Transforming the jewelry industry: A visionary journey with Kishun

Kishun was founded in 2014, and nowadays, you’ve become a one-stop service for purchasing and selling colored stones, doing everything in-house, from buying, appraising, polishing, and cutting, to selling gemstones and diamonds. What were the core motivational factors behind establishing Kishun in 2014, and what have been some of the challenges you’ve faced in your short history?

My personal motivation was linked to the company’s founding back in 2014, and my family has been closely related to the kimono industry. In the past, we ran a kimono shop, and jewelry is a natural complement to kimonos. People often choose a kimono to complement their jewelry and vice versa, so as a kimono seller, the idea of becoming a jeweler myself has always been in the back of my mind. I think this was the key personal reason behind starting Kishun back in 2014. In fact, I would say that I wanted to become a jeweler pretty much since middle school, so it was an opportunity to make my dreams come true.

Before opening Kishun, I actually worked for a jewelry company for ten years as a salaryman, and through working for another company, I came to understand how I would run this sort of business myself.

The business concept was based on my ideas to convey the value of secondhand jewelry, uncovering the hidden value of Japanese jewelry in particular. Unfortunately, we found in many cases that these items were discarded and not granted the opportunity to have a second life. This thinking is what helped solidify my thoughts on how I personally could contribute to society, and the solution that I decided upon was sustainability and the reusing of precious gemstones and diamonds. This concept was the one swimming about in my head, and fortunately, I was able to realize this vision with the creation of Kishun.

Back in 2011, as you might remember, the Great Tohoku Earthquake occurred, and in many ways, this event was a milestone in changing the way I look at the world. Obviously, even the smallest local companies can add value to society, companies such as local hairdressers or a butcher. Jewelry itself is not on that list, and the thought is that it doesn’t really add any extra value. This is even more true when we talk about secondhand jewelry. My opinion was that something had to be done, and I really wanted people to see the value in secondhand jewelry. I wanted to contribute, not only by prolonging the life cycle of gems and diamonds but also by giving a second life to items that had been completely discarded.

With the weak JPY coupled with the growth of inbound tourism and tax-free reductions that these tourists can benefit from; Japan once again seems to be a very attractive destination on the international jewelry scene. Tourists can take advantage of this economic situation to bring back very high-end Japanese jewelry to their home countries. Do you agree with this sentiment, and what business opportunities do you see for Japanese jewelry companies to leverage inbound foreign tourism?

I cannot agree with you more on your premise that Japanese jewelers can take advantage of this situation with increased tourism and weak JPY. We see this as a great opportunity to capitalize on the business potential presented by foreign tourists, and the best way we see to do this is by introducing those tourists to Japanese cultural heritage and craftsmanship. We have a good technological background behind the products that we produce here, and the jewelry of Japan itself is also somewhat appealing to international visitors. We would like to see our company also contributing to connecting interested foreign visitors with manufacturers in Japan, thus creating more possibilities for foreign customers.

We refer to this as Urban Mining, and the market currently stands at a price of JPY 80 trillion, and it presents firms like ourselves with some fantastic opportunities. If you were actually mining raw materials, you would need extensive investment and equipment, so Urban Mining cuts down on that in a sense, while still requiring the craftsmanship to turn secondhand gemstones into beautiful products. Luckily within our portfolio, we possess those craftsmen so we can make this happen for our customers inside and outside of Japan. All things aside, we see this time as a great opportunity.

We also see a great opportunity to provide added-value price products. Luckily there has been an accumulation of jewelry throughout Japan’s economic outbursts, and as a result, Japanese jewelry shops have a large quantity of stocks that are still yet to reach customers’ hands. This phenomenon is also what we define as Urban Mining. I think there is a good connection right now between not only the availability of Urban Mining but also the potential increase in the price of these products.

Geographically you have to remember that Japan is resource-dependent, and I think the situation right now creates a good outcome for us with the accumulated jewelry over many years.

From experience, we have seen that Japanese consumers like new things and really value brand-new items. You can see it in the construction industry where houses are torn down and new houses are built for the next person, which is surprising to Westerners since houses in the West will stay up for 30, 40, 50, or more years. Jewelry is a completely different sector, but we know there is a similar trend where Japanese people like brand-new clothes and brand-new jewelry. Contrary to this trend, however, in recent years, websites such as Mercari have gained traction, a website that is used for secondhand items. Could you comment on the secondhand market in Japan and how you see the consumer preferences of Japanese consumers in particular change?

