Yasukazu Suwa is an insider and an expert. He is a well-known writer on colored stones and well respected in the industry.
Yasukazu Suwa (President, Suwa & Sons, Inc, Tokyo, Japan) writes:
It took about 2700 years to mine and fashion an estimated 0.8 tons of diamonds before the South African discovery in 1867. Currently, about 3.6 tons of polished diamonds are produced each year. Since the beginning of the 20th century, annual diamond mining production has tripled every 30 years. Nevertheless, if all the diamonds polished since the beginning of time were brought together, they would only fill a single double-decker bus.
In addition, only a small percentage of gemstone production is of the finest quality. This percentage get even smaller as production increases. More than ever, we must realize that truly fine gemstones are entrusted to us by nature. After individuals own them for a relatively short time, these gems change hands, either as heirlooms or as estate pieces. As the world market becomes more borderless, fine gemstones and jewelry circulate freely—back and forth between the United States, Europe, Japan, China, and so on. Since new production of fine quality gemstones is limited, recirculation is a major source of high quality material.
Advances in treatments make it possible to convert some previously unusable material into beautiful stones, but these lack the rarity of naturally beautiful gems. Synthetic stones might be attractive, but because theoretically there are no limitations to the quantity that can be produced over time, again they lack the rarity intrinsic to the value of a natural gem.
The current Japanese jewelry market
The emergence of the modern Japanese market began around 1960. Japan’s share of global loose diamond imports rose to 20% by 1985, peaked at 34% in 1991, then declined to 12% by 2005; currently, its share of the world retail market for jewelry is about 10%. Meanwhile, the nation’s retail market shrank from 3 trillion yen to 1.3 trillion between 1991 and 2005.
In 1985, the relative values of Japanese imports of diamonds, colored stones, and finished jewelry were 70%, 15%, and 15%, respectively. By 2005, this distribution had changed to 46%, 6%, and 48%. Diamond imports fell due to a drastic drop in sales of small-carat-size engagement rings. Relative imports of finished jewelry increased as about half the domestic manufacturers went out of business. This increase included super brand goods as well as less expensive jewelry from Thailand, China, and India.
Twenty years ago, most Japanese consumers saw themselves as comfortably middle class. Today, 80% of the population feels that they are in the lower middle class, and few feel that they are rich. The Japanese jewelry business must now deal with two very different market segments.
Looking forward
The future holds a number of scenarios for Japan and the global jewelry industry:
1. Japan will maintain its 10% share of the world’s polished diamond market through 2020, but jewelry imports will continue to grow relative to loose gemstone imports. Meanwhile, the jewelry market will become more polarized. Japan’s high end consumers will prefer rare, high quality untreated gemstones, and they will be asset conscious and more global in their purchases. The faster growing low end market will be dominated by commercial, treated, and even synthetic stones; these shoppers will be more price conscious and purchase locally. Within this polarized market, high end gemstone oriented jewelry will remain the driving force behind all jewelry sales. The low end jewelry market will follow the trends and styles that are established by the more affluent market.
2. Branding and traceability will be more important to consumers worldwide. Where jewelry is made will matter less to consumers, while a manufacturer’s reputation for quality and reliability will mean more. Traceability and positive determination of country of origin will become more important as consumers become more sensitive to issues such as conflict diamonds, child labor in developing countries, and other political and human rights concerns.
3. Recirculation will be more prevalent in the fine jewelry market. Just as the supply of gemstones is now more global, customers for fine jewelry are more mobile than ever. They purchase fine quality gemstone oriented jewelry from all over the world. This trend will continue in the future. The role of gemological laboratories in distinguishing country of origin and methods of treatment will become increasingly important as fine qualities circulate between markets.
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