Diamonds aren’t necessarily forever. At least not in Japan, where jewelry owners are unloading unwanted jewels for cash at a record pace and shipping them off to buyers in China and India.
The appeal of gem-encrusted rings and earrings that were part of the luxury fashions of the 1980s and 1990s has faded as the population ages and the economy languishes. In a country that doesn’t have any diamond mines and was the second-largest buyer of the stone less than a decade ago, exports of used diamonds are up 77 percent this year, Finance Ministry data show.
“I want to spend the money for traveling or dinner rather than just holding the diamond in my closet,” a 64-year-old housewife, who asked to be identified by her first name, Mitsuko, said after selling her two-carat diamond ring at a Komehyo Co. store in Tokyo’s bustling Shinjuku district. She declined to say how much she got, except to say that it was less than what she paid 30 years ago.
As the population shrinks and the number of retirees grows, Japan is seeing the market for second-hand goods expand as people unload luxury items acquired during the boom years. Swapping gems for yen also dovetails with Prime Minister Shinzo Abe’s plan to encourage more shopping and less saving, as the government tries to revive an economy still recovering from the implosion of the bubble economy in the early 1990s.
About 25 percent of the population in 2013 was older than 65, up from 12 percent in 1990, according to the Statistics Bureau.
For some people, like Mitsuko, cashing in means getting rid of unneeded things to lead a simpler life, a concept known as danshari. Others are selling inherited jewelry or practicing shukatsu — preparing for one’s own death, said Shuzo Takamura, executive director of the Japan Re-Jewelry Council.
The market for used goods has expanded about 10 percent annually since 2009, reaching ¥1.5 trillion ($12.1 billion), and people are more comfortable selling to shops, Takamura said.
The number of approved dealers who trade second-hand precious metals, jewelry, clothes and other goods has increased 23 percent over the past decade to 741,045, according to data from the National Police Agency. Over the same period, Komehyo, founded in the city of Nagoya in 1947, expanded to 24 stores from just five.
A weakening yen is also making Japanese diamonds and jewelry more attractive to customers visiting from overseas, according to Naoto Owaki, a senior manager in the marketing and sales promotion department at Komehyo.
The currency has fallen 18 percent against the dollar in the past 12 months alone, the worst performer against the greenback among 12 of its peers in Asia.
Japan’s diamond exports in the first four months of 2015 jumped 77 percent to 38,032 carats from the same period the previous year, the highest since 2007, and the value more than doubled to a record ¥3.01 billion, ministry data going back to 1988 show. India and Hong Kong were the top buyers in terms of volume, each accounting for about one-third of the total.
China was the fastest-growing market for diamonds last year after the United States, according to De Beers SA, the world’s top diamond seller. Japan, which was the No. 2 buyer before the financial crisis in 2008, now ranks fourth behind the U.S., China and India.
Much of the demand in China is being driven by an emerging middle class, according to Paul Gait, a London-based analyst at Sanford C. Bernstein.
“The Chinese diamond jewelry market has the potential to be a tremendous driver of overall demand growth,” Gait wrote in an April report.
In India, where sales are growing as incomes rise, the country also serves as Asia’s diamond-cutting and polishing hub.
Vaibhav Bhandari, 24, a Japan-born diamond trader with roots in India, buys diamonds at auctions about four times a month in Okachimachi, Tokyo’s wholesale jewelry hub, to sell on to jewelers in Mumbai and Hong Kong.
“We can buy recycled diamonds 15 percent cheaper in Japan than for same-quality new ones in India,” Bhandari said. And, the nearly unbreakable stones can hold their value from one country’s rise to the next, he said.
Once they’re polished and set, “You can’t distinguish old diamonds from new ones,” Bhandari said.