three manufacturing plants located in Israel, India and Botswana, with more than 700 employees worldwide, including 100 in the Far East. Its sales are split almost evenly between the Far East and the U.S. It created and owns two jewelry brands: an American brand in partnership with American jeweler MK Diamonds, and Amorosso, a hearts and arrows cut jewelry brand that became China’s first diamond jewelry brand ever when it was introduced in that market in 2003. The company has said current plans are to commit more resources to marketing Amorosso in the U.S.
THE ROAD TO CHINAToday, as the U.S. diamond market slumps and stalls, lots of companies are looking to China and other Far Eastern markets, where economies are growing and discretionary income has risen. But, back in 1997, no one was looking to the East. The Asian currency markets were in the throes of a financial crisis so severe that the world feared a global meltdown. Where other companies foresaw disaster, however, Benny Yerushalmi saw opportunity. In a key strategic move, he decided to focus company growth on China, believing the companies that were closing up shop at the time were leaving behind a wide-open market with growing consumer potential.
Starting with a local office in Hong Kong, the Yerushalmi Bros. team set out to educate themselves about the Chinese market. With the help of local firms, Yerushalmi learned the local market from “soup to nuts,” according to Loaad Katzir, Yerushalmi marketing director. That involved investing in market research, brand development and advice on the cultural nuances of selling to the Chinese market.
That research convinced Yerushalmi that Chinese consumers strongly preferred high-quality, white, clean diamonds over lower-quality goods. Looking to expand the range of goods they could sell to these consumers, the company decided to develop a brand that would have more value than just the stone itself. The result was the hearts and arrows Amorosso brand that Yerushalmi translated into Chinese as “love commitment.”
Yerushalmi officially launched Amorosso in 2003 by hiring two popular Chinese television stars, Hu Bin and Qu Ying, actors and models having an on-screen affair on a popular Chinese television show. Since most of the country believed they were romantically involved off screen as well, Yerushalmi arranged for Hu Bin to give Qu Ying a specially designed Amorosso necklace at a nationally televised press conference introducing the brand.
As its own brand, Amorosso was designed, marketed and packaged with the “love story” theme. “We were the first diamond jewelry brand in China, so there was no competition,” Benny says.
“That was the beginning of a new era for us,” Katzir says, as the brand became immediately popular with Chinese consumers. As the sales and popularity of the brand increased, the line expanded to include a wide range of jewelry — rings, bracelets, necklaces and earrings — with price points at both ends of the spectrum.
Designed to take advantage of the brilliant light reflection created by the hearts and arrows cuts, some of the fancier, more expensive pieces were created by Lu Kun, a famous Chinese designer, and other pieces by in-house company designers. Today, Yerushalmi releases new Amorosso designs at least twice a year to coincide with the fashion seasons. The company even received the coveted international Superbrand award for Amorosso in 2006.
CHINA TRANSFORMEDAt the same time as the Amorosso line was taking off, a parallel phenomenon modernizing the country’s shopping experience was sweeping China’s big cities. For the first time, major cities were building luxury shopping malls that included the likes of Louis Vuitton and other world-class brands.
As the competition intensified for space in these new Western-style centers, “having a brand became the ticket to get into the mall,” Katzir explains. The well-packaged and well-presented Amorosso brand gave Yerushalmi a strong marketing edge over other retailers accustomed to selling their jewelry from a display of pieces spread over tables.
As China’s retail sophistication continued to evolve and as consumers were able to afford and display wealth, Yerushalmi also partnered with Seibu, the Japanese department store that had sold the right to use its name to third-party owners in Hong Kong.
Seibu provided the retail space and Yerushalmi provided the product. “Once we created the brand, it worked for us in numerous ways,” Katzir says, noting that it opened doors by being a familiar brand name. “The support that we gave to the brand and the joint ventures we were able to develop with clients gave us a much stronger, more visible position in the marketplace,” she adds.
Today, Yerushalmi Bros. has over 200 sales points across China, including kiosks within stores, mall stores and displays in other retailers’ shops. It has two Amorosso stores in Chengdu and Shenyang and corporate offices in Shenzhen, Chengdu and Shanghai, in addition to its original office in Hong Kong. As the rest of the industry looks at China as a new market, Yerushalmi has a ten-year head start — and the company intends to capitalize on it.
Article from the Rapaport Magazine - August 2008. To subscribe click here.