The supporters of Laopu Gold and Buccellati are not consumers seeking affordable alternatives, but rather more discerning consumers
Gold and jewelry are a tale of two extremes.
After spot gold continued to reach new historical highs, the prices of full gold jewelry from many gold jewelry brands have soared recently. On October 19, the price of full gold jewelry exceeded the 800 yuan per gram mark, and less than a week later, it broke through 810 yuan. Lao Feng Xiang, Lao Miao, China Gold, and others quoted 813 yuan per gram, while Chow Tai Fook reached 815 yuan per gram.
The price of gold jewelry has surpassed 800 yuan, and young consumers might not have a concept of this, but this news is enough to make long-term buyers of gold jewelry feel “unable to buy.” At the same time last year, the price of pure gold jewelry was about 610 yuan per gram.
The China Gold Association stated that in the first three quarters of 2024, due to the continued rise in gold prices, gold jewelry consumption was significantly affected, with consumption amounting to about 400 tons, a year-on-year decrease of 28%.
Consumers are deterred by high gold prices, making this year’s situation very difficult for Zhou Dafu and others.
According to the latest quarterly report released by Chow Tai Fook as of the end of September, overall retail sales fell by 21%, with the mainland China market declining by 19%, and the Hong Kong, Macau, and other markets plummeting by 31%, with the rate of decline widening quarter-on-quarter. As of the end of the period, the total number of Chow Tai Fook jewelry retail outlets was 7,113, a net decrease of 145 compared to the previous quarter.
Chow Tai Fook Managing Director Wong Siu Kee revealed that during the recently concluded National Day Golden Week, Chow Tai Fook still experienced a year-on-year decline. The company predicts flat revenue for the 2025 fiscal year and plans to close 95 stores.
Consumers are deterred by the high gold prices, making this year particularly difficult for companies like Chow Tai Fook
In addition to Chow Tai Fook, the financial statements of other gold and jewelry companies such as Lao Feng Xiang and Luk Fook Group are also visibly under pressure. Luk Fook Group’s overall sales fell by 16% in the second quarter of the 2025 fiscal year and in the first two weeks of October, with same-store sales dropping by 35%.
At the same time, however, another gold jewelry brand, Lao Pu Gold, is soaring against the trend.
Since its IPO on the Hong Kong Stock Exchange on June 28th this year, the stock price of Lao Pu Gold has risen by nearly 180%, with a market value reaching HK$32.9 billion, almost half of Chow Tai Fook Group’s HK$75.1 billion market value. Lao Pu Gold has become the darling of capital, continuously attracting industry attention.
In September, Laopu Gold released its first financial report after listing, with sales surging 149% to 3.52 billion yuan, gross profit increasing 146% to 1.455 billion yuan, and net profit soaring 199% to 588 million yuan. On September 23, Laopu Gold immediately announced a price increase, marking the second increase of the year for its iconic ancient gold series, with an average increase of about 9%.
Since its listing four months ago, Laopu Gold‘s stock price has risen by nearly 180%
The ups and downs of gold and jewelry reflect profound changes in the industry. Lao Pu Gold stands out because its competitors are not Chow Tai Fook and others, but Cartier and the like.
The most intuitive aspect is pricing. Looking at the products from Laopu Gold, there is a filigree Ruyi cloud pattern bracelet priced at nearly 70,000 yuan, a Pixiu fortune bead bracelet at 128,000 yuan, a coiling branch Baoxianghua gold bowl at 378,000 yuan, and a Laopu Yu Wang sword ornament priced as high as 789,000 yuan. Clearly, its price range overlaps with brands like Cartier, and according to the prospectus, products priced above 50,000 yuan contribute over a quarter of Laopu Gold’s revenue.
Unlike Chow Tai Fook and other gold jewelry brands priced by the gram, Laopu Gold uses a “fixed price” pricing method. Since the weight in grams is unclear, a significant portion of the money consumers pay is for the product design and style, rather than the gold itself.
In the past, for traditional gold brands, the price of each piece of jewelry was calculated based on the international gold price, the weight of the jewelry, and the processing fee per gram. The daily gold price and the buy-back price were displayed in the shop notice to maintain transparency of information.
This pricing method satisfies the consumption psychology of traditional consumers with investment needs, forming the logic of cost pricing for gold jewelry over the long term. This group of mature consumers more often associates gold jewelry with investment hedging and the rigid demand of marriage, and they are often unwilling to pay excessive brand premiums, with relatively low loyalty to gold jewelry brands.
Gold jewelry is closely related to wedding scenarios
Purchasing gold and jewelry in the Chinese market holds special cultural significance. China is the world’s largest gold producer and consumer, accounting for 11% of global production. Just like the status of diamond rings in the West, Chinese consumers often purchase a large amount of gold jewelry for weddings, considered as an equivalent to cash. Compared to gold bars, gold jewelry also carries symbolic and decorative significance, making it popular among consumers with wedding, holiday, or gifting needs.
