Yoshihiro Utsumi joined Japan Pearl Exporters’ Association (JPEA) six years ago. Apart from being the executive director of JPEA, he also holds other titles in several public organisations including Japan Brand Support Project under the Ministry of Economy, Trade and Industry of Japan (METI), Japan Pearl Promotion Society and Kobe Marathon, where he serves as the brand strategist. He is at the same time the chief secretary of Pearl Passport Committee (an initiative in Kobe that encourages tourists to wear pearl when they visit Kobe). Tirelessly reiterating the importance of branding in the pearl business, Utsumi enthusiastically shares his insight with Hong Kong Jewellery about the making of Japan’s pearl brand.
HKJM: Hong Kong Jewellery
YU: Yoshihiro Utsumi
HKJM: First of all, could you describe the general situation of Japan’s pearl industry now?
YU: We have already reached the sales target we set before the Lehman shock took place. Price of pearls has risen, especially for akoya pearls, which saw an increase by 70 percent in the last five years. The Japanese pearl industry is growing vibrantly with 60 percent of exports going to China and the rest to the United States and Europe. For instance, in the March Hong Kong International Jewellery Show 2015, the Japan Pavilion achieved a contract sum of ¥6.3 billion (US$51.03 million), compared to ¥1.2 billion (US$9.72 million) in 2009 while the number of Japanese pearl exhibitors also jumped to 100 in 2015 from 61 in 2009.
HKJM: What accounts for such tremendous success of the Japanese pearls?
YU: The main reason of our success is the incomparably fine quality of the Japanese pearls. There are many pearl producing regions in Japan such as Ehime, Mie and Nagasaki. Almost all those pearls collected from farms are sent to Kobe for treatment and polishing. The situation is similar to the way rough diamonds mined in different regions are sent to Antwerp for cutting. Prior to being treated in Kobe, the pearls are only ‘stones’. After treatment they become jewels. When the pearls reach Kobe, they are sorted into grade A, B, C or below. Pearls of grade C or below are then destroyed by burning – about 300kg of pearls are destroyed each year (According to Kobe customs, a total of 18,629kg pearls were exported from Kobe in 2014). As a result the low-quality pearls never leave Kobe and only top-quality Japanese pearls are offered to the market.
Undoubtedly pearl treatment is also carried out in other places; however, from a professional point of view, the quality of treatment in Kobe is much finer than the others, thanks to the advanced technology and research as well as the long history of Japan’s pearl industry that has lasted over a hundred years. Close to the shore of Kobe and alongside the mountains, over 200 companies specialising in pearl selection can be found. Workers there only rely on sunlight for illumination because it does not flicker like electric light does. Sunlight is softened by the mountains before it is reflected into the workspace, thus providing an excellent environment for pearl selection. A skilled worker can select pearls of matching quality at a speed of as fast as 0.5 second per pearl. These workers have the ability to match pearls of same lustre, size, colour and feeling – this is the quality we offer. It would take an untrained worker five to six years before he/she could reach the Japanese standards of pearl selection. Therefore with this level of expertise Kobe cannot be replaced by other regions that offer pearl treatment and selection.
HKJM: How does branding reinforce the status of Japanese pearls in the market?
YU: Aside from maintaining the quality, we care a lot about branding. I have studied under Richard Collasse, CEO of Chanel Japan, from whom I had learned the Chanel branding system. Coco Chanel and famous brand representatives founded the Comité Colbert (an association of French luxury houses). She suggested that member companies all put ‘Paris’ under their brand logo so that whenever people read ‘Paris’ they will associate the word with fine luxury and top-quality goods. I would like to adopt this system in promoting Japanese pearls. Since freshwater pearls did not undergo the same grading process we decided to use saltwater pearls only in branding. To promote Japanese pearls to Chinese consumers, we have spent ¥40 million (US$324,000) so far in media activities, fashion shows, lectures, etc in Shanghai. We made buyers understand that the quality of Japanese pearls is always believable, and they must travel to Hong Kong to purchase them.
HKJM: What are the challenges faced by the Japanese pearl industry and how has the association helped its members?
YU: Taxation. Due to the high tax imposed on Japanese pearls exported to China, Japanese pearl companies have to sell through Hong Kong or Macau. According to the data provided by the Hong Kong office of China Council for the Promotion of International Trade & China Chamber of International Commerce Representative Office in Hong Kong & Macao, the tax rate on graded natural pearls imported to China from Japan is as high as 38%. Despite good business, we hope to expand the exhibition space for Japanese companies but the organisers would not allow it. Our association has applied for funding from MAFF (Ministry of Agriculture, Forestry and Fisheries) and METI to sponsor exhibitors by paying two thirds of their exhibition fees of the March Hong Kong International Jewellery Show. Customers need to see the pearls before they buy, so if we have a larger booth, we can increase sales.
HKJM: Has the Fukushima nuclear incident in 2011 affected the production of pearls in Japan?
YU: Ninety-five percent is no and the remaining five percent is in doubt from Europe. We were not affected at all. The pearl farms are located on the south of Japan, a long distance as 500km from Fukushima. The Kuroshio Current flows towards the north so the pollution did not affect pearl farms.
HKJM: What are your outlooks of the Japanese pearl industry? Do you have plans to explore new markets of Japanese pearls?
YU: I believe the industry will grow well and the Japanese pearl market in China is still growing. India and Russia are interesting target areas, although the currencies there are not that stable. I think the most important task at this point is to keep control of the high quality and trustable business to make sure they fetch high prices.
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