This is a very good question, and it is actually very important for us to understand the perception of used jewelry from a Japanese consumer perspective. First of all, human nature is in play here, and everybody likes new things. Japan is no different, and we even have a phrase in Japanese, hatsugatso, pronounced "HA-tsu-GAH-tsu-o." It translates to "departure point for something new." It can also mean "beginning," "first step," or "inauguration." If broken down, hatsu means “first, initial, or beginning,” whereas gatsuo means “bonito.” Therefore, "Hatsugatsu" literally translates to "first fishing of the bonito," which can metaphorically represent offering something new and sophisticated. Just because it is the first bonito of the year, its value increases and the price goes up. “Hatsu-gatsuo" is such a special food for the Japanese, and it is also a symbol of the Edo spirit of being vain and loving sophistication. The idea of challenging yourself to add value to new products or services is something that designs the national character of Japanese people I would say. Therefore I would agree wholeheartedly with your premise that Japanese people like new things.

I think the good thing about these secondhand products that we are acquiring through our Urban Mining is that we have to come up with new approaches ethically, essentially principles for environmental sustainability. Jewelry mining from a completely pure sense is a very complex process, and I wouldn’t say it is environmentally friendly at all. Additionally, you have an issue when it comes to developing nations that have access to the raw materials but don’t have access to the technology and equipment necessary to mine these materials in a safe and environmentally friendly way. In Africa, you often see on the news child labor forces in the mines, which is obviously the complete opposite of what the developed world would call ethical. Blood Diamonds are a real thing, with crime, violence, and death accompanying them. In this way, secondhand jewelry represents a more ethical product to the consumer that also preserves the environment a little better by giving an item a second life. These SDGs are something that we base our business on every time we approach new or existing customers. We would like to deliver this message and philosophy through our products and services.

We also look to introduce value-added prices to the products, as if it was brand new and had a new design for the gemstones. We introduce our own technical capabilities to polish and grind the stones to remove defects or cracks. Then, utilizing our CAD designs we can scale up new drawings to create a new housing for the gemstones. It results in totally new products that don’t have to resemble the original product at all. A totally new design for a totally new product.

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One of the more pertinent challenges that Japan is facing right now as a whole is, of course, the demographic shift. Japan is known as the world’s oldest society with a shrinking population due to low birth rates. In fact, experts believe that the population will dip under 100 million by 2050, with over 30% of people over the age of 65. This creates a labor crisis and a shrinking domestic market. What are some of the challenges you have seen as a result of this demographic shift, and how is your firm reacting to the demographic changes in Japan? To what degree do you believe your firm needs to look overseas to ensure long-term business success?

There are a lot of problems because of this population decline and the increase in elderly people. There is a distinct lack of human resources and there are obstacles in the way of almost every industry right now.

The overall size of the jewelry industry right now is something we compare to the Bubble economy back in the 1980s. Nowadays it is down to 25% of those Bubble economy times, and obviously, that doesn’t paint a good picture, not only with the number of jewelry items but also the interest from people in jewelry. We cannot employ enough people on a year-to-year basis. The younger generation; graduates aged around 22 or 23 will think carefully before jumping into a career in jewelry. Averagely, the age of a jeweler in Okachimachi, an area known for jewelry, is above the age of 60 years old. This is also a problematic point because we are talking about the craftsmanship required to polish and grind gemstones and represent them with techniques that have been accumulated over many years. There needs to be a smooth transition of this accumulated knowledge and practice that a jeweler has carried with them across an entire lifetime of work. If you don’t have enough younger people to pass this know-how to, there is going to be a generational gap, and honestly, this is a problem that is already becoming apparent.

I wouldn’t even say that this problem is exclusive to Kishun, the jewelry industry, spreading all across industries in Japan. If I were to speak about international markets, obviously expanding our market reach, accessing new customer segments, and diversifying our revenue streams is something that we are currently forward to and we’ve had some level of success in penetrating other markets. The whole domestic situation has pushed us to look outside of Japan, and for that reason, we are looking at international markets positively.

In other interviews, the theme of partnerships often comes up, with major players saying that collaboration and co-creation with local partners are the keys to unlocking international markets. What role do partnerships play in your business model, and are you searching for any new partnerships in international markets?

Partnerships are essential for us to attempt to penetrate other markets. First of all, we have to establish a reliable supply chain, and in our case, quality second hand gemstones would have to be introduced to that supply chain. This is something we are currently engaged in.

