Latest News

China's "Hermes of Gold" shines in spite of a lacklustre market for high-end products

China's "Hermes of Gold" shines in spite of a lacklustre market for high-end products

Vivian Wang purchased a gold medallion from Laopu Gold decorated with a dragon carved into it nearly a decade earlier, but she forgot about the brand. It wasn't until last year that her social media pages were flooded with images of this product.

The sales and marketing professional in Shanghai was scrolling through posts about Laopu Gold when she came across the dragon medallion that had sold for 220,000 yuan (30,440.14). This is double what she paid.

Wang braved the queues outside Laopu’s Shanghai store, located in the tourist hotspot Yu Garden, to buy another item. This time it was an intricate jewellery case made from gold strands that were thinly woven. The lid featured a dragon with phoenix. Wang would love to pass the box on to her daughter, who is 8 years old.

Wang, a jeweller, said: "I love Tiffany, Cartier, or Bulgari. These are all brands that I've bought." He cited rival retail chains owned LVMH and Richemont. "I own diamonds and gemstone jewelry, but... gold is the best option to maintain value over time."

This traditional dragon and Phoenix box is auspicious, but it also provides spiritual sustenance.

Laopu Gold stands out as a luxury brand in China, where the market has been hit by a consumer malaise that is being exacerbated by concerns about job security and wages and a property slump.

The company has incorporated Chinese cultural elements into contemporary designs, resulting in a unique homegrown luxury brand. Gold, which is a popular investment among Chinese consumers in times of uncertainty, has strengthened the strategy.

Laopu Gold has not responded to requests for interviews from.

A source who has direct knowledge of Laopu’s business stated that its annual sales would approach 10 billion yuan by 2024. This is up from 3,18 billion the year before.

The source stated that "Laopu’s average store revenue was nearly 300 million Yuan, compared with the average revenue per store of most international jewelry brands in China which generated between 100 and 200 million yuan annually."

Investors are paying attention. Laopu shares have risen tenfold since its Hong Kong IPO, in June 2024. They went from HK$40.50 ($93.30) to HK$725 (HK$725).

A NEW LUXURY CONTENDER

The company has grown a lot since founder Xu Gaoming - a former fisheries employee - started his first gold jewelry business in 2009. He then established Laopu Gold – which translates as "old store" – in 2016.

Laopu competes directly with Western luxury brands like Tiffany and Cartier, whose prices range from 10,000 to 50,000 Yuan for many of their most popular products.

Its exclusivity stems in part from a playbook taken from its Western competitors.

Laopu raised its prices twice on designer jewelry and trinkets as rising gold prices in China in 2024 drove investors to bullion coins and gold jewellery fell by 24.69%, reaching 532.02 tonnes. Laopu increased prices again by 5-12% last month.

Laopu also does not use the gold spot price, which is used by other domestic competitors to set their prices. Instead, they charge a premium based on design and branding.

The gourd pendant, a symbol for good luck in Chinese culture, contains 24 grams of gold. However it sells at over 29,000 Yuan - nearly 1,200 Yuan per gram.

Some brands may sell similar weighted products at 900 yuan/gram, in line with gold's 700 yuan/gram price.

Laopu, on the other hand, has chosen exclusivity over the many stores that gold-focused brands such as Chow Tai Fook or Lao Feng Xiang have.

Singapore will be the first of 37 stores in Greater China, including Hong Kong, Macau and Hong Kong.

Laopu is known as "Hermes of Gold" by Chinese consumers.

Chinese brands may have taken market share away from Nike and L'Oreal, but they are still unable to compete with global luxury players who charge premiums for heritage, storytelling and design.

The high-profile entrants into this market, including the clothing and furniture manufacturer Shang Xia, which was co-founded by Hermes and sold to Ferrari owner Exor, and the Kering jewellery brand Qeelin have found a niche for products that balance Chinese and Western elements of luxury.

Analysts say Laopu could be a serious contender for breaking through the luxury glass roof.

It's not a threat that is imminent to global luxury groups, because it takes time to build a brand. It's not an immediate threat to global luxury groups because it takes a long time to build a luxury brand.

It's possible if you have the best design, quality and service.

(source: Reuters)