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World Federation Of Diamond Bourses

Interview with Michio Iwasaki, Chairman of Tokyo Diamond Exchange.

Q. What are your current titles/functions in the diamond industry, both private and organizational?

As Chairman of the Tokyo Diamond Exchange, I am responsible for heading the organization. As a member of the WFDB, the Tokyo Diamond Exchange plays an important role in the diamond industry in Japan by maintaining transparency in the diamond trade and consumer confidence.

As Chairman of Iwaden & Co. Ltd. I am responsible for the overall management of the company, which is an importer and wholesaler of diamonds. My role includes setting the company’s vision and strategy, determining management policies, and overseeing the organization.

Q. Tell us about your journey in the diamond industry, how you began and where you are now.

I jumped into the diamond industry at the age of 30 from a completely different industry than diamonds. I started at GIA in Los Angeles, where I learned the basics of diamond grading and valuation, and then gained valuable experience in the diamond trade, including sourcing and selling diamonds. As my experience grew, I realized my orientation. I recognized the need for a platform that would facilitate a fair and transparent diamond trade and foster trust and confidence among industry players. To realize this vision, I became actively involved with the Tokyo Diamond Exchange. I saw the Tokyo Diamond Exchange as an important player in the global diamond market. In parallel with my involvement with the Tokyo Diamond Exchange, I also had the opportunity to lead Iwaden & Co. Ltd., which specializes in the import and sale of superior diamond materials. I am able to leverage my knowledge of the diamond industry and business acumen to drive the growth and success of Iwaden & Co., Ltd.

Q. What is the current situation in the Japanese diamond and diamond jewelry industry?

The size of the domestic jewelry retail market in 2022 will be 1.227 trillion yen (approx. $7.2 billion), 106.3% of the previous year’s level, recovering to 1 trillion yen for the first time in 14 years since 2008. The jewelry industry had been in a long slump since the collapse of Lehman Brothers, but the jewelry market gradually recovered amid rising demand from foreign visitors to Japan, rising stock prices, and a growing sense of economic recovery, However, the wealthy were not affected to the same extent, and their consumption behavior increased as they became weary of the self-restraint. Such consumer behavior boosted the jewelry market to a level even higher than that before the Corona disaster. In 2023, the market is expected to remain strong due to the lowering of regulations on COVID-19, which will bring psychological relief to consumer behavior, and the expected revival of inbound demand.

Q.How popular is online diamond and jewelry purchasing?

The jewelry market in Japan continued to shrink after 2007 and fell further in 2020 due to the Corona disaster, but the following year it rebounded to increase and exceeded 1 trillion yen in 2022. One factor contributing to the increase is E-commerce. Major jewelry retailers appear to have begun to focus their efforts on E-commerce. According to their income and expense reports, the E-commerce channel increased revenues by more than 10% year over year, indicating a brighter future.

The jewelry industry is an industry that excels at in-store, face-to-face sales. Therefore, a crucial question for jewelry E-commerce is to what extent the customer experience from in-person sales can be replicated online.

Q. Are diamonds popular for bridal jewelry? For self-purchasing?

In Japan, gemstones of high value, brilliance, and hardness have long been considered appropriate when choosing a gemstone as an engagement ring. The most representative gemstone is the diamond, followed by ruby and sapphire. Until recently, engagement was associated with diamond rings, but recently some young people have stopped giving engagement rings and instead put the money toward a honeymoon or furniture for their new home. While the economic situation at the time may be a factor, it is undeniable that tastes are changing.

Q. Where are most diamonds sold in Japan imported from?

According to Japanese government trade statistics, imports from India dominate in both volume and value, followed by Belgium and Israel as the major exporters. This situation has continued for more than 10 years.

Q. How is the economic situation in Japan today, and how will that impact the local diamond industry during the second half of 2023 and beyond?

The Japanese economy is slowly recovering, mainly driven by domestic demand, against the backdrop of normalization of economic activity, and we expect the economy to maintain growth in the 1% range from 2023 onward, led by domestic demand. Personal consumption is expected to continue to recover, driven by rising wages, despite the downward pressure from high prices. In the diamond industry, the government’s response to Covid-19 is positioned as a step down, and consumer behavior stemming from a sense of psychological release and the development of E-commerce are expected, but the extreme depreciation of the yen is a concern.

Q. What are the challenges and opportunities facing the local diamond industry?

  • Consumer preferences and demands are changing, and the industry needs to adapt.
  • Measures need to be taken to ensure that transparency in diamond distribution does not lead to consumer suspicion.
  • Differentiation from second-hand diamonds in secondary distribution, which are mixed in the domestic market, is required.
  • The price of synthetic diamonds is on a downward trend due to technological advances, and it is necessary to prevent this from affecting the price of natural diamonds.

We believe that it is important for the diamond industry to work toward sustainable growth and maintaining competitiveness by properly understanding and addressing these issues.

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