Jewelry in a Tough Economic Environment
The Japanese fashion industry has been hit by a 10 percent duty hike. The new tax, which takes effect in January, will be ten percent higher than the present value. According to the Japan Times, this tax increase will increase costs for jewelers, clothing, makeup artists and other items that have high-priced ingredients.
This hike is felt strongly in the jewelry and fashion industries across Japan. This includes not only necessities but necessities like clothes and other essentials. Jewelers and fashion houses can no longer afford to supply their clients with more expensive products. In other words, the new tax means competition will get even harder. The only bright spot is that the revenue will help fund the country’s Olympic sports program.
Not all in the fashion industry are happy with this new tax. Many feel the new tax will affect the precious metal market. Many Japanese citizens are investing large sums of money in gold and silver jewelry and coins. These investments will not be affected by the new tax.
The main business of the jewelry industry is luxury goods. High end watches, jewelry and costume wear command top dollar prices. Many citizens of Japan are earning six figures salaries just to keep up with the demand. High end jewelry is also an important asset for the Japanese economy. With the new tax increase, these precious assets will become even more valuable.
The Japanese fashion industry came close to paralyzing their financial system last year when the tax increase was implemented. When the economy slid downward, the government had to look to stimulate the economy using fiscal stimulus programs. This move temporarily helped the economy to return to a positive track, but in the long run will haunt it. Economic growth is vital to Japan, as it helps maintain its currency.
The high value of imported goods has driven up the cost of everything made in Japan. Now the country must deal with the ramifications of this new tax increase and how it will affect their ability to compete in the international luxury items market. One thing that is certain is that the Japanese fashion industry has no choice but to adjust their business practices. As new companies are unable to import luxury items due to the prohibitive tax rates, the once vibrant industry will be limited.
For the small time jewelery makers in Japan, this new tax means either cut back on production or import all together. If you are a jewelry maker and are currently exporting to Japan, it’s time to find a new country where you can do business. You may find other foreign manufacturers interested in doing business with you, which will help support your company. Keep in mind that the tax on jewelry is 10% and higher, so make sure you get the total price quote before deciding on where you will export your jewelry.
Many in the Japanese fashion industry are watching the way the new tax will affect the precious metal that is an essential part of the Japanese culture. Many consumers have been buying gold to protect their value in the face of a new global financial crisis. While this method seems to be working for now, we’ve never seen anything like this before. This could mean huge changes to the Japanese economy in the short and long term. Watch this space for more information on how this new tax will impact the luxury items to market in Japan.
The “cons” are that jewelry makers might leave the country if they feel the effects of the tax will affect them enough to lose their profitable production. Since many jewelers are also used as items for weddings, this is not the end of the line. The jewelery makers are very good at marketing and making sure consumers feel good about spending their hard earned money on their product. With their marketing skills, they can likely keep their businesses going strong even during these tough times.
The “pros” are that the new tax will promote international trade and diplomacy, which have been a tradition for the Japanese. It will be beneficial for everyone involved. As the United States and other western countries begin to impose high tariffs on certain goods that they produce and import, the Japanese fashion industry could pick up significantly. If the countries continue to do this, there will be less Japanese made jewelery imported into the US and other western countries.
The “cons” are that Japan may not see an increase in demand for their wares because it’s already helped them in other areas. Jewelry is not a one size fits all product. Each individual has their own taste. Many like their traditional styles while others want something more modern. There will probably be some Japanes that never even think about buying a silver or gold bracelet.