Japan jeweler Mikimoto eyes China growth
TOKYO (Reuters) - Upscale Japanese jeweler Mikimoto & Co plans to open its fourth store in China next month, expecting double-digit growth in what is set to become the world's biggest jewelry market, its president said.
Mikimoto has also seen strong demand from Chinese shoppers in Japan. Sales to Chinese customers at its main store in Tokyo's posh Ginza district tripled in February from a year earlier as tourists hit town during China's New Year holidays and splurged on luxury goods, Noriyuki Morita told the Reuters Global Luxury Summit.
China's jewelry market is soon expected to top $33 billion to surpass the United States as the world's biggest, according to the Japan External Trade Organisation, as China's strong economic growth creates a new class of rich.
"In about three years' time, sales from China will probably double to account for some 10 percent of our total sales. China is Asia's big consumption country," Morita said
He added the company was considering opening more stores in China but was wary about the risks of rapid expansion.
Mikimoto, which competes against global jewelry brands such as Tiffany & Co (TIF.N), has also started to see signs of recovery in Japanese consumers' appetite, especially those of wealthy customers, from around March, he said.
"We started to see some products with eight-figure prices (above 10 million yen, or $110,000), being sold," Morita said, adding that the company's overall sales will probably pick up from its next financial year starting in September thanks to an economic recovery in Japan.
He added that the Japanese government's move last year to ease visa requirements for Chinese tourists has led to a boost in the number of Chinese shoppers at its stores.
CULTURED PEARLS PIONEER
Fanning Japanese retailers' hopes for more sales from Chinese shoppers, Japan plans to further relax the tourist visa requirements for Chinese nationals starting in July.
"That would surely be an additional help for us," said Morita, a lifelong Mikimoto employee who became the jeweler's ninth president in November 2007.
Mikimoto, whose founder Koichi Mikimoto succeeded in creating the world's first cultured pearls in 1893, opened its first store in Ginza in 1899.
Since then, the company has been known for its popular pearl jewelry, often favored by royal families and celebrities. A 16-inch Mikimoto pearl necklace was given to film star Marilyn Monroe by her husband and baseball star Joe DiMaggio on their honeymoon in 1954.
"As a pioneer in pearl cultivation, the company must try hard to stay healthy and to preserve Japan's pearl culture," Morita said.
As consumers cut back on spending following the global economic crisis, Mikimoto's total sales fell nearly 20 percent to 24 billion yen in the financial year ended August from the previous year, he said.
"Our sales are likely to stay at around the same level this year before picking up next year as a economic recovery is likely to kick in," Morita said.
Japan's jewelry market, worth 3 trillion yen in 1991, has since shrunk by 69 percent to 928 billion yen in 2009 with the global financial crisis landing an extra blow, Yano Economic Research Institute data showed.
Improving consumer sentiment is set to help the market pick up from later this year albeit only at a modest pace, the research note added.
"Although middle class customers have recommenced shopping, it would probably take some time until other shoppers start spending money on luxury products," Morita said.
(Editing by Muralikumar Anantharaman)
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