By HUANG Shan
Surging demand for gold seems to be behind the strong performance of China’s top jewelry companies in Q1. Consumption in general has bounced back strongly, also driving demand for gaudy baubles.
According to the National Bureau of Statistics, retail sales of consumer goods in Q1 reached 11.5 trillion yuan (about US$ 1.8 trillion), representing year-on-year growth of 5.8 percent.
Retail sales of gold, silver and jewelry increased by 13.6 percent to 97 billion yuan. The entire jewelry market grew 37.4 percent year on in March.
According to a report by the Gems & Jewelry Trade Association of China, the scale of China’s jewelry market remained largely unchanged in 2022 compared to 2021, with a slight decline due to weak consumption. Gold jewelry faced significant operational pressure.
With recovering consumption, high-end gold jewelry brands have done well. The market is dominated by foreign brands such as Bulgari, Cartier and Tiffany. Although these brands have a limited number of stores, they strictly control direct sales and rely on reputation and exclusivity.
Swiss group Richemont achieved year-on-year revenue growth of 19 percent. The jewelry division, which includes Cartier, Van Cleef & Arpels, and Buccellati, grew by 21 percent, making it the fastest-growing business segment for the company.
In the domestic high-end gold jewelry market, the leading players include Hong Kong brands such as Chow Tai Fook, Chow Sang Sang and Lukfook, as well as local brands like Lao Feng Xiang and Chow Tai Seng. These brands rely on channel expansion for growth.
In the past three years, they have opened up their agency rights, expanding their channels through franchisees, especially in third- and fourth-tier markets. These traditional jewelry companies increased their market share during the pandemic.
As a result, these Hong Kong and local high-end brands, after a difficult year in 2022, have shown signs of recovery with an impressive performance in Q1.
Chow Tai Fook has the largest number of brand stores with 7,300 retailers on the Chinese mainland, of which 76.5 percent are franchises. Mainland retail accounts for 88.9 percent of the group’s total.
Chow Tai Fook sees signs of recovery and same-store sales improved compared to the previous quarter with sales of gold performing much better than other products
Chow Tai Seng saw revenue up 49.6 percent to 4.1 billion yuan in Q1 with gold the absolute driving force. The franchise channel is the main source of income for Chow Tai Seng, with revenue of 3.1 billion yuan in Q1.
