Gold, Chinese luxury groups challenge Richemont
Industry shifts from sales by weight to fixed-price and brand-driven models, but weak consumption and shifts to investment gold squeeze margins
Key points
Gold's volatile phase in recent months has not only affected global commodity dynamics, but has amplified the declines in performance among listed companies along the jewellery supply chain in China. Indeed, stocks in the sector have all shown negative balances since the start of the year, in a context where the market is structurally reviewing the link between metal price and equity valuations.
For years, gold jewellery companies in China have been interpreted as almost direct proxies for the performance of the precious metal: a rise in gold translated into an automatic improvement in margins, and thus in profits and stock market performance. This relationship today appears less linear. In fact, the metal's recent weakness has not produced a homogeneous movement, but has highlighted increasingly divergent business models along the supply chain.
Chinese groups are, however, repositioning themselves by redesigning their business model, moving from jewellery paid by weight to fixed-price jewellery that also values workmanship and craftsmanship in its overall cost. An attempt to decouple the trend of margins from that of the commodity of reference.
The Hermès of gold
Laopu Gold, dubbed the Hermès of gold, debuted on the stock exchange on 28 June 2024 and was trading at 40 times projected earnings for that year. It is now down nearly 13% since the start of the year and 20% over the past twelve months due to profit-taking and fears over valuations after an exceptional first-year rally when at its highs it had touched HK$1,100 from HK$40.50 at the IPO. The group had become one of China's leading luxury success stories thanks to the phenomenon of guochao, i.e. the growth in demand for Chinese domestic brands perceived as trendy, desirable and associated with the country's cultural identity, instead of being considered an inferior alternative to Western brands. In 2025, group revenues reached RMB 27.30 billion, up +221% year-on-year. Of this, sales in mainland China accounted for 85.6% of the total, up 205.4%, while overseas revenues increased by 4.3%. The company plans to open 6-9 overseas shops in 2026-2027, entering markets such as Japan, North America, Australia and the Middle East, with the aim of expanding its international presence. According to Frost & Sullivan, in 2025 Laopu Gold ranked second among global luxury brands in China by revenue and was the only Chinese brand in the top five. The consumer overlap rate with five major international luxury brands (including Louis Vuitton and Hermès) increased from 77.3% (July 2025) to 82.4% (March 2026), confirming the premium positioning.
Traditional Chinese Jewellery
Among the industry giants Chow Tai Fook Jewellery Group, which has lost 11.4% since the beginning of the year. The group, which has a network of 5,813 shops as at 31 December 2025, is undergoing a major restructuring of its retail network, with hundreds of shop closures and a major rationalisation of its operations in mainland China. In fact, the growth model based on widespread shop expansion no longer seems sustainable in the face of weak domestic consumption and the rising price of gold, which is shifting purchases from high-margin jewellery to lower-margin gold bullion as an investment.
