Despite a broader slowdown in consumer spending across China, Laopu Gold, a Beijing-based jeweller renowned for its handmade accessories, has become a standout success. The company’s high-end gold and gem-set jewellery is flying off the shelves, even as global luxury giants like Louis Vuitton and Gucci struggle with weak demand in the region.
Laopu Gold, which went public in Hong Kong in June, has seen its shares soar by more than 550%, reaching a record high of HK457(US58.7) on Tuesday. The company’s interim report for the first half of 2024 revealed staggering growth: sales surged 148% year-on-year to 3.5 billion yuan (US$482.7 million), while net profit skyrocketed nearly 200% to 588 million yuan.
A High-End Focus Pays Off
While mass-market gold jewellery sales have declined amid rising gold prices and subdued consumer sentiment, Laopu Gold has thrived by targeting affluent buyers. Richard Lin, chief consumer analyst at investment bank SPDB International, explained that wealthy consumers are less affected by economic downturns and often view gold as both an investment and a luxury item.
“Affluent shoppers aren’t just buying gold for fashion or consumption—they’re also considering its long-term value,” Lin said. “This mindset has worked in Laopu’s favour.”
Fixed Pricing Drives Profits
Laopu’s success is also tied to its unique pricing strategy. Unlike competitors such as Chow Tai Fook Jewellery, which adjusts prices based on fluctuating gold rates, Laopu uses a fixed-price model. This approach, which includes a significant markup to reflect the brand’s intricate craftsmanship, has proven highly profitable. In the first half of 2024, Laopu’s gross margin reached 41.3%, more than double Chow Tai Fook’s 20%.
“With gold prices now around 600 yuan (US$82.30) per gram and expected to keep rising, consumers are willing to pay a premium for Laopu’s quality and brand appeal,” Lin added.
Cultural Appeal and Craftsmanship
Laopu Gold has also won over younger, affluent customers by promoting “heritage gold”—a line of pure gold jewellery that combines ancient crafting techniques with Chinese cultural and Buddhist-inspired designs. Sheila Zhang, a Beijing-based financial professional, purchased a 20,000 yuan prayer wheel necklace in January and praised the brand’s unique style.
“Laopu stands out from other jewellers,” Zhang said. “Their stores are simple and focused, making it easier to choose. I love their distinctive designs.”
Social Media Buzz and Long Queues
Laopu’s popularity is evident on Chinese social media. On RedNote, a platform gaining international attention, over 1.2 million posts feature the hashtag “Laopu Gold.” Users share photos and videos of the brand’s intricate jewellery and long queues outside its stores.
“I’m obsessed with this brand. I need to work harder to afford more,” wrote one RedNote user, Yoyo Zaizai, alongside a photo of her wearing a gold pendant. “Once you start buying Laopu, you can’t stop.”
Future Prospects and Risks
With gold prices hitting record highs amid global economic uncertainty, Laopu Gold is well-positioned for continued growth. China International Capital Corporation predicts the company’s net profit could reach 1.7 billion yuan in 2025 and 2.3 billion yuan in 2026.
However, risks remain. If gold prices fall, Laopu’s appeal could wane. “The challenge will be whether Laopu’s brand strength can offset the impact of a gold price downturn,” Lin cautioned. “It’s a possibility, but not a certainty.”
For now, Laopu Gold’s blend of craftsmanship, cultural heritage, and high-end appeal continues to captivate China’s affluent consumers, defying the broader economic slowdown.
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