Japanese Jewellery Market and the Opportunities

for Italian Jewellery Manufacturers

June 2016

Yano Research Institute Ltd.

1

Content I. Market Overview and Prospects for the Future ....................................... 2 II. Jewellery Market Analysis by Segment ............................................... 4 1. Jewellery market by item and its characteristics ................................. 4 2. Market by price range and its characteristics .................................... 4 3. Retail market by material, and its characteristics ............................... 5

III. Consumer Analysis ................................................................ 6 1. Purchasing attitude by age group ................................................. 6 2. Characteristics of Japanese Consumers ............................................ 7 3. Bridal demand .................................................................... 7 4. Brand consciousness .............................................................. 8

IV. Import Trend ....................................................................... 9 1. Gold jewellery import ............................................................ 9 2. Platinum jewellery import ....................................................... 10

V. Laws and regulations on the import of jewellery ................................... 12 VI. Distribution ...................................................................... 13 1. Major distribution channels ..................................................... 13 2. Retailers ....................................................................... 15 3. Characteristics of business dealings, custom of trade and import products in Japan .. 15

VII. Sales Promotion ................................................................. 16 1. Characteristics of jewellery promotion in Japan ................................. 16 2. Trend of major jewellery gifts in Japan ......................................... 16

VIII. Valuation of Italian Jewellery Products in the Jewellery Industry in Japan ...... 17 1. Advantages of Italian jewellery products ........................................ 17 2. Disadvantages of Italian jewellery products ..................................... 17

IX. Summary ........................................................................... 18

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I. Market Overview and Prospects for the Future

Japan is a major jewellery power with the third largest jewellery market in the world, following the United

States and China. In Japan, jewellery is sold at all department stores, shopping centers and specialty stores, which comes in wide variations in quality, design and material, and well accepted by matured and diversified consumers in Japan. Jewellery enterprises across the world have entered, and many International Brands concentrated in Japan.

World’s jewellery market share by countries Rank County %share 1 USA 38.9% 2 CHINA 12.0% 3 JAPAN 7.5% 4. Russia 2.9% 4 Hong Kong 2.0% Others 36.7%

Rough Estimate by Yano Research Institute Ltd

Domestic Jewellery Market Size Transition and Forecast

9.94

8.76

8.59 8.44

8.59

9.07 9.18 9.14

9.00 9.12

9.39

9.79 9.81

7.5

8.0

8.5

9.0

9.5

10.0

10.5

2008 2009 2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E

（US$bil） Past and present statistics and future estimates of domestic jewellery markets

Yano wesearch Institute.Ltd

1US$=106JtY.ankruptcy of Lehman brothers

Source: Estimated by Yano Research Institute

3

87.9% 88.1%

98.1% 98.3%

101.8%

105.6%

101.1%99.6%

98.4%

101.4%102.9%

104.3%

100.2%

80.0%

85.0%

90.0%

95.0%

100.0%

105.0%

110.0%

2008 2009 2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E

Jewellery market growth rate transition and Forcast(Year/year)

Yano Research Institute.Ltd

Notes: The market size is based on retail value. 2) (E) indicates Forecast

◆ Key Findings

Domestic Jewellery Retail Market in 2015 was 969.1 Billion Yen, Slightly Decreased to 99.6 % of the Preceding Year.

Bridal Jewellery Market is Shrinking with Decreasing Number of Couples Getting Married The number of couples married in 2015 was estimated to be 635,000, decreased in 3 consecutive years,

according to the demographic statistics (estimation for the year) of the Ministry of Health, Labour and Welfare. In the meantime, bridal jewellery market is an important market which accounts for 20 percent of the total jewellery market in Japan. Recently, there are many new design marriage rings with stone emerging in the market, which are mixture of engagement and marriage ring, and the average unit price is in a trend of increase. Also, made-to-order, custom design marriage rings have become popular, as many couples are looking for their own originality.

