November 2013

Industry Report Japanese Jewellery Market

(Source: Uchihara Group/SA BIRTH Co., Ltd.)

Embassy of the Republic of South Africa - Economic Section 4F, Hanzomon First Building, 1-4, Kojimachi, Chiyoda-ku, Tokyo 102-0083 JAPAN  

 

Table of Contents 1. Market Overview 2. Distribution Channel 3. Trade Statistics 4. Tips for South African Companies wishing to penetrate into Japan 5. Ideal Promotional Model for Japan 6. Yamanashi Project 7. Key Trade Show

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Please refer to the graph on the top of the following page.

1. Market Overview l l l

Market Size in 2012: JPY 911.0 billion (About ZAR 91.1 billion) Market size in 2013 is expected to be JPY 937.4 billion (about ZAR 93.7 billion). It is expected that the market would be as big as JPY 1 trillion (about ZAR 100 billion). Japanese platinum jewellery market is the second largest in the world, following China.

Headlines: l

Jewellery Retail Market in 2012 achieved JPY 911.0 Billion, 101.8 % of previous year

It attributed not only to the recovery from sunken market in the wake of the Great East Japan Earthquake, but also to revitalised consumption from wealthy population. l

Soaring Bullion Prices Causing Expectation for Further Price Hike and Purchase for Asset Expansion

The price of gold and platinum bullion has been on the rise since 2011. Wedding rings, necklace chains and other luxury metal products without gems and precious stones are showing tendency of gaining prices in tandem with the price hike of bullion. There are some cases of consumers beginning to purchase such bullion products in the hope of further price hike, leading to expansion of their assets. l

Market Size Estimated to Reach 1 Trillion Yen by 2015 with Anticipation for Economic Recovery

The size of the domestic jewellery retail market seems to continue its steady growth with estimation reaching JPY 937.4 billion (about ZAR 93.7 billion) (102.9% on Y-o-Y bases) in 2013, 982.4 billion yen (104.8% on Y-o-Y) in 2014, and 1 trillion yen in 2015. The recent expectation for economic recovery is likely to generate willingness among consumers to buy more jewellery and luxury products, boosting the domestic retail market. Last-minute demand is also expected prior to the rise of consumption tax. (From 5% to 8% from April 2014 and 10% from October 2015)

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Jewellery Sales in the Japanese Market from 1991 to 2012 & forecasts

X: Year / Y: Sales (Hundred Million Japanese Yen) Source: Yano Research

2. Distribution Channel: - Major Importers of Bare Metal: Morigin, Ijima Kikinzoku, Tanaka Kinzoku Kogyo, Tokuriki Honten and Ishifuku Metal Industry - Major Importers of Loose Diamond: Kashikey, Kiriya, Kunita, Kuwayama, Tokyo Kiho, Nagahori, Fukui Diamond, Hakko, Mizukei, Iwaden Sangyo, Imayo and Takada Jewelry - Major players in Wholesale: Kuwayama, Nagahori, Kashikey, Otsuki Pearl, Eikodokei, Tokyo Kiho, Citizen Jewelry, Kyocera and Uchihara Group - Major players in Retailing: Sogo & Seibu, Takashimaya, Tiffany Japan, Richemont Japan, Mitsukoshi Iesetan Holdings, Mikimoto, Tsutsumi, Tasaki Shinju and Bvlgari Japan Source: Japan Precious magazine and other information source

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Distribution Channel Chart Importer/Material Wholesaler – Importers of finished items and importer & wholesaler of raw materials such as bare metal (gold, silver and platinum) Manufacturer – Some are integrated manufacturers (entire manufacturing value chain) and some are segment-specialized manufacturers. Year by year, the number of purely manufacturing company has been decreasing, since those bare metal wholesaler are more likely to do manufacturing as well. Retailer – There is a wide variety of retailers such as jewellery specialized store, watch & glasses shop, shop-in-department store, accessory shop, at home sales, event sales, mail-order sales and on-the-internet sales etc. Also there are wholesaling manufacturer directly-owned shops and foreign brand directly-managed stores. (Source: Documents from Japan Jewellery Association)

3. Trade Statistics (2012) HS Code: 7113.11

Japan’s Export to the rest of the world Ranking     1   2   3   4   5   6   7   8   9   10   11   12   13   14  

Destination     HG  KONG   TAIWAN   R  KOREA   USA   CHINA   SWITZLD   THAILND   VIETNAM   SNGAPOR   MALYSIA   MACAO   SPAIN   PHILPIN   FRANCE  

Value  (JPY)        224,047,000          214,146,000              41,716,000              41,282,000              19,296,000              18,833,000              14,808,000              12,210,000              10,228,000                  6,829,000                  6,539,000                  4,532,000                  3,361,000                  2,862,000    

