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[SINGAPORE] Up-and-coming Chinese jewellery label Laopu Gold has made waves in the past year with both consumers and investors.

There has been rapidly rising demand for its offerings – and a stock price that has soared more than 2,000 per cent since its blockbuster Hong Kong listing at an initial public offering price of HK$40.50 last year. As at Wednesday’s (Jul 16) close, its shares were trading at HK$874.50.

Analysts are getting bullish on the stock, and one fund manager has trounced more than 90 per cent of his peers by buying into the Gen Z-favoured stock.

Now, the jeweller is expanding beyond China and has picked Singapore as its first destination, with a new boutique at Marina Bay Sands (MBS).

The Singapore store, which has drawn long queues during peak hours, is the first of four planned outside of China, the Chinese media has reported. This comes as the company positions itself as a serious contender to global names. It plans to open a store in Japan, and two other locations that have yet to be confirmed.

A Bloomberg report earlier in July cited analysts saying that Laopu poses a “serious threat” to Western luxury brands. Richemont, which owns Cartier, has warned investors about the rise of the Chinese label, it has been reported.

The Singapore store

Located just outside the MBS casino, Laopu’s Singapore store opened on Jun 21 to snaking queues in the weeks following.

The store features a product selection based on the brand’s existing range, with pricing broadly in line with those at its stores in China, UOB KayHian analysts noted.

It also launched a “Gold Cross” series for the store opening, incorporating Christian symbols.

Nomura said in a note on Jul 3: “The company’s Singapore store recorded a two-hour wait time during peak time, with a higher proportion of local customers than in the tourist-heavy Hong Kong and Macau stores, according to its management.”

It added: “Its management highlighted that the future design direction remains rooted in Chinese aesthetics with heritage gold craftsmanship, but international designers have also been introduced to elevate the product’s premium/international perception.”

UOB KayHian analysts said that, unlike the Singapore store, Laopu’s store in Tokyo will focus on promoting cultural exchange with non-Chinese communities and emphasising finely crafted gold jewellery tailored to local aesthetic preferences.

A different kind of gold business

What sets Laopu apart is fundamentally its pricing model.

Unlike traditional Chinese jewellers that price by weight and link daily pricing to international gold markets, Laopu uses a fixed-price model that factors in design, symbolism and craftsmanship.

Its exclusivity is drawn in part from a strategy pulled from the playbook of its Western competitors.

Rising gold prices have pushed investors towards bullion and coins, and gold jewellery sales in China fell around 24.7 per cent to 532 tonnes. But Laopu has raised prices on its designer jewellery.

The business again upped prices of these goods by 5 to 12 per cent last month, said a Reuters report.

Laopu is eschewing the spot price for gold to which other domestic competitors peg their selling rates, charging a premium for design and branding.

Nomura said, citing Laopu’s management, that the brand’s pricing mechanism involves at least two annual price increases, with no reductions even if gold prices fall.

“The management believes that fixed pricing and its proprietary gold designs… could help decouple product pricing from gold price fluctuations. This, according to the management, will help maintain Laopu’s gross margin trend in the long term.”

Laopu was officially established as a brand in 2016. It was founded in 2009 by Xu Gaoming, who was then a government clerk in Hainan’s fisheries department.

The brand, which homes in on traditional Chinese designs and craftsmanship and emphasises its luxury-level branding, has jewellery, ornaments, tableware and seasonal gifts among the items in its product line.

Laopu’s financials

Laopu’s revenue for FY2024 ended December 2024 rose to 8.5 billion yuan (S$1.6 billion), up 167.5 per cent from around 3.2 billion yuan in the year-ago period.

Profit before tax for FY2024 stood at 1.9 billion yuan, an increase of 251.7 per cent from around 553.5 million yuan in the corresponding period in the year before.

Its gross profit margin has also been stable, at above 40 per cent for three years prior to its first-half 2024 review, said Phillip Securities Hong Kong.

A bigger trend?

Laopu’s rise underscores a larger shift in Chinese brands muscling in on the global scene, such as electric vehicle giant BYD and toy maker Pop Mart.

One such brand is Seres Group, a carmaker once best known for its 30,000 yuan minivans, which has overtaken BMW and Mercedes-Benz Group to become China’s hottest high-end carmaker. Its Aito M9 sport utility vehicle has taken the title of the country’s best-selling car above 500,000 yuan.

Another is Mao Geping Cosmetics, a premium skin-care brand founded in 2000. Its revenue and profit jumped more than 30 per cent last year, even as foreign rivals such as L’Oreal struggled with disappointing sales in China, Bloomberg reported.

Chinese brands may have stolen market share from Nike in sportswear and L’Oreal in beauty, but most still struggle to threaten global luxury players, which charge a premium for storytelling, heritage and design.

But while Laopu might have overtaken 96-year-old chain Chow Tai Fook this year, the road ahead is far from easy.

Chow Tai Fook has since introduced its own heritage gold jewellery line, and a number of smaller brands are now mimicking Laopu’s ornamental approach, intensifying domestic competition.

Still, analysts from Nomura note that Laopu’s brand-led approach and focus on product innovation places it in a strong position to defend its lead in a crowded and fast-evolving market.

Investing in gold

While Laopu is more akin to a luxury consumer good, investments in gold take other forms, such as bullion, futures contracts, gold mining stocks such as CNMC Goldmine and exchange-traded funds (ETFs).

This means that, for example, a Laopu bangle is more of an artisanal item, while a one-ounce Pamp Suisse gold bar is a standard investment product.

Securities such as gold ETFs also track the price of gold and are backed by physical bullion held in secure vaults, and Laopu’s products do not.

Dan Chang, trading representative at PhillipCapital, in an interview with The Business Times, said: “Gold ETFs are cost-effective with lower storage and insurance costs, compared to physical gold, and they come with minimal tracking error, meaning they closely follow the actual price of gold.”

The sale (and resale) value of Laopu assets, on the other hand, could vary a bit more independently of gold prices, though there is some correlation.

For example, a Laopu necklace could sell for S$2,000 even if the gold content is worth only S$1,300. This is because of the excess value of design and branding; an SPDR Gold Shares ETF directly tracks the price of gold.

In another circumstance, reselling a Laopu asset may yield 60 to 70 per cent of its purchase price – unless it is a collectible.

Comparatively, selling a gold bar or ETF is more straightforward and transparent to investors because their value is pegged to current gold prices.

That said, the steady rise in the price of gold, which currently trades at around double its level in 2022, has given Laopu a boost, with buyers viewing its wares as a place to park their cash amid uncertain times.