Market is Expected to Stay Strong until Tokyo Olympic Games in 2020, with the Increase of Inbound Foreign Tourists Consumption

The domestic jewellery retail market in 2016 is expected to reach 989.4 billion yen, which is 102.4% of the previous year. As the increase of consumption tax has been postponed to 2019, the market is expected to stay strong toward the Tokyo Olympic Games in 2020 with the expected increase of domestic consumption and especially the expansion of inbound demand, spending by foreign tourists in Japan.

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II. Jewellery Market Analysis by Segment

1. Jewellery market by item and its characteristics

In the market size by item, Pendant/Necklace (Chain) is ranked in the top, followed by Fashion Ring. In the past, as low-necked fashion was not popular in Japan, jewellery sales were focused on rings. Recently, however, Pendant/Necklace (Chain) has been increasing their shares.

Also, paired products, such as paired rings and paired necklaces, are increasing, many of which are engraved with message, and gaining consumer recognition.

2. Market by price range and its characteristics

As to the jewellery price range, middle price range with over 200,000 yen accounts for the largest, 36.6% of the total, followed by high price range with or over 500,000 yen for 32.2%.

Recently, there has been a trend of polarizing into low and high price ranges, consumers who want low-price, casual accessories for everyday use, and those who want high quality jewellery even if expensive.

In the meantime, wealthy customers may purchase, in many cases, jewellery which may worth several million, or even several tens of millions of yen.

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3. Retail market by material, and its characteristics

（Unit: 100 M yen)

% ratio % ratio % ratio % ratio % ratio % ratioDiamond Jewellery 4,356 47.8% 4,318 48.3% 4,411 48.4% 4,651 48.4% 4,776 49.1% 4,763 49.1%

Gemstone Jewellery 1,901 20.9% 1,804 20.2% 1,810 19.9% 1,954 20.3% 1,962 20.2% 1,920 19.8%Pearl Jewellery 1,520 16.7% 1,491 16.7% 1,478 16.2% 1,482 15.4% 1,376 14.1% 1,423 14.7%Metal Jewellery 1,327 14.6% 1,332 14.9% 1,411 15.5% 1,530 15.9% 1,612 16.6% 1,585 16.4%

Total 9,104 100.0% 8,945 100.0% 9,110 100.0% 9,617 100.0% 9,726 100.0% 9,691 100.0%Estimated by Yano Research Institute

2013 2014 20152010 2011 2012

Diamond Jewellery

47.8%

Gemstone Jewellery

20.9%

Pearl Jewellery

16.7%

Metal Jewellery

14.6%

Retail Market Size by Material, 2010

Retail market size in 2010910.4 B yen

Diamong Jewelry49.1%

Gemstone Jewelry20.2%

Pearl Jewelry14.1%

Metal Jewelry16.6%

Retail Market Size by Material, 2015

Retail marekt size in 2015969.1 B yen

In Japan, diamond jewellery accounts for about half of the total jewellery market. On the other hand, accessories with semi-precious stones are popular as well. Recently, increasing numbers of consumers are selecting their jewellery by design and brand without paying attention to the material. Many accessories made of titanium, stainless steel or ceramics are sold at jewellery stores.

There is also an enduring popularity for cameos and corals among the elderly users. “Cameo Exhibition” with invited artists may be held, especially, as an attraction of jewellery sales events in many cases. In some cases, also, young, new designers may try new attempts with those traditional materials.

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III. Consumer Analysis

1. Purchasing attitude by age group

10s Users in this generation are fashion-sensitive and personality pursuing. They are focused on silver accessories, and like unique accessories made of natural materials such as shells, wood or bones. They may be divided into two groups, a brand-conscious group likely to purchase low price products of premium brands such as silver jewellery of Tiffany, and personality pursuing group looking for their won originality.

20s Users in this generation are most brand-conscious, and may seek harmony with their colleagues by wearing orthodox jewellery at work. However, as their income may be rather limited, expensive jewellery priced in the range of 100,000 to 300,000 yen may be the gifts from their boyfriends in many of the cases.

30s Users in this generation may begin to differ in their income. Users with family do not spend much money on jewellery due to the spending on childcare. On the other hand, there are many women who are single and working, with a lot of money to spare, and some of them purchasing an apartment house. In case of jewellery as well, they are purchasing jewellery in a range up to 500,000 yen or so for themselves.

