Chow Tai Fook Sees Glitter in China’s Growing Middle Class
Whoever said all that glitters is not gold didn’t get the memo to Chow Tai Fook Jewelry Group, based out of Hong Kong. Despite China’s sputtering economic growth, the jeweler expects sales of its accessibly priced gold rings and bracelets to continue to rise. In turn, the brand is opening more than 500 stores in China over the next four years.
Despite a decrease in China’s economic expansion to 7.5 percent in 2012 from the 8 percent goal in place since 2005, caused largely by crises in Europe and the U.S., Alan Chan, the director of Chow Tai Fook’s group branding, says, “We’re still quite positive. Jewelry demand is growing steadily.” The demand, however, is not for pricy bespoke pieces, but rather mid-range jewelry as higher-end luxury demand eases from 70 percent to as low as 15 percent.
Chow Tai Fook, the world’s largest listed jewelry retailer, is getting more than 70 percent of its sales from products ranging between $250 and over $12,000. The items “are things that the general public can afford, and we are going after this segment,” Chan said. More than half of the products are gold, which has deep cultural ties to the country. China, the world’s second-largest gold jewelry market, may boost retail consumption of the precious metal by 35 percent in 2012 to a record as incomes rise and urbanization continues, according to researcher Frost & Sullivan.
Chow Tai Fook currently has over 1,500 watch and jewelry outlets in 320 of China’s cities, as well as Hong Kong and Macau. The company aims to have more than 2,000 jewelry outlets by 2016. Chang said that Chow Tai Fook will expand in third- and fourth-tier cities as well as “go deeper” into large metropolises as it opens more free-standing stores.
photo credit: elect1on.com.hk