Laopu Gold, a Beijing-based jeweller recognized for its handmade equipment, has emerged as a favorite amongst prosperous customers, as international luxurious manufacturers like Louis Vuitton and Gucci grapple with tepid client spending in China and sluggish gross sales throughout the area.
With simply 36 shops in Higher China, the Hong Kong-listed firm offered 3.5 billion yuan (US$482.7 million) price of pure gold and gem-set jewelry within the first half of 2024, up 148 per cent from a 12 months earlier, in line with its interim report. Its web revenue skyrocketed almost 200 per cent to succeed in 588 million yuan throughout the identical interval.
Laopu Gold’s shares are up greater than 550 per cent because the firm’s buying and selling debut in June, reaching a excessive of HK$457 (US$58.7) on Tuesday.
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With gold costs on the rise for almost a 12 months and client sentiment remaining subdued attributable to a slowing China, demand for mass-market gold jewelry has been declining. However Laopu’s efficiency is “vastly totally different,” in that it’s “centered completely on the high-end market,” stated Richard Lin, the chief client analyst at SPDB Worldwide, an funding financial institution.
“Prosperous customers should not solely much less affected by broader financial situations, however extra importantly, in contrast to the typical client who buys gold as an adjunct or for consumption, additionally they contemplate the funding worth of gold merchandise,” he stated.
Laopu’s success is partly attributable to its pricing mannequin. Not like competitor Chow Tai Fook Jewelry – which sells the majority of its gold equipment primarily based on a dynamic pricing mannequin that rises and falls with the yellow metallic – Laopu follows a “mounted worth” mannequin, the place costs stay unchanged although they contain a hefty mark-up to mirror the corporate’s intricate craftsmanship.
For Laopu, this implies extra revenue. Based on its interim report, the corporate’s gross margin reached 41.3 per cent within the first half of 2024, in comparison with round 20 per cent for Chow Tai Fook.
“With the worth of gold now round 600 yuan (US$82.30) per gram and prone to hold rising, many customers are pondering, since we’ve got to pay further for the model and craftsmanship anyway, we would as effectively select Laopu given the standard of its merchandise,” stated Lin. “So essentially that is about model energy.”
Laopu’s attraction among the many younger and prosperous can also be tied to its promotion of “heritage gold” – a kind of pure gold jewelry that blends historical crafting methods, Chinese language tradition and design parts impressed by the Buddhist religion.
Sheila Zhang, a Beijing-based monetary skilled, purchased a prayer wheel necklace that value round 20,000 yuan in January. She stated her first impression of Laopu was that “it’s totally totally different from the opposite manufacturers”.
Consumers in an out of doors mall in Beijing. Photograph: AP alt=Consumers in an out of doors mall in Beijing. Photograph: AP>
The store she visited at Wangfujing, a business district within the metropolis centre, affords two most important classes of jewelry: one that includes conventional Chinese language and Taoism-inspired equipment, and one other one centered on Buddhism.
“Total, Laopu may be very easy and clear in its choices, which, in comparison with different manufacturers that overwhelm you with choices, surprisingly makes it simpler to choose,” she stated. “I preferred it so much, as a result of its fashion may be very distinctive.”
Zhang isn’t the one one that feels this manner. On RedNote, the Chinese language social media app that just lately rose to worldwide fame as a result of US crackdown on TikTok, there have been greater than 1.2 million posts that includes the hashtag “Laopu Gold.” These posts characteristic the intricate craftsmanship of the jeweller’s necklaces and rings, in addition to movies of lengthy queues outdoors its shops.
“I am loving this model. I’ve to work exhausting to earn more money,” wrote one RedNote consumer named Yoyo Zaizai, who posted an image of herself sporting a gold pendant. “It is so stunning. When you begin shopping for Laopu, you possibly can’t escape the ‘pit.'”
With the worth of gold hitting an all-time excessive this week, sparked by demand for safe-haven belongings amid turmoil sparked by US tariffs, Laopu Gold stands to learn. China Worldwide Capital Company projected in October that the corporate’s web revenue may attain 1.7 billion yuan in 2025, including that in 2026, it may hit 2.3 billion yuan.
However a draw back danger looms. With the corporate’s shares rising as gold costs have shot up, Laopu may lose favour amongst customers when gold costs begin to fall.
“When that occurs, the query is whether or not Laopu’s model energy can offset a few of the adverse impression of the downward cycle of gold costs,” Lin stated. “It’s a risk.”