40s Those who are married may begin to have some additional money to spare with children having grown to certain ages. They may be quality and brand conscious rather than design, and may have critical eyes on the jewellery. Once attracted, however, they may easily become repeating customers.

50s and older Users are beginning to have fair amount of time and money to spare, who constitute major customers of jewellery sales events. Rather than collecting and reviewing information by themselves, and purchasing the jewellery they like, the users may purchase jewellery blindly to certain extent based on the recommendation of familiar sales person or person in charge of the event. Some wealthy customer may easily purchase a piece of jewellery priced several million yen.

Observing the market by material, silver is popular among young people in their 10s and 20s due to its low price and voluminous look, but its popularity decreases considerably along with the increase of age. Gold is popular among the users in their 30s and older. The most expensive platinum is highly valued in all age groups, including “adoration” regardless of actual purchase or not. As to the design, there is a trend that older the user is, more voluminous and blinging designs preferred. Many young people prefer pierced earrings, but older people may prefer conventional earrings.

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2. Characteristics of Japanese Consumers ◆General consumption trend

It had long been pointed out that Japanese consumers are susceptible to trend and brand, and not good at showing their personality. In recent years, however, increasing number of women are Westernized under the progress of globalization, and therefore, blind worship of mega brands are now limited to young people in their teens and early twenties. Majority of female users purchase the jewellery they have selected by themselves. Increasing number of consumers does not care much about the brand. As they are becoming highly capable of valuing the jewellery, they may not purchase jewellery if its quality, price and design are not best matched. The trustworthiness of the shop, however, is an essential condition for purchasing jewellery, which is judged based on the comprehensive information such as shop interior, sales persons, featured articles on magazines, and so forth.

Recently, consumer confidence has been increasing under the economic recovery, and new jewellery stores are opening one after another. As a rebound to pullbacks in spending under the economic downturns in the past 20 years, many consumers are ready to purchase something as rewards for themselves. Large-scale commercial facilities combined with fashion stores and restaurants are attracting attentions and drawing customers. Women’s magazines are full of advertisements for fashion and gourmet items and stores.

3. Bridal demand

In the jewellery market in Japan, bridal demand is a major demand, which accounts for about 20% of the total jewellery market. Engagement ring may be the most expensive jewellery for most of the Japanese women. The engagement ring has become popular among the general public with “three months’ salary for an engagement ring” campaign undertaken by De Beers 30 years ago. In recent years, however, increasing number of couples are not so much interested in the engagement ring, and the ratio of purchasing an engagement ring has also been declining. As to the design, mainstream used to be an orthodox design with platinum frame and center diamond, priced about 300,000 yen as an average. Recently, however, unique designs have increased, but the average unit price decreased. In order to permit everyday use of engagement ring, which is an expensive purchase, design to double as a marriage ring has become a mainstream.

Consequently, the average unit price of marriage ring has increased considerably, many of which with diamond or colored stone. Also, semi-customized and fully-customized design orders have been increasing, showing a trend of looking for an originality of each customer same as for the other types of jewellery.

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4. Brand consciousness

Japanese consumers have a strong passion for famous international brands, which has facilitated the growth of brands such as Cartier, Tiffany and BVLGARI in the Japanese market. In the past 2-3 years, however, consumers are beginning to get bored with these brands which have become widespread and over-generalized. Unique brands or newly introduced brands are beginning to attract some trend-conscious users who are looking for “my own brand” in Japan. In responding to this trend, department stores are introducing new brands one after another at the jewellery counters at the first floor for attracting customers and keeping them from boring.

