Several decades ago, Japan was one of the world's major diamond jewellery consumers, along with the United States. That said, there was virtually no diamond market in the country until the middle of the 20th century. The question arises as to how it gained momentum and powerful development and why it is now in the slow lane? Let's try to figure it out.
In the early 1960s, De Beers that had already conquered the American market decided to embrace new horizons: Germany, Japan and Brazil. To do this, it turned to J. Walter Thompson (JWT) advertising agency that ran a brilliant advertising campaign most successfully implemented in Japan.
At that time, there was a 1500-year tradition of contractual marriages in the Land of the Rising Sun accompanied by the exchange between the parents of the bride and groom with ‘yuino’ gift boxes that included no diamonds. Moreover, until 1959, the export of diamonds to Japan was prohibited.
How did De Beers - through JWT - manage to bring the Western traditions in such a conservative country with a unique mentality? Much of the success was achieved thanks to using initially no calls in the advertising campaign for a radical change in the traditions and ceremonials. A diamond ring was considered an additional ‘gift’ in the ‘yuino’ box, which was perceived not as a replacement of an age-old tradition, but only as its adornment. By a lucky coincidence for De Beers, the advertising campaign coincided with the women's movement for the ‘modernization’ (americanization) begun in Japan. JWT capitalized on this ambition to be on top of trends and published the advertisements in some Japanese magazines showing women with European features wearing the Western clothes and diamond rings who went in for ‘non-Japanese’ sports such as golf, mountain skiing, water skiing, trekking, etc.
This turned up trumps - while in 1966, only 5% of Japanese brides-to-be received a diamond engagement ring as a gift, in 1978, the share was already 54%. By the 1990s, a Japanese man paid an average of three to four monthly wages for a ring for a girl of his choice, and the country overtook the United States in the diamond consumption.
However, at the onset of the third millennium, the situation began to change for the worse and currently, the diamond jewellery retail sales in Japan account for only 10% of the sales in the Americas or 5% of the global ones ($3.9 bn in 2018 according to Tacy). Let's figure out the reasons.
First of all, the Japan's economy experienced stagnation in the 1990s and early 2000s also known as the ‘lost decade’ after the so-called ‘Japanese financial bubble’ of 1986-1991 popped. At that time, an incredible and unjustified rise in prices for land and shares took place in the country, which led to the active development of various kinds of speculative trading. The ‘bubble’ popped in 1991 continued to slowly deflate until 2007, but as soon as the property prices began to recover, the global financial and economic crisis of 2008-2009 broke out and the prices declined again. It is quite natural that the sales of diamond jewellery pieces that are luxury goods dropped significantly during these hard times for the country.
In addition, at the same time, the monopoly of De Beers was fading away against the background of some new emerging producers (Australia, Canada), attacks by the antimonopoly legislation, problems with African countries that wanted greater independence, and a number of other reasons. De Beers no longer ran its large-scale advertising campaigns, however, the consumer demand must be maintained continuously.
Let's go back to the situation in Japan. In recent years, there has been a downward trend in the number of marriages in Japan. While in the mid-1990s, one in 20 Japanese women was never married, today - one in seven women.
In addition to the falling demand for engagement rings, the Japanese interest in high-end jewellery in general has decreased. Young people began to favor gadgets, and in the 2010s, Japan had no equal in the world in their design and improvement, and the young customers increasingly opted for travelling and experiences over jewellery purchasing.
Since 2016, the ‘secondary’ diamond jewellery pieces purchased by the Japanese during the ‘economic bubble’ have been actively sold in Japan. These are sold at the auctions in Japan, and mostly foreigners participate in the auctions, mainly the buyers from the PRC and India - these countries are currently experiencing the economic growth. The Japanese are happy to sell inherited diamonds that have remained unused for years. Many elderly residents of the Land of the Rising Sun sell their jewellery pieces as part of the ‘shukatsu’ practice - preparing for their own death.
At the same time, it can’t be said that the Japanese have lost interest in the diamond jewellery. The demand for precious stones still exists in the country, but its pattern has changed. Unlike the United States, the diamond sales in Japan are based not on the engagement rings, but on the jewellery pieces that 30-plus women independently buy for themselves to celebrate their individual achievements. When it comes to a jewellery design, the Japanese prefer original handicraft jewellery of classic Asian designs and using characters from the Japanese animated films. As a rule, small diamonds are used for such goods. Most purchases are made via online platforms that also allow tracing the history of a diamond and ensure its authenticity and its ‘humane’ mining and manufacturing.
Perhaps, all that the Japanese diamond market needs to flourish again is another ingenious ad campaign.
Anastasia Smolnikova for Rough&Polished
