There is a Chinese precious metal brand that has recently garnered the most attention in the market, surpassing competitors with over 100 years of history such as Chow Tai Fook. It is the newly established brand LaoPuGold, founded 16 years ago and in its second year of listing on the Hong Kong stock market. Due to its high-quality and high-price strategy, LaoPuGold has gained popularity among China's Generation Z (born in the mid-1990s to early 2000s) and has become the second most expensive stock among the components of the Hong Kong Hang Seng Index.
According to LaoPuGold, the brand modernly interprets traditional Chinese gold craftsmanship by combining it with intangible cultural heritage craft techniques. It is the first in China to promote the concept of 'ancient handmade' (古代 수공예). By introducing a diamond-setting technique based on pure gold, it has differentiated itself by offering a unique value compared to existing diamond jewelry based on carats. It sells gold accessories utilizing traditional materials such as dragons and phoenixes, pure gold diamond accessories, and gold crafts. Founder Xu Gaoming started in March 2009 with a store in Wangfujing, Beijing.
◇ Working hours alone total 600 hours… Selling like hotcakes for hundreds of thousands to millions
The reason LaoPuGold has emerged as the 'Hermès of the precious metal industry' is due to its high-quality, high-price strategy. LaoPuGold's products are created by artisans, who reportedly spend over 600 hours working on a single product. The lengthy production time results in high quality that does not tarnish over time.
High prices have also ignited consumer sentiment. LaoPuGold products are much more expensive than the international gold price, and prices are frequently raised, which reportedly stimulates purchasing desire. As of the 13th, a single pure gold bracelet is being sold at LaoPuGold's Tmall flagship store for 97,690 yuan (about 18,643,159 won). Pure gold rings are priced around 10,000 to 20,000 yuan (about 1,900,000 to 3,800,000 won). The cheapest ring is also 5,200 yuan (about 1,000,000 won). The smaller number of stores compared to competitors paradoxically contributes to building the image of 'rare products that are not easily obtainable.'
These characteristics align with changes in consumer trends. According to Xinhua News Agency, Gao Dalang, a fund manager at China International Capital Corporation (CICC), recently analyzed that public consumption habits have changed significantly. Preferences among Chinese consumers are shifting from brand consumption to quality consumption, and from product consumption to service consumption. Moreover, they are increasingly paying attention to the emotional value of goods and are more willing to spend large amounts for self-satisfaction.
As a result, long lines are seen outside stores to buy LaoPuGold products during holidays, and there are reports that illegal black market transactions are also rampant. In reality, the number of 'loyal members' who have purchased LaoPuGold products at least once has reached 350,000.
◇ Small scale but… profitability that overwhelms traditional giants
According to 36kr, LaoPuGold's annual sales for 2024 are projected to be 9.8 billion yuan (about 1.87 trillion won), a 166% increase from the previous year. The net profit is expected to be 1.47 billion yuan (about 267.2 billion won), a 354% increase from the previous year, while gross sales profit is expected to be 3.51 billion yuan (about 669.9 billion won), which is a 163% increase.
Although the overall sales scale is less than that of traditional giants that make sales worth trillions of won, profitability is overwhelming. According to the Chinese economic media 21jingji, LaoPuGold achieved 10% of Chow Tai Fook's sales with less than 1% of its store size. Reports indicate that among China's precious metal brands, only three, including Chow Tai Fook, have a gross sales profit margin exceeding 20%, and LaoPuGold has not fallen below a 40% gross sales profit margin since 2020.
Representative Xu Gaoming noted in a performance announcement, 'The goal is to increase store efficiency to over 1 billion yuan (about 190 billion won). In the future, stores with efficiencies below 500 million yuan (about 95.45 billion won) may be closed.'
Since its listing in 2024, LaoPuGold's stock price has been rapidly soaring. The stock price of LaoPuGold was trading around 70 Hong Kong dollars (about 12,000 won) immediately after listing, and it doubled within three months. As of the 12th of this month, about a year later, the closing price was recorded at 914 Hong Kong dollars (about 159,800 won), a 1,200% increase compared to June last year.
LaoPuGold opened 66 new stores in China this year. Some of these stores reach sizes of 300 to 400 square meters (about 90 to 120 pyeong). Recently, it has also been preparing for overseas expansion, with Singapore chosen as the location for its first overseas store. On Chinese social media, photos of the LaoPuGold store under preparation for opening at the Marina Bay Sands Hotel, one of Singapore's landmarks, have been spreading. According to Xinhua News Agency, after expanding its business in Hong Kong, Macau, and Singapore, LaoPuGold plans to enter other Asian cities. Previously, LaoPuGold announced a plan to open four additional Southeast Asian stores within two years of its listing in 2024.
However, it remains uncertain whether LaoPuGold will enjoy the same popularity in overseas markets as it does in China. This is due to high tariffs and varying preferences for precious metals by country. Gao Chengyuan, head of Tiao Yuan Consulting, analyzed to Xinhua News Agency, 'Gold, a special commodity, is subject to strict export and import controls in many countries. Complex trade procedures not only increase costs but can also lead to supply delays.' He added, 'Moreover, consumers in different countries have distinct preferences regarding the purity, style, and cultural significance of gold. Old gold stores need to adjust their product designs and marketing strategies to local conditions, which requires higher management capabilities.'