Brand CountryBrand sales

（Million yen）1 TIFFANY USA 45,9002 MIKIMOTO Japan 27,1523 4℃ Japan 21,3224 Cartier France 21,0655 TASAKI Japan 19,0366 BVLGARI Italy 14,8807 HARRY WINSTON USA 12,5008 I-PRIMO Japan 10,6509 Van Cleef & Arpels France 10,000

10 STAR JEWELRY Japan 9,70711 GINZA TANAKA Japan 7,68812 CHROME HEARTS USA 7,02813 CHANEL France 6,81014 GRAFF England 6,60015 VENDOME AOYAMA Japan 6,27316 NIWAKA Japan 6,13417 K・UNO Japan 5,34018 agete France 5,07519 DAMIANI Italy 4,96820 LAZARE DIAMOND USA 4,600

Brand Jewellery Sales Ranking

Estimated by Yano Research Institute

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IV. Import Trend

1. Gold jewellery import

0

20,000

40,000

60,000

80,000

100,000

120,000

0

5,000

10,000

15,000

20,000

25,000

08 09 10 11 12 13 14 15

（M Yen）（ｋｇ）Gold Jewellery Import

Import in volume

Import in value

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（Yen／ｇ）

Gold Jewellery Import Unit Price

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Countries from which gold jewellery is imported: 2015（1 USD = 122.11 yen）

Country Volume （g） Value（1000Yen）

Unit Price（Yen/g）

Value（USD）

Unit Price（USD/g）

1 France 5,314,675 31,030,800 5,839 254,121,694 47.822 Italy 4,926,740 21,541,001 4,372 176,406,527 35.813 U.S.A. 3,124,156 10,118,771 3,239 82,866,031 26.524 Switzerland 1,863,900 8,665,007 4,649 70,960,667 38.075 Thailand 1,102,831 6,994,217 6,342 57,278,003 51.946 Hong Kong 422,948 5,189,757 12,270 42,500,672 100.497 China 753,464 3,765,801 4,998 30,839,415 40.938 Vietnam 548,126 2,912,976 5,314 23,855,344 43.529 Spain 386,229 2,706,622 7,008 22,165,441 57.39

10 UK 129,682 1,795,747 13,847 14,705,978 113.40

2. Platinum jewellery import

0

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Platinum Jewellery Import Unit Price

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Countries from which platinum jewellery is imported 2015

（1 USD = 122.11 yen）

Country Volume （g） Value （1000Yen）

Unit Price（Yen/g）

Value （USD）

Unit Price （USD/g）

1 U.S.A. 1,125,783 39,821,274 35,372 326,109,852 289.67

2 France 1,407,394 25,335,903 18,002 207,484,260 147.42

3 Thailand 680,418 5,267,721 7,742 43,139,145 63.40

4 Italy 172,679 2,890,714 16,740 23,673,033 137.09

5 Switzerland 674,182 2,864,811 4,249 23,460,904 34.80

6 UK 20,574 2,009,590 97,676 16,457,211 799.90

7 Spain 78,035 1,507,428 19,317 12,344,837 158.20

8 Vietnam 143,503 1,268,021 8,836 10,384,252 72.36

9 Hong Kong 42,271 1,257,721 29,754 10,299,902 243.66

10 China 66,657 427,855 6,419 3,503,849 52.57

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V. Laws and regulations on the import of jewellery

Customs duty and other taxes

Customs duty on jewellery

Item Customs duty Consumption tax Pearl Free 8% Diamond Free 8% Colored stone Free 8% Precious metal jewellery Silver jewellery 5.2% 8% Platinum jewellery 5.2% 8% Gold jewellery 5.4% 8% Precious metal products other than jewellery

Silver product 5.4% 8% Gold/platinum product 3.3% 8% Pearl & precious stone product 5.2% 8% Base-metal accessory Plated/coral cuff links 5.4% 8% Other jewellery cuff links 5.3% 8% Other plated jewellery 3.7% 8% Plastic products 2.7～10% 8% Organic materials Amber 3.9% 8% Coral 4.1% 8%

Restrictions There is no particular restriction other than those controlled by Washington Convention (such as

crocodile used for watch straps, ostriches, coral, shell and elephant ivory). Trademark-infringement goods (counterfeit) may be applicable.