This is also why the names of gold and jewelry brands are associated with auspicious meanings. In 1929, Chow Tai Fook Jewelry’s founder, Chow Chi-Yuen, established the first jewelry store in Guangzhou, naming it Chow Tai Fook by borrowing the traditional blessing “Five Blessings to the Door, Great Wealth and High Rank,” evoking associations with wealth and good fortune, aligning with the mindset of the people at that time.
In fact, pure gold is not suitable for making jewelry. Because it is very soft, it cannot achieve complex designs, and if used for inlaying, it does not provide strong fixation and support, and is prone to deformation and wear. This characteristic to some extent has led many gold jewelry brands not to devote too much effort to design, and the limited design makes the differentiation between brands relatively low.
For half a century, the core message conveyed by Chinese gold and jewelry brands has been “purity,” such as Chow Tai Fook promoting itself as the definer of 999.9 pure gold.
The K gold represents the purity of gold. Generally, 100% gold is referred to as 24K gold. However, due to the difficulty of achieving 100% purity in the production process, China usually refers to gold with 99.6% or higher purity as 24K gold, while 18K gold is an alloy composed of 75% gold and other metals. 999 fine gold refers to gold with a purity of 99.9%.
This might also be why international luxury brands actually rarely use pure gold. Cartier’s gold jewelry is generally made of 18K or 22K gold, along with other materials such as platinum, diamonds, and gemstones. Tiffany’s primary materials include silver, diamonds, and gemstones. To achieve complex designs and flexibility, luxury brands often choose to sacrifice the purity of gold and enhance the hardness of the alloy.
Many mature consumers who purchase pure gold jewelry are unmoved by international luxury brands, precisely because they consider the materials of these brands’ jewelry products to be insufficiently pure. Insufficient purity leads to inadequate liquidity, and the brand value of luxury goods does not form a consensus among this group of consumers.
Therefore, Chow Tai Fook has actually been doing business with the same group of consumers for decades. They are highly sensitive to gold prices and are far more concerned with the investment and hedging attributes than design and brand.
Although Chow Tai Fook was the first to propose the “fixed price” in the 1990s, which was revolutionary for the entire industry, it actually did not touch the logic of cost pricing for gold jewelry. The background at the time was Hong Kong’s economic boom, with the unprecedented prosperity of the jewelry industry and retail jewelry prices in chaos. Merchants competed to attract customers by offering high marked prices and then discounts. In 1990, Chow Tai Fook implemented the “fixed price” to promote reasonable competition in the market.
However, gold jewelry is still calculated by weight in grams, meaning that pricing power is primarily determined by international gold prices, making gold jewelry brands relatively passive. Even if these brands can hedge against the impact of gold price fluctuations on gold inventory through gold loans, they still cannot effectively stimulate consumer purchase intent when gold prices soar.
In recent years, gold and jewelry brands represented by Chow Tai Fook have been attempting to enhance their profit margins and brand premium capability through craftsmanship upgrades and branded marketing. The development of electroforming technology has increased the hardness of gold, allowing jewelers to embed various gemstones into 24K gold jewelry, creating more diverse designs and expanding the range of product choices and prices.
At the same time, Chow Tai Fook has also catered to the aesthetic preferences of young people by launching many minimalist designs similar to the classic entry series of luxury brands, regarded as “affordable alternatives” to luxury brands. Although this move has attracted a group of young consumers to Chow Tai Fook, many still believe that these new designs of traditional gold jewelry lack originality. In addition, pure gold products demand higher styling requirements in contemporary fashion compared to alloy accessories.
Overall, the brand upgrade path of gold and jewelry brands represented by Chow Tai Fook is not smooth.
This is mainly hindered by two aspects. First, for many years, it has been difficult to change brand perceptions, and the main consumers do not accept brand premiums beyond the cost of gold. Second, the vast network of over 7,000 distributors makes it difficult for brand upgrades to act in unison, hindering the reversal of its mass-market positioning. The brand’s high-end product line is viewed as an affiliate of Chow Tai Fook Jewelry, without establishing an independent market recognition.
As the world’s largest jewelry group by market value for a long time, until being surpassed by Tiffany in 2019, Chow Tai Fook has always wanted to compete directly with its international counterparts in the past decade as luxury brands expanded in the Chinese market. However, the fact is that Chow Tai Fook has not truly joined the hard luxury market competition and has always been seen as an affordable alternative.
To some extent, Laopu Gold fulfilled Chow Tai Fook’s long-standing wish. This is because establishing a new image from a blank slate is much easier than reversing a stereotype.
In the luxury goods industry, it is very rare for a brand to successfully reposition itself as high-end unless it is positioned that way from the start. As for channel quality, establishing high standards from the initial 33 directly-operated stores is clearly much easier than upgrading 7,000 stores later on.
Since the beginning of this year, as the luxury goods market has cooled, many industry insiders have revealed that, judging from the sales performance of domestic luxury goods malls, Lao Feng Xiang has taken market share from brands such as Cartier, Tiffany, and Bulgari in high-end commercial districts.