Value  (ZAR)        22,404,700          21,414,600              4,171,600              4,128,200              1,929,600              1,883,300              1,480,800              1,221,000              1,022,800                      682,900                      653,900                      453,200                      336,100                      286,200    

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Ranking   (continued)     15   16   17   18   19   20  

Destination   (continued)       CANADA   GUAM   QATAR   S  AFRCA   BELGIUM   INDIA  

Value  (JPY)   (continued)                  2,786,000                  2,247,000                  2,203,000                  1,638,000                  1,265,000                  1,054,000    

Value  (ZAR)   (continued)                      278,600                      224,700                      220,300                      163,800                      126,500                      105,400    

Source: Japanese Ministry of Finance website

Japan’s Import from the rest of the world Ranking     1   2   3   4   5   6   7   8   9   10   11   12   13   14   15   16   17   18   19   20  

Destination     USA   THAILND   ITALY   CHINA   SPAIN   VIETNAM   FRANCE   INDIA   HG  KONG   PHILPIN   R  KOREA   DENMARK   U  KING   INDNSIA   GERMANY   BELGIUM   NEPAL   NETHLDS   SRILANK   SWITZLD  

Value  (JPY)        6,065,856,000          3,500,935,000          2,129,601,000          1,348,185,000                  830,218,000                  600,754,000                  559,238,000                  386,288,000                  376,024,000                  271,732,000                  198,565,000                  196,845,000                  147,607,000                      88,632,000                      68,508,000                      33,100,000                      29,687,000                      25,994,000                      22,586,000                      21,785,000    

value  (ZAR)        606,585,600          350,093,500          212,960,100          134,818,500              83,021,800              60,075,400              55,923,800              38,628,800              37,602,400              27,173,200              19,856,500              19,684,500              14,760,700                  8,863,200                  6,850,800                  3,310,000                  2,968,700                  2,599,400                  2,258,600                  2,178,500    

Source: Japanese Ministry of Finance website

South Africa is not in the list, i.e. South Africa did not export the items to the Japanese market.

4. Tips for South African companies wishing to penetrate into Japan First, to understand quality-conscious Japanese consumers, who are believed to be Embassy of the Republic of South Africa – Tokyo Economic Section 4F, Hanzomon First Building, 1-4, Kojimachi, Chiyoda-ku, Tokyo 102-0083 JAPAN Page 5

most difficult clients to satisfy in the world. In Japan, it is not rare that sometimes internationally well-known branded jewellery items are refused by Japanese importers due to one tiny scratch which is as big as ‘nit’. To observe that Japanese consumers are happy to pay for what they get, or they know that they get what they pay for. Their demand is ‘tall order’. But once you satisfy them, the relations will continue almost forever. Identify own core and competitive competency that Japanese companies do not have. Then select most suitable Japanese partner(s) based on your core competency. Working together with the Japanese is key to penetrate into the Japanese market.

5. Ideal Promotional Model for Japan In general, Japanese jewellery industry is well-organized, manufacturing-oriented and high craftsmanship-driven. And these days, their intention of export is much stronger than ever before after the 3-11 Great East Japan Earthquake. Consequently, our promotional model is to be changed to accommodate the trend to be more realistic in the given situation. It is highly expected to be really difficult to figure out best solution since nobody has done that before. But we strongly believe that it is worthwhile trying for the best for South African jewellery business. Major factors to be incorporated into new promotional model: Japan:

Wishing strongly to export their jewellery pieces to overseas market to grow further. Growth in the Japanese market is limited to some extent.

South Africa:

Wishing strongly to nurture platinum downstream beneficiation sector to add values to platinum including capacity building. Eventually wishing to export ‘Made-in-South Africa’ jewellery pieces as one of core exported items to the rest of the world.

In short, the new model should translate the Japan’s wish into realization of South Africa’s wishes.

6. Yamanashi Project Please see a separate document ‘Briefing Document on Yamanashi Project’.

7. Key Tradeshows •

International Jewellery Tokyo 2014 (22 - 25 January 2014) http://www.ijt.jp/en/home1/

•

International Jewellery Kobe 2014 (14 - 16 May 2014)

Embassy of the Republic of South Africa – Tokyo Economic Section 4F, Hanzomon First Building, 1-4, Kojimachi, Chiyoda-ku, Tokyo 102-0083 JAPAN Page 6

http://www.ijk-fair.jp/en/Home/ •

Japan Jewellery Fair 2014 (26 - 28 August 2014) http://www.japanjewelleryfair.com/en/index.php

Reference: • • •

Yano Research such as Japan Precious Magazine Japanese Ministry of Finance Japan Jewellery Association

For further engagement, please contact: Mr Manley Barnard, Counsellor (Economic) E-mail: [email protected] Mr Tomokiyo Shimura, Marketing Officer, Economic Section E-mail: [email protected] Embassy of the Republic of South Africa Tel: +81 3 3265 2126 / 3366 Fax: +81 3 3261 6445

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