Documents Normally, only invoice is required. In case of consignment trading, however, advanced application for

tax refund and picture of the products are required. In case of Washington Convention items, CITES export certificate is required in addition to proper

consultation and application for import license. Certificate of origin is required for preferential duties, and a certificate is required for antiques older than 100 years.

Standard, labelling, packaging, transportation and safety standard In normal trading, each piece of jewellery is tagged with its item number, packed with cushion materials

such as bubble wrap, placed in a plastic or aluminum case and sealed. The case is then labeled either by the shipper, freight forwarder or airline, with the consignee/destination. The transportation need to be subcontracted to a freight forwarder, preferably specialized in handling precious goods and materials. It is strongly recommended to have the goods (cargo) covered by insurance, either by exporter or importer. The insurance may be arranged through the freight forwarder. Export packing shall be executed carefully and supervised by the exporter, because a damage caused by improper packaging might not be covered by the

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insurance. Low price products are often sent via International parcel delivery service. However, it must be understood that the risk is higher than the normal export procedures.

Standard terms of payment Deferred payment: Products and invoice are sent to the consignee for payment at a later day COD: D/P (at sight), D/A (30, 60, 90 days after sight), L/C are the popular terms of payment Consignment deal: Products are consigned for sale. Payment shall be made on the products sold, and the

products not sold shall be returned to the shipper.

Consumption tax Consumption tax: Although the consumption tax is not applicable to the exporter, the importer must pay

8% of the product value in addition to the payment for the products at the time of import to the customs.

CARNET In case of brining in certain products temporary for exhibition and similar purposes, you can clear the

products through the customs without paying the customs duty if you have CARNET. However, you need to return all the products within one year. Otherwise, you will be charged the import duty. When it becomes necessary for you to sell samples at the exhibition, you need to submit “an application for the use of products imported on CARNET for other use” to the customs in charge, and pay the customs duty and other applicable tax to sell the samples. Even in case the products on CARNET are stolen, however, the customs duty and other applicable tax are not exempted.

VI. Distribution

1. Major distribution channels

Jewellery distribution structure in Japan is complicated and rather difficult for overseas business persons to understand. This may be a major issue that needs to be clearly understood by the Italian enterprises entering into the Japanese market. In general, distribution channel is consisting of importers and trading companies who import jewellery materials from overseas dealers into Japan, and sell to primary wholesalers/manufacturing wholesalers, who then process and machine those materials and produce jewellery products, and sell those products to secondary wholesalers who distribute them to retailers. In case of imported premium jewellery, the products are generally distributed through the authorized importing agent to wholesalers and to retailers. Leading brands, however, are distributing their products, in many cases, directly to retailers. Recently, many directly operated stores are opened for retailing their products in Japan.

Changes have been occurring in the distribution channels, which in short, are the short-cuttings of distribution stages. Different from the US or European market, distribution margins in the Japanese jewellery market amount to 2-3 times, or even 4-5 times of the material prices in some cases, and many wholesalers & manufacturers have been enjoying the benefits, due to the fact that distribution structure is complicated with many distribution stages, such as primary and secondary wholesalers, and margins are added at each and all stages before the products are delivered to the consumers. However, as a result of the increase of direct import of

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products facilitated by the drop of material prices with strong yen, entrances of foreign enterprises and enhancement of international trading capabilities of the players, Japan-specific, complicated distribution structure with multi-stage intermediate wholesalers has been disintegrating. These changes are driven by major retail chains emerging in the market, which are expanding and improving their business performance by positive store deployment and cost reduction with direct import or even off-shore production at their overseas production facilities. Recently, increasing number of small-scale retailers are visiting overseas, such as exhibitions and purchasing products directly, and accelerating the short-cuttings of distribution stages.

Jewellery distribution channel

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2. Retailers

<Classification of major jewellery retail categories>

Retail category Main retail methods Long-term

prospects

Department store

Price ranges are separated and assigned to the accessory sales counters on the ground floor and jewellery sales floor in upper floors. Substantial sales are generated through Gaisho, direct sales to loyal customers.

