Laopu Gold, a Beijing-based jeweller recognized for its handmade equipment, has emerged as a favorite amongst prosperous shoppers, as world 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 bought 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 yr earlier, in response to its interim report. Its internet revenue skyrocketed practically 200 per cent to succeed in 588 million yuan throughout the identical interval.
Laopu Gold’s shares are up greater than 550 per cent for the reason that 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 practically a yr and client sentiment remaining subdued because of a slowing China, demand for mass-market gold jewelry has been declining. However Laopu’s efficiency is “vastly completely different,” in that it’s “centered solely on the high-end market,” stated Richard Lin, the chief client analyst at SPDB Worldwide, an funding financial institution.
“Prosperous shoppers should not solely much less affected by broader financial circumstances, however extra importantly, in contrast to the common client who buys gold as an adjunct or for consumption, in addition they take into account 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 based mostly on a dynamic pricing mannequin that rises and falls with the yellow steel – Laopu follows a “mounted value” 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 maintain rising, many shoppers are pondering, since we’ve to pay further for the model and craftsmanship anyway, we’d as properly select Laopu given the standard of its merchandise,” stated Lin. “So essentially that is about model energy.”
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Laopu’s attraction among the many younger and prosperous can be tied to its promotion of “heritage gold” – a kind of pure gold jewelry that blends historical crafting strategies, 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 completely different from the opposite manufacturers”.
Consumers in an out of doors mall in Beijing. Picture: AP alt=Consumers in an out of doors mall in Beijing. Picture: AP>
The store she visited at Wangfujing, a industrial district within the metropolis centre, affords two predominant classes of jewelry: one that includes conventional Chinese language and Taoism-inspired equipment, and one other one centered on Buddhism.
“General, Laopu could 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 favored it so much, as a result of its type could be very distinctive.”
Zhang is just not the one one who feels this manner. On RedNote, the Chinese language social media app that not too long ago 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 function the intricate craftsmanship of the jeweller’s necklaces and rings, in addition to movies of lengthy queues exterior its shops.
“I am loving this model. I’ve to work laborious to make more cash,” wrote one RedNote consumer named Yoyo Zaizai, who posted an image of herself carrying a gold pendant. “It is so lovely. 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 internet revenue might attain 1.7 billion yuan in 2025, including that in 2026, it might hit 2.3 billion yuan.
However a draw back threat looms. With the corporate’s shares rising as gold costs have shot up, Laopu might lose favour amongst shoppers when gold costs begin to fall.
“When that occurs, the query is whether or not Laopu’s model power can offset among the adverse affect of the downward cycle of gold costs,” Lin stated. “It’s a risk.”
