The price of gold has gone up again. On 1 April, the price of an ounce of gold reached 3,162 USD globally, making it 735.68 RMB (101.22 USD) per gram in China. Prices from gold shops or traditional jewellers such as Chow Tai Fook, Chow Seng Seng and Luk Fook all reached or nearly reached 950 RMB (130.71 USD) per gram. Against this background, most gold shops saw a slump in sales due to the ever-growing prices, but two did exceptionally well: the Shuibei market, the affordable jewellery hub in Shenzhen and Laopu Gold, a premium gold and jewellery chain.
Shuibei Jewellery Park is a wholesale centre for gold and jewellery, where many merchants use social commerce platforms like Rednote and Douyin as their way to reach end consumers. Young and internet-savvy individuals are seeking more affordable alternatives to branded jewellery with real gold, pearl or gems close to wholesale prices. By sticking to market prices with no premium, as well as low crafting charges, it is a way for Chinese customers to do away with the “branding tax” for cost-effectiveness, similar to “white label” FMCG.
On the last day of March, Laopu Gold (老铺黄金) released its first annual financial report after going public in Hong Kong. The jeweller, known for its “traditionally crafted” gold accessories, earned 8.51 billion RMB (1.17 billion USD) in 2024, up 167.5% year-on-year (YoY). Its gross profit also grew 162.9% YoY to 3.50 billion RMB (481.56 million USD) with a 41.2% gross margin. Attributable net income surged 256.2% to 1.48 billion RMB (203.63 million USD). Laopu Gold’s share price jumped 19.07% the next day to 868 HKD (11.59 USD) per share, making its market value 146.1 billion USD (18.78 billion USD). This was all achieved with just 36 stores.
The reason Laopu wins over the wealthy and aspiring customers is the opposite of the Shuibei merchant. It charges high premiums on the “traditionally crafted” pieces by offering “emotional value” through its brand storytelling of craftsmanship and traditional culture. With the “New Chinese style” becoming mainstream, it is likely Laopu can aim for a luxury status with its positioning and brand image. The affordable Shuibei and premium Laopu Gold might squeeze the middle even further with the high gold prices today.
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