↑

Jewellery specialty store

Jewellery chains

Basic business is to sell jewellery at the store with face-to-face customer service, but may hold event sales at the store or a hotel. Discount sale has become a normal state at many stores. Sales in Christmas season may amount to 2-3 times of the sales in a regular month.

↓

Import brand shop

Deploy direct stores in premium locations such as Ginza and Aoyama, attract customers by improved brand image by advertisements in women’s magazines. Never discount the price of their products.

↑

Accessory-oriented jewellery shop

Deploy stores at department stores (ground floor) and shopping centers, and sell everyday use jewellery items priced about 20,000 to 30,000 yen. No discounting of product prices.

↑

Watch, jewellery and glasses shop

Traditional jewellery retailers found all over Japan, focused on local, repeating customers, and offering watch repairs and jewellery re-modeling, as well. Many stores closing and discontinuing their business.

↓

Volume retailer Sales of parallel imported overseas brands ↑

Jewellery sales by other

industries (Events,

door-to-door sales)

Kimono Sales of jewellery to their kimono customers focused on event sales. Some operate their own stores. ↓

Apparel

Jewellery sales companies hold jewellery event sales at apparel boutiques. ↓

Non-store retailing

Mail order sales Various media are used, such as catalog, Internet and TV. Recently, the sales on the Internet are growing. ↑

Door-to-door sales Visiting homes and offices for the sales of jewellery ↓

3. Characteristics of business dealings, custom of trade and import products in Japan

There are two types of commercial dealings in Japan, “purchase” on which the payment is due at the time of product delivery, and “consignment” on which products are delivered to the consignee for sale, but payment will become due when a product is sold to a customer. Also, there are two types of payment methods, “cash” and “promissory note”, and many of promissory notes are issued with 90 days or longer usance. In the jewellery industry in Japan, players in lower downstream have stronger negotiation power. Especially, major retailers have strong negotiation power against wholesalers, and wholesalers are strong against manufacturers. Consequently, dealings disadvantageous to the corporate cash flow, such as product delivery on “consignment” and payment by “promissory note” were prevailing in the market. As a result, excessive products have been accumulated as dead

16

stocks due to the lack of responsible procurement. Sometimes, it becomes difficult to reclaim the products delivered on “consignment”, because those products are consigned to third parties, or it becomes impossible to negotiate the promissory notes as the issuer went bankruptcy. Thus, chain-reaction bankruptcies were observed in some cases.

On the other hand, import products are not governed by this type of trade customs, and the dealings are generally based on “purchase by cash”. Recently, as the terms for international trading has become generally recognized, Japan-specific custom of trade as above described are reviewed and beginning to be improved.

The issue Italian businesses need to be well aware of is the fact that, different from the other countries, only the creditor or appointed lawyer is allowed to engage in the collection of debts or negotiation with the debtor in Japan. Third party (Italian Trade Promotion Agency, for example) is only allowed to collect money from the debtor in place of the creditor, but not allowed to demand or engage in the activities associated with the collection of the debt.

VII. Sales Promotion

1. Characteristics of jewellery promotion in Japan

Jewellery sales promotion is focused on women’s magazines in Japan, because women are collecting information, not only jewellery but on fashion, such as clothes and cosmetics as well from the women’s magazines. TV commercials are implemented as well, although expensive. Recently, WEB based promotion is considered most effective, and all players are placing priority. In addition to the purchase for own use, gifting is an important segment of the market as well. Each jewellery company is implementing promotional activities on the gift related occasions as described below.

Also, advertisements on trade journals, such as “JAPAN PRECIOUS” may be effective.

2. Trend of major jewellery gifts in Japan

Christmas (December 24) In Japan, Christmas is the most important event especially for those who are going together. They

usually gift something to each other as memories or have a dinner together. The most popular gift is jewellery. All the jewelers work hard to promote their goods in the Christmas season (December). Manufacturers develop products associated with Christmas, and retail shops try to attract customers with special displays and wrappings for Christmas. Goods at relatively affordable prices, 30,000 to 70,000 yen, are popular. Tiffany , Cartier, BVLGARI are some of the most popular brands in Japan. Any materials and items can be chosen as gifts.