Market-wise we are currently looking at Southeast Asia as well as Central Asia too. Further down that list, we are also looking at America and possibly Europe, but to do so just by ourselves would be a very hard task to achieve. It is crucial to have a good understanding of local market demand and trends in secondhand gemstones. By ourselves, we cannot follow all of the trends that are happening outside of Japan, thus we need a reliable partner that can do this due diligence for us and deliver that message to us. Our approach in business is B2B2C so in that sense a reliable local partner outside of Japan is vital to our business operations.

We know that besides your locations in Japan, you also have a subsidiary in Hong Kong and you recently opened a new shop in Bangkok. What strategies are you looking to employ in order to continue your investments in overseas markets?

Just a quick correction first, in Bangkok we don’t have a company there yet, but Thailand is a country that is rich and abundant in resources of precious metals and jewelry. We have however had a presence in Thailand for export reasons as well as to participate in local exhibitions, all with the idea of gathering more information about the country and possible partnerships. In the future, I do see the possibility of opening up a store in the country, but due diligence is important before taking such a leap.

Things that are important to us right now are a little obvious, mostly revolving around opening up sales channels. First of all, in order to achieve this, we need to understand the supply chains and establish them on a reliable level. Without proper market research, we cannot select a location for expansion.

Speed is another key factor for us. Up until now most of our business has been concentrated on the Japanese market, and to that end, we have used our Urban Mining approach to obtain second-hand jewelry before grinding, polishing, and creating new designs to breathe new life into these gemstones. Those are then sold to customers inside and outside of Japan, and in order to further penetrate local markets an obvious direction would be to partner with a local manufacturer, allowing local supply chains and local assembly for local customers. This allows for better reach to the customers and much speedier times in terms of our entire process. This is the vision we have right now in our minds to approach new regions and markets.

With the advent of COVID-19, many physical stores struggled due to the changes forced on people’s lifestyles and consumption habits. Many companies had to adapt to this, and as a result, we saw online sales jump 13% in Japan, making the country the fourth largest e-commerce market in the world. You’ve started your own e-commerce channels with the website Pocket-By-Kishun, which was launched in 2021. How has your business adapted to take advantage of the growth in e-commerce?

Yes, we benefited a lot from this situation that saw customers unable to go to physical stores, and inevitably, they had no choice but to shop online. Our company started operating our online sales as a result of the pandemic, with the concept of allowing customers to purchase the kind of jewelry you could easily put in your pocket and carry around with you. Jewelry has traditionally had a strong image of being a luxury item, but the concept of pocket by Kishun is to target the younger generation and make it affordable and easy enough to put in a pocket. The target age was slightly different from what conventional jewelers target, aiming at the younger generation who are in their 20s and 30s. This targeted approach itself resulted in good sales, so the mindset of the company changed from just being a B2B company to also approaching B2C sales. Still, however, the B2B side of our business generates the most income, but we are still very happy with the results we have seen from Pocket-By-Kishun.

Your company has seen a number of evolutionary steps in recent years. Starting in 2021, you launched Pocket-By-Kishun, in 2022 you relocated to Okachimachi, and in 2023 you successfully participated in the JCK Jewelry Exhibition in Las Vegas, Nevada. Could you outline for us what you consider the next steps in the evolution of Kishun?

The initial plan is definitely to be participating in more events, especially those related to jewelry. There are quite a number of these exhibitions happening in Asian countries such as Taiwan and Korea, as well as the Middle East. The jewelry market tends to be defined by Europe so we would like to be participating in events there also.

Imagine that we came back on the very last day of your presidency and interviewed you all over again. What goals or dreams would you like to achieve by the time you are ready to pass the baton onto the next generation of Kishun executives?

I have several goals to outline here, with the core one revolving around changing the perception of jewelry. Obviously, this is a monumental goal and I’m not really sure how to go about it just yet, but something needs to be done in order to motivate young people to pursue a career in jewelry. We want to shed light on the industry and help young people understand how amazing jewelry really is.

This is our ninth year since establishment, so a mid-term strategy plan is currently being formulated for the next three years. If I’m going to be the president of the company for the foreseeable future, I would like to set achieving this goal as something we all at Kishun can reach for. We could potentially expand our boundaries and create a more sustainable business for the future, capturing many potential new customers inside and outside of Japan along the way.