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Disaster Strikes Japan
The recent earthquake followed by the tsunami that struck Japan and the nuclear catastrophe have taken a huge toll of that country, lets take a look at the broader picture briefly asseses the likely impact on the gems and jewellery industry.
By: Diamond World News Service
May 2 2011 2:53PM
Reference: 5955  

Japan is the second largest consumer market for jewellery, with China and India fast catching up and almost on par, in terms of world share. The global gems and jewellery industry yet to recover fully from the shock of the financial crisis of 2008, was not only perturbed by the enormity of the calamity which hit the Japanese people, but also wondered what this would mean to the industry specifically.

In a special intervention at the recently concluded Presidents Meet of the WFDB, Michio Iwasaki, President, Tokyo Diamond Exchange described the loss and hardship that the Japanese people were undergoing. Putting the extent of the impact in perspective he said, “The area destroyed covers 443 square kilometers, which is 2.7 times of the area covered by Tel Aviv and 2.2 times of that of Antwerp. Please try and imagine a similar situation, i.e. a tsunami wiping out the whole of your hometowns.” He said that even “people in Tokyo began to hunt for their daily necessities although there was no direct damage in Tokyo itself”. Iwasaki added, “Consequences of the disasters also have a big influence on the diamond and jewellery industry of Japan. Therefore department stores and retail stores began to shorten their business hours and all the jewellery exhibitions in Tokyo were canceled.” He said that most Indian diamond dealers in Tokyo had shut shop and returned home. “The diamond market in Japan has dropped to about 30% of what it was before the earthquake.” However, he was optimistic that in time the situation would be normalised, saying, “We Japanese are patient and generous in facing such hardships.”

Indian gems and jewellery businesses trading with Japan were also confident that any ripples caused by the immediate situation in Japan would soon settle down. Analysts feel that as Japan currently accounts for roughly 5-7% of the global diamond market, even a fall of 20%-30% would not have a major impact on overall offtake. Even this would only be for the short term and be a limited setback, they say. “The impact is more at a sentimental level”, said one diamantaire. Some also opined that there had been no immediate impact felt on trading volumes which would be experienced in the coming months.

Japan-based Nitin Khinduka of V.N. Trading echoed a similar view. “Sentiments are down”, he said. “It will take about six months to a year for the situation to stabilise.” Khinduka was of the opinion that the tsumani did not affect consumer confidence as much as the nuclear crisis did, impacting as it did Tokyo which is the heart of the jewellery consumer market. The government was pumping in money and making a big effort to normalise the situation, he said, expressing confidence that this would soon be done.

Nirmal Kumar Bardiya of RMC Gems India Ltd, which also has an extensive business with Japan said, “There are some reduced sales and we will continue to see some impact through the summer, but we expect things to recover August onwards.” He felt that there had been no extensive loss suffered by those in the jewellery trade as a result of the disasters. Bardiya added “The confidence level is already improving since the water problem in Tokyo has been solved.”

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