"White Day" (March 14) "White Day" is unique to Japan when boys present something to girls in return for the gifts of St.

Valentine's Day. Jewellery is popular in this event too. But its average price is lower than that of a Christmas gift, about 10,000 to 30,000. Recently, since "White Day" is promoted with magazines and other media, that event is penetrating to not only urban areas but into local areas as well.

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Birthday Birthdays are the most popular events for gifting some presents regardless of age. Many retail shops

make "Birthday stone of this month" section for promotion, or send direct mails to customers who are going to celebrate their birthdays in that month. Recently, more and more girls tell their boyfriends what they want for their birthday and boyfriends give them the jewellery they want on their birthday.

Wedding anniversary As noted before, the bridal jewellery market accounts for the biggest share of the whole jewellery market.

Therefore, De Beers and other trade members promote actively to stimulate consumers to buy jewellery after their marriage too. Specifically, De Beers carries on "Sweet 10 Diamonds" campaign and has succeeded to make Japanese consumers to "present jewellery on their 10th wedding anniversary" who had no such customary before. It also promotes "milestone" diamonds as the 25th anniversary presents.

Others In recent years, in order to increase opportunities for the user to purchase jewellery, there is a tendency in

the industry to introduce various anniversaries for various events, such as birthday and graduation day of children, retirement of parents, and so forth. All the enterprises and organizations are working on new ideas and implementing sales promotions.

VIII. Valuation of Italian Jewellery Products in the Jewellery Industry in Japan

1. Advantages of Italian jewellery products

Most valued by every player in Japan is the superior design. Adventurous ideas and creative designs of Italian products are difficult to find in the Japanese products. Designs which could be somewhat outrageous are based on the long history and traditions in Italy. Designing in Japan is based on repetitive marketing activities and results in producing a stereo type design which may be a combination of good selling products in the market and acceptable to the consumers. In case of Italian design, it is an originality to create a new product, and enthusiasm to generate a boom instead of following an existing trend. As a result, products by innovative Italian designers often become popular in Japan, and many Japanese designers visits exhibitions in Italy, such as in Vicenza. To be specific, Italian designers are good at mixing multiple materials, and their design steric and interesting, possibly with original locking craws.

2. Disadvantages of Italian jewellery products

Quality was the most commonly indicated issue. What is not considered an issue in Italy or Europe may be considered an issue, and disadvantage in Japan. Italian enterprises have confidence in the quality of their products, but some of their products do not satisfy the quality level required in Japan. Some people indicated that quality control is not good enough as there are some defective products. Especially pointed out are the finishing of stone locking craws and polishing. Sometimes, there are issues such as tiny holes on the metal part, rough finish of blank ring, cracks in casting, etc. In Japan, some enterprises may be checking by using a magnifying glass or microscope, which may show a somewhat sensitive nature of the people in Japan. Also, there were comments that the quality of center stones is not so good.

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Other issues are delivery time and purchase order quantity, such as delivery delays, and non-acceptance of small lot purchase orders.

IX. Summary

1) Jewellery market in Japan is the third largest in the world, which has finally climbed out of the recession, and will expand toward the Tokyo Olympic Games.

2) Jewellery market in Japan has been matured, and consumers are more interested in individualistic jewellery rather than so-called mega brands. Thus, there is a potential for Italian jewellery with high originality and design quality in the Japanese market.

3) Provided the quality and delivery requirement are satisfied, on which jewellery companies are strict and demanding in Japan, there is a good room for Italian jewellery companies to enter into the market in Japan.

4) In entering the market, it is important to find a dominant partner. There are many agents and importers in Japan. Participation in jewellery exhibitions may be effective to find a prominent partner.

5) Most promising types of jewellery are as below: A) Jewellery with sharp and unique design, which are not easily found in the other brands B) Expensive, one of a kind jewellery C) Jewellery with modern arrangement of traditional materials such as cameo and coral D) Jewellery-taste accessories, low-price but jewellery-like quality with trendy-design E) Easy to promote brands, such as a brand celebrities and famous icons are using