From the perspective of originality in product design, Lao Pu Gold rarely draws on the popular trends of luxury brands in its product design, but instead adheres to traditional Chinese aesthetics, integrating elements such as ancient patterns, mythological stories, and palace styles. The brand style is focused and consistent, breaking the characteristic of traditional gold jewelry brands that, in order to cater to market trends, aim to cater to all groups, resulting in a cluttered product line.
In recent years, the gold industry has seen many new processes, but only the ancient gold craftsmanship pioneered by Laopu Gold has achieved wide market adoption. This is because the ancient gold craftsmanship is not only a new technical process but also an innovation in the narrative of craftsmanship, mastering the ability of luxury brands to tell stories.
The Love series bracelets by Cartier are usually made from 18K yellow gold, 18K white gold, and 18K rose gold or platinum
The external favorable factors for Lao Pu Gold’s rise are that with the popularity of new Chinese-style wear and ancient wind culture among young consumers, the styling and matching of gold products become easier.
At the same time, consumers’ recognition of China’s ancient intangible cultural heritage has greatly increased. In fact, not many consumers have deeply studied which specific techniques are included in ancient gold methods, but its distinct cultural significance, pure artistic expression, and more free and flexible design limits have left a strong impression on them, forming a clear distinction from other traditional gold jewelry brands.
In fact, Lao Pu Gold and Chow Tai Fook have two completely different consumer groups. One prioritizes cost pricing logic with added cultural value, and the other prioritizes luxury value and cultural resonance, with the “real gold and silver” cost logic being a bonus.
Unlike mature consumers, this group of young consumers did not receive much market education on gold and jewelry during their growth, but they are more familiar with the logic of luxury brands. However, in the past few years of macroeconomic fluctuations, the demand for gold as a safe haven and the spread of rational consumption have led them to reflect on luxury consumption and pursue products with higher value preservation.
Due to the stagnation in innovation faced by soft luxury brands mainly focused on leather goods, and the parallel pricing between aggressive price increases post-pandemic and the relatively conservative price increases for high-end jewelry products, coupled with the deepening exploration of luxury goods among many aspiring middle-class consumers in China, the market demand for high-end jewelry brands in China has consistently increased over the past few years.
However, if transitioning from soft luxury to hard luxury is a leap for consumers, then within the hard luxury sector, moving from international high-end jewelry brands to emerging brands like Lao Pu Gold is another step forward in rational consumption.
Under the context of rational consumption, young consumers are shifting from the traditional consensus that “luxury goods are unrelated to cost” to focusing on the materials and craftsmanship of jewelry, allowing Laopu Gold to seize the gap left by international brands.
After a brief period of novelty, consumers began to think that high-end jewelry products were made with inferior materials and sold at high prices. Behind the simple designs, these brands overly rely on iconic symbols, resulting in limited product choices and a lack of innovation.
Some consumers have turned to the Shuibei market, while others have turned to alternative brands that resonate more emotionally with consumers and have a clearer pricing logic.
Whether it’s using higher purity gold, an Art Deco aesthetic, or designs with bold and expressive styles, it’s easy for Lao Pu Gold’s consumers to see value in the products themselves. Even if consumers don’t intend to recycle and sell their gold ornaments, the recyclability of pure gold offers an additional layer of emotional value.
The rise of Lao Pu Huangjin and Buccellati is remarkably similar
Not just Lao Pu Huangjin, the reason why the Italian jewelry brand Buccellati has gained popularity in recent years and become a new growth engine for the Richemont Group has similarities to Lao Pu Huangjin. Although Italy’s gold mining volume is limited, its strength in gold processing, design, and market demand gives Italy a significant position in the global gold industry.
The ostentatious and intricate design style of Buccellati, with its strong religious aesthetic, as well as exclusive techniques such as brushed metal and openwork gold carving, may not have been favored by consumers in the market dominated by brands like Cartier and Tiffany ten years ago. However, it has recently gained sudden popularity, which is actually due to consumers’ higher pursuit of luxury goods. They have grown tired of the repeated brand stories told by Cartier and others.
In the first quarter of fiscal year 2025 ending on June 30 of this year, although the overall sales of the jewelry division of Richemont, where Cartier is located, saw growth, with a 4% increase to 3.66 billion euros, it slowed compared to last year’s annual increase of 6%. Meanwhile, Richemont’s sales in the Greater China region fell by 27% in the first quarter.
Analysts believe that although the demand for high-end jewelry remains strong in the European and American markets, the rapid cognitive iteration of Chinese consumers may foreshadow the trends of these brands in the European and American markets, which Cartier and others have to be wary of.
Whether they are high-net-worth individuals who can afford expensive jewelry or budget-conscious entry-level consumers, both are looking for new alternatives. The followers of Laopole Gold and Buccellati are not consumers seeking affordable alternatives but rather more discerning consumers.
Of course, luxury brands are not built overnight; it’s about maintaining consistent actions over a long period. Currently, the ancient gold shop standing at the forefront of the capital market, whether it has the patience to continue the marathon for decades and avoid the traditional short-sighted issues of Chinese brands, is the greatest test for the brand management team.
By the time Cartier’s panther reacted, the challenge had only just begun.