Waldman Diamond Company

Japanese market is weak but shows promise says WDC's Japanese department head
December 2000

RAMAT GAN, ISRAEL - The Israel diamond industry continues to perform well, with the unrest in the Gaza Strip and West Bank, and particularly in the areas ruled by the Palestinian Authority, having no perceptible effect on business.

In October, rough imports were down 42 percent in weight, to 605,676 carats, compared to more than a million carats in the same month in 1999. In value, the decrease was substantial but less dramatic—a 24 percent to $262 million, compared to $346 million in 1999. November, however, showed an increase of 21 percent in weight, to 1.24 million carats but the value of rough goods imported dropped one percent, to $338 million. Industry experts suggested the figures indicate a cooling of the pipeline, and could portend a slowing of the market early in 2001.

While at the year-end they still will be higher than in 1999, rough exports continue to fall, although these figures are directly related to the amount of rough being brought into the country. Furthermore, the ever-growing increase of polished diamond imports demonstrates that Israeli manufacturers continue to manufacture many of their smaller goods in the low-wage centers abroad.

Exports of polished diamonds rose 4.6 percent in November to $522 million, compared to $487 million in the same period in 1999. In weight, exports increased to 412,236 carats, up eight percent from 381,532 carats in the same period of 1999. Results for the January-November period show exports to be 21 percent higher in value and 13 percent higher in weight, compared to the same period in 1999.

During the first 11 months of 1999, the United States now took more than 66 percent of all Israeli goods, and Hong Kong performance continued to improve, with exports to that market rising by more than 12 percent when compared to same period a year earlier.

"There's no doubt that in Asia, we're seeing an improvement in sales of polished goods. However, one must look at the Hong Kong figures with a critical eye," says Gal Vered, who is the manager of the Japanese department at the Waldman Diamond Company (WDC) Group office in Ramat Gan. "Hong Kong is a hub market and the goods do not remain there. From Hong Kong, most of these goods continue their journey to various other markets."

As to Japan, Vered is cautiously optimistic. "Japan's overall performance in polished diamonds remains low, and there are a number of reasons for that," Vered said. "Some major financial institutions, among them some of Japan's leading insurance concerns, have bitten the dust, and caused an unprecedented chain reaction of bankruptcies.

"On the other hand," Vered continued, "our Tokyo operation, against all the apparent market trends, has been performing well, especially during the past few months." That, Vered added, is remarkable for a branch office that opened barely a year ago. In Japan, it usually takes years to gain a true foothold. In our case, we did so much groundwork before establishing the office, that it bore fruit earlier than expected. That and an uncompromising emphasis on service make it happen for WDC in the Japan, in spite of the general subdued performance of the market."