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Trends and opportunities The market
The jewellery industry in Japan covers a diverse range of products from precious metals and gems, to personal ornaments and decorative costume jewellery. The traditional sector of the market occupies 70 per cent, however, this is changing rapidly in accordance with the demand for unique and unusual designs to suit the younger generation (whose market occupies 16 per cent but is expected to increase rapidly over the coming years).
Japan's jewellery industry relies on imports for virtually all of its raw material supplies. While pearls, quartz and onyx are produced in Japan, precious stones or metals used in jewellery are not. Japanese-made jewellery is known for its precise and careful workmanship and jewellers mostly use 18 carat gold. Sixty per cent of set jewellery is made of white precious metals such as platinum and white gold.
Medium and small sized businesses such as jewellery specialty stores and jewellery and watch retailers account for 65 per cent of the entire retail market. There are a few very large businesses in the industry, however, businesses from other industries such as apparel makers and major retailers, have moved into the jewellery market. There are almost 30,000 jewellery stores in Japan, divided into five categories:
- Stores (independent and chain stores)
- Department stores
- Supermarkets
- Manufacturers or primary wholesalers
- Other store types such as mail-order, cosmetics, and apparel companies
Rings are the most frequently purchased jewellery items, including engagement rings and wedding rings, and account for 40 per cent and 60 per cent of market volume, respectively. Almost all engagement rings are diamond rings.
Fashion rings using coloured stones have enjoyed steady sales growth. However, as many consumers wear two or more rings, there is a shift in demand toward necklaces and earrings. These products account for 40 per cent and 33 per cent of the total jewellery market, respectively.
Young women want gemstones that fit into their daily fashion look so this has given coloured stones and semi-precious stones a much larger role in the jewellery market. This pattern of consumer preferences should see fashions extend into other areas that will bring jewellery more into the realm of fashion.
Major chain stores such as Jewellery Miki and Tsutsumi are doing their own product development, targeting fashion jewellery at teenagers and young adults. Jewellery Miki uses 9k and 14k gold in their product range.
Sales in department stores are currently stagnant, whereas smaller specialty stores are gaining a larger share of the jewellery retail channel.
Opportunities Major Australian companies that have achieved success in Japan's jewellery industry focus on high quality designer opals and black and boulder opal stones as their primary goods. The Australian diamond industry has also seen success in Japan. However, opportunities also exist for lower priced jewellery suited to the youth sector.
Australia is recognised as a supplier of high quality gemstones, such as opals, South Sea Pearls and pink diamonds.
Specific opportunities include:
- Opals are the target market for women in their 40s and 50s, as they are the wealthiest group and can afford to purchase opals. Generally, black and boulder opals are purchased as loose stones and the settings are selected after purchase. Opals are not popular among young women who perceive that the design and colour are more suited to an older image and the high price is also a deterrent. Less expensive opals such as white opals, boulder matrix beads, doublets, and triplets are more suitable for this generation.
- Pink diamonds are popular for engagement and marriage rings, particularly set together with white diamonds in platinum rather than gold. Pink diamonds are very popular for women in their 20s and 30s and colour preferences in Japan are for settings in silver (platinum) instead of gold.
- Silver jewellery is preferred by teenagers and those in their early 20s, in particular branded jewellery such as Chrome Hearts and Bill Wall Leather (BWL) from the USA. There are opportunities for Australian jewellery manufacturers in Japan if they can establish brand image.
- Japanese cultured pearls are well known internationally and often worn by the Japanese royal family making them highly desired items by Japanese consumers. South Sea pearls are also popular and the Japanese prefer pinkish pearls and increasingly, natural golden.
Fashion preferences are changing as individualism gains popularity in society. The Japanese market is one of choice, and analysts suggest there is a market for niche groups with unique and unusual designs. |  |
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Tariffs, regulations and customs
Consumption tax is calculated by adding together the cost, insurance and freight (CIF) and customs duty, then multiplying it by five per cent. If merchandise is defective or is not what was ordered, it can be sent back directly from a bonded warehouse without having to pay customs duties and consumption tax.
The main tariffs in the Japanese jewellery industry are:
- Silver and platinum jewellery - 5.2 per cent
- Gold jewellery - 5.4 per cent
- Diamonds, pearls and other coloured stones - none
Some imported products are prohibited or restricted if they infringe trademark or design rights or are made from ivory or coal.
Industry standards
There are no labelling requirements for coloured stones or jewellery in Japan. However, paper or plastic used as packaging material for wrapping individual product items, for labels, tags, external packaging or elsewhere, must have a material identifier mark displayed with information where the material is used.
