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Building a Market for the OE Cut

Jun 29, 2005 3:13 PM   By Kazuko Ito
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For Yoshinori Kawabuchi, president of Hohoemi Brains Co., Ltd., the inventor/marketer of the Over Excellent (OE) Cut, the JCK Las Vegas show last month was the most opportune venue to look for potential business partners in the international community. With help from Hoyu Hotta, chairman of Hotta Co., Ltd., a 126-year-old establishment in Japan’s jewelry industry, Kawabuchi met with five international jewelry manufacturers from Europe and the U.S. who regularly attend the show.

“I am the fifth generation of a jewelry manufacturing/wholesaling house,” Hotta introduced himself to the group. “Having been in the market nearly 40 years myself, I have an intuition that OE cuts will break out in a big way. It will be revolutionary. Very few in the world, if any, would come up with such a brilliant idea.”

The cuts that Hotta referred to are extremely well-cut diamonds that Kawabuchi brought into the market. Not only do OE Cuts appear more brilliant and shinier compared to diamonds of similar size, color and cut, but Kawabuchi succeeded in proving that the cuts are mathematically and optically superior. These findings are well documented and patented internationally.

A Cut Above

Since the days of Marcel Tolkowsky in the early 1900s, much has been discussed about the relationship of cut proportions and how they influence the appearance of the stones. Today the extremely precision-cut round brilliants based on Tolkowsky’s theories are sometimes called “Ideal Cut” or “Hearts and Arrows” and are gaining popularity in the U.S. and around the world. In Japan, the so-called “Triple Excellent” stones, which receive “excellent” grades on all three cut-grading criteria, have become the norm for the trade. In some instances, marketers provide a simple device with the product that allows viewers to observe the optical effects of “hearts and arrows” in such diamonds.

“The beauty of OE Cuts is that the superiority of their brilliance is visible with the naked eye, as opposed to the marketing of the Ideal Cut, which is theory driven,” Hotta pointed out. The name, Over Excellent, denotes the cut’s superiority to “Triple Excellent.” But since the OE Cut does not fall into Tolkowsky’s “Ideal Cut” definitions or similar theories derived from it, OE Cuts have had difficulties in attaining market recognition and in attracting enough interested parties, at least until now.

Designing Ways

Kawabuchi is aggressively looking for suitable jewelry manufacturers to work with, as he believes OEs would enhance the quality of jewelry pieces. Last year, taking advantage of OE’s unique properties, two of Japan’s hippest jewelry manufacturers, F.D.C. Products, Inc. and Vendome Yamada Corporation, developed new lines, Rugiada and Uzri. Rugiada is sold at F.D.C.’s own stores and Uzri at Tokyo’s major department stores such as Isetan and Mitsukoshi. “At 200,000 yen ($1,836) apiece, it is no casual price for everyday jewelry, but they are doing quite well,” reported Kawabuchi. And this year, Tokyo Kiho Co., Ltd., another major jewelry manufacturer/wholesaler, and Watabe Wedding Co., Ltd. have joined Kawabuchi’s arena.

Because of the precision work the cuts require, OE Cuts are pricey. “Compared to same-size regular ideal cuts, OE Cuts are about 30 percent more expensive,” said Masahiro Suzuki of the Product Development Department of Tokyo Kiho. “But OE Cuts are flatter in depth, so even though they are lighter in carat weight, they do not appear much smaller. Designs will play key roles in making the most of them. This is an interesting material,” continued Suzuki. Tokyo Kiho is scheduling the launch of the new lines with OEs for the beginning of the season in September.

Watabe Wedding, on the other hand, is a bridal specialty marketer that caters to all wedding needs, including diamond rings and diamond jewelry. The marketer has more than 20 offices throughout Japan as well as one in Hawaii and another in Shanghai, China.

Hotta and his company are studying the possibilities of OE cuts, but “the scope of OE Cut should go beyond one company’s undertaking,” he said. While the products are brilliant, Hotta sees a number of problems with the venture, too, including not enough exposure in the marketplace, a patent buy-out attempt from a foreign company and the weak finances of the company. “But we would like to support it with whatever we can,” commented Hotta.

OE Cuts come in round brilliants and in princess cuts, which are also documented and patented internationally. Hohoemi Brains carries melees in all sizes. Larger stones are made to order. “We have the technology. We can handle any orders. We just don’t want to carry them in inventory,” explained Kawabuchi.

MARKETPLACE

  • Smalls of 1/100 and 1/200 continue to be strong, sometimes exceeding prices of 1/50 and 1/60 stones.


  • Demand for pointers is moving from rounds to fancy shapes such as heart, pear, marquise and princess where profit margins are better.


  • 4/4-grainers round stones remain steady. Prices stay controlled, probably due to excess inventory in the marketplace.


  • Prices for 2 carats+ are strong.


  • Large stones, 5-caraters and 10-caraters, have become very scarce. Prices continue to be strong.


  • Prices of fancy shape capes have strengthened.
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Tags: China, Japan, JCK, Jewelry, Manufacturing
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