A Real Gem of a Business

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A Real Gem of a Business

Looking down from the 18th floor of the Korea Trade Center, staring at some of the choicest real estate in Seoul, Kim Ik-hwan exudes the pride of a self-made man. Against a spectacular view of southern Seoul, his modest clothes seem almost shabby. All except for his glistening wristwatch. "It's a gift from President Kim Dae-jung," he says almost dismissively, "but it didn't come easy. Look at my hands." Bent and gnarled fingers are raised for inspection. The nails, particularly on the thumbs, appear rippled and discolored.

"Amethysts," Mr. Kim explains, smiling slightly. "Cutting amethysts has been my whole life."

Cutting, or faceting, the raw, purple gemstone involves thin abrasive disks, charged with powdered diamonds - treacherous wheels designed to cut through the hardest of minerals. The line between getting the most out of an uncut stone and saving your skin is extraordinarily fine.

The amethyst is a clear variety of quartz. Its name comes from the ancient Greek for "not drunk," because people once believed that if you drank alcohol from an amethyst cup, you would never become intoxicated. In Asia, people have long-believed that the amethyst supplies and balances the energy of the universe and that it wards off evil.

Korean amethysts are exported to 193 nations worldwide, and the great reputation that Korean amethysts enjoy is due largely to one man, Kim Ik-hwan.

Mr. Kim, 55, is one of the Korea's most successful jewelry dealers, a entrepreneur who created his own amethyst empire. Strangely, few Koreans realize that their nation produces such a distinguished gem. Mr. Kim's company, Kim's Ameth, has been ranked among the top domestic exporters for the past three decades. Last year, Kim's Ameth made it to the number one spot with gross export sales of 21.3 billion won ($16.4 million) and a net profit of 4.6 billion won.

Mr. Kim was born to a journalist father and homemaker mother and grew up in Hunjeong-dong, central Seoul. The Korean War took his father when he was just 4, and like many poverty-stricken families, the young boy had to support his mother and two sisters. Kim's first job was carrying bricks at a construction site. During his teenage years, he delivered newspapers.

A good friend introduced Mr. Kim to the jewelry business in 1968. His friend was a unruly young man who often stole jewelry from his own father's store in Myeongdong. How bad was it? Every time the friend showed up at his father's shop, the old man quickly locked up all the cabinets. But the old man trusted his son's best friend, and decided to teach Kim Ik-hwan the trade.

"The jewelry business is built on 'credit' between dealers," says Mr. Kim from a sofa in his 18th floor office. "It didn't matter what you had, the dealers had to trust you or else there was no business." So his friend's father decided to vouch for Mr. Kim, and began sending him to his dealers to work. With 1 million won in savings (then the purchase price of a modest apartment in Seoul), Mr. Kim opened a small jewelry shop named Gyeongbosa near his benefactor's store in Myeongdong. He was 23.

Ambitious, Mr. Kim was not satisfied with just a simple shop. He heard through a traveling gem dealer that Korea produced an indigenous stone called an amethyst. Eventually he found that the Ural mountains in Russia yielded the world's finest amethysts. He also found that the Taebaek mountains in Korea might have a supply.

Determined to discover how rich that Korean supply might be and how they could be excavated, young Kim Ik-hwan caught a night train to an amethyst mine in South Kyongsang province. The mine's original owners, a group of Japanese, had abandoned the place when the colonial period had ended. The ownership of the mine was in dispute. Most miners were from the region, while others were convicts hiding out. An outsider, Mr. Kim worked to get everyone's trust. He kept going back to that mine and another one nearby, to talk with miners. He went in the mines with them and learned to cut amethysts. He tore up his fingers but he earned the miners' trust. In time, the miners, even the convicts on the run, taught him everything about the gemstones - cutting, buying and processing.

For the next 18 years, three to five times every month, Mr. Kim rode that same night train to Kyongsang province, in the southeast corner of the peninsula. His mission was always the same: to hunt for the biggest and best amethysts. Within three years he became the top manufacturer and seller of the stone in Korea.

His best customer were Japanese. After Korea established diplomatic relations with Japan in the mid-1960s, Japanese newspapers printed stories about how Korean amethysts were an outstanding buy and a solid investment. Amethysts, with their purple color signifying peace, became the Japanese royal family's signature gemstone. The Japanese television station NHK ran a series on amethysts that helped to cause a boom there.

Mr. Kim says that his "made-in-Korea" product was the only business that brought in big cash at the duty-free shop, in the early 1970s. "Sometimes a CIA agent had to travel to the United States when the Korea Bank didn't have any dollars available," he says. "The agent would then wait in my store until I sold some amethysts to a foreign traveler and then I would hand the money to the agent."

In spite of his success, Mr. Kim says he was hurt when the government treated his business as shady and offered no assistance to help it grow. "There are three businesses in the world whose exact statistics are never known: arms, drugs and jewelry. For 30 years, I could never get a loan from any bank. It didn't matter how much legitimate cash I brought into Korea, or that I was always tops in sales for made-in-Korea products. The Korean government didn't protect my company because gems were considered 'luxury goods,' and instead levied special consumption taxes."

Many years have passed and with them people's beliefs about the industry have changed.

In June 1996, Kim's Ameth became the first jewelry company in Korea listed on theKosdaq. Mr. Kim is especially proud that his gems are being sold in Beijing's international airport, particularly since the city has been chosen to host the 2008 Olympic Games. Kim's Ameth is the only Korean company that has gained entry into the international airport duty-free shop circuit. There are 11 Kim's Ameths in duty-free stores in Korea and 10 abroad, including the ones in Beijing and Shanghai international airports.

None of those achievements came easily, however. A few years ago in Hong Kong, a shop he had planned for 10 years, and with lots of hard lobbying, was not allowed to open. "I still remember what they told us: 'We cannot allow an inferior company into our duty-free shop.' One of my employees who had worked on the project broke down, and then we all cried together. No one can imagine how much I worked to penetrate the China market. Now the size of the Kim's Ameth store in the Beijing airport is as big as Swarovsky, the crystals store, but we sell 12 times more than they do. And I expect our sales to increase 10-fold in the near future."

Mr. Kim's admirers are many. Kim Dong-keuk, the chairman of Korean Gem Trade Association, and a business acquaintance of 20 years, is one. He says: "Amethysts take up less than 10 percent of the world jewelry market. That Kim Ik-hwan alone was able to penetrate the Chinese market itself shows his excellence in promotion and marketing."

Mr. Kim, with 103 people on staff now, maintains a simple management style. "I'm an uneducated man who just worked three to five hours a day more than ordinary Koreans."

A Guide to Getting a Great Rock

Gemstones can cost as little as $10 per carat or as much as $300. Most Korean amethysts are now excavated on Mount Baekdu, the northernmost mountain on the Korean Peninsula, near the border of China and North Korea.

Korean amethysts are famous for their clarity and color because they contain a high percentage of iron. The high density of the mineral makes amethysts not only stronger but it also gives them an intense shine.

As done with diamonds, appraising amethysts includes the four C's: color, clarity, cut and carat, with color being the most important. When an amethyst is held up to the light, the stone should be clear and reddish-purple, like a fine, red wine. Although Asians prefer a deeper hue, Europeans go for the lighter and slightly opaque color. The inclusion, also known as bubble or flaw, is one way to prove that the stone is natural, but the flaw should not affect the durability or the shape. The cut should be well-balanced, and each facet should be achieved with a polished precision.

by Inēs Cho

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