The Quality Marking System guarantees the quality (ie. content of precious metal) of jewellery and handicrafts made of precious metals (gold, platinum and silver). Under this system, items must be stamped with the registered trademark of the Japan Jewellery Association and a labeller identification mark.
Grade certificates for high-quality diamonds are issued by Japanese gem evaluation laboratories, and some diamonds have US GIA certificates.
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Marketing your products and services
Market entry
Australian exporters wishing to enter the Japanese jewellery industry should consider the following:
- Find and appoint local agents or distributors and develop personal relationships.
- In appointing your representative focus on your ability to provide stable supplies, good qualities, reasonable prices and punctual delivery.
- Building good relationships with importers can be useful in finding a good agent to represent you.
- Bear in mind that in Japan, success can still depend on being introduced by a prominent intermediary.
- Understand your target market and research it well as it is critical to success to understand the market segmentation.
- Consider cooperating with jewellery designers to develop jewellery accessories that appeal to consumers.
- Consider using one of the bigger importers such as Nagahori, Kuwayama or Kashikey to gain access to the Japanese market.
There are a number of importing factors you should consider when marketing jewellery in Japan. Jewellery trade fairs will help you understand consumer trends and tastes on jewellery. The bigger ones are those held by Reed Exhibitions or the Jewellery Net Asia trade fairs held in Hong Kong. Promotional events specialising in opals are often held at hotels, while Embassy premises and consul houses sometimes host displays and launches.
The best sales seasons are March and April when the Japanese commemorate graduation from and entry to universities. The other prime gift-giving times are Christmas, Valentine’s Day on 16 February, and White Day on 16 March. There is a lot of advertising on TV and in female magazines during these most popular gift-giving times.
Stones such as black or boulder opals, pink diamonds and South Sea pearls should be aimed at their traditional consumer markets, ie. black or boulder opals for over 40s, pink diamonds for bridal and South Sea pearls for both.
Packaging is also very important in Japan. Rings and chains costing more than $800 are usually packaged in tiny fancy jewel boxes, while others are put in a woven fabric sachet. Young adult women in their teens and 20s make their purchasing decisions based on style, coordination with their clothing and comfort, rather than material value. Price ranges for jewellery items also depend on the generation:
- Young women and teenagers - $1000 and under
- Working women in late 20s and 30s - up to $5000
- 40s and over - $1800 to $10,000
Online purchases and catalogue buying from overseas are growing as e-shopping gathers acceptance in mainstream society.
Many business-to-customer (B2C) markets have emerged and some wholesalers also sell jewellery directly to consumers over the Internet. The total amount of transactions conducted through e-commerce will represent about 10 per cent of the whole business-to-business (B2B) market. In doing so, it is of paramount importance that both English and Japanese services are provided (for both B2B and B2C).
There are a number of ways to set up an exporting online system, but Japanese consumers may find it difficult to trust a company they are not familiar with. Key players in the online export and mail-order industry are Senshukai and Cecile. They have been in operation in Japan for a long time and have established a reputation and trust among the Japanese that will be hard to match.
Distribution channels
Each stone has a different distribution channel. For example, pink diamonds are distributed from a few selected Japanese diamond importers who have a right to purchase at Argyle, whereas the typical opal import company in Japan are father and son operations who often fly to Australia to purchase on a monthly basis.
There has been an increase over the last decade of direct importing by large retail stores, department stores and chain stores. Some leading importers have opened their own retail outlets so they could sell directly to consumers at lower prices than their competitors. Key players in this chain of distribution are Nagohori, Kuwayama and Kashikey.
There are almost 30,000 jewellery retail stores across Japan including those that also sell watches and glasses. A number of small retail stores have no financial resource of their own and so sell on consignment with merchandise from wholesalers.
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Contact details
The Australian Trade Commission (Austrade) is the Federal Government agency that helps Australian companies win overseas business for their products and services by reducing the time, cost and risk involved in selecting, entering and developing international markets.
Austrade offers practical advice, market intelligence and ongoing support (including financial) to Australian businesses looking to develop international markets. Austrade also provides advice and guidance on overseas investment and joint venture opportunities, and helps put Australian businesses in contact with potential overseas investors.
A list of Austrade offices (in alphabetical order of country) is available.
More information
For further information please contact Austrade on 13 28 78 or email info@austrade.gov.au
(Last updated: 12 May 2008)
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