This Chinese jeweler is using traditional techniques to challenge Cartier — and it's starting in Singapore

CNBC

2 days ago

SINGAPORE / BEIJING — A Chinese company with a new twist on gold jewelry is taking aim at global luxury giants with its first overseas store.
Laopu Gold opened in Singapore on June 21, just outside the Marina Bay Sands casino. During the first two weekends, wait times stretched from one to two hours, according to an employee.
Echoing the sleek front of the nearby Patek Philippe store, Laopu's windows showed off a delicately crafted golden deer and lotus sutra urn, gleaming against black display panels, as if in a museum. The company uses traditional Chinese gold crafting techniques inspired by ancient royal jewelry.
Jessie Lim, a 52-year-old Singaporean, said she entered the store with low expectations but left with a bracelet on her wrist and a butterfly necklace on her daughter's neck — a total purchase of at least $4,000.
"The designs are very exquisite. Even the wings of the butterfly are double-layered," she said. "There are also diamonds [inset into the pieces]."
In a sign of growing global attention, San Antonio Spurs' player Victor "Wemby" Wembanyama also picked up one of Laopu's "hulu" gourd-shaped pendant necklaces while visiting Beijing last month, the athlete's China representatives told CNBC.
The 21-year-old French basketball player has rocked the gold necklace in recent public appearances, including a New York City sports show. He became a brand ambassador for LVMH last year.
A 12,520 yuan ($1,747) version of the hand-crafted gourd-shaped pendant is Laopu's most popular piece on Chinese e-commerce site Tmall. A pricier gourd (29,250 yuan) made of gold threads ranked fifth.
Laopu has excited investors with its surging China sales — up 166% to 9.8 billion yuan ($1.37 billion) in 2024, according to its annual report. The company's shares have skyrocketed by well over 2,000% since its public offering price of HK$40.50 in Hong Kong in June 2024.
While Laopu is an obvious beneficiary of surging gold prices, its success contrasts with that of European luxury giants, which have seen their China sales drop amid lackluster domestic consumption. In May, Cartier-parent Richemont warned investors that Laopu's rise pressures the European company "to be creative and to develop ways to make our brands desirable."
For its Singapore venture, Laopu launched an exclusive diamond inlaid gold cross for local customers, in addition to a wide range of products such as the popular hulu necklace, which draws on Chinese folk beliefs and Taoist culture.
Several days after the store opening, the wait was still one hour long on a weekday, said Xew Ling, a 60-year-old owner of a local construction business. She instead returned the next day, when the wait was only about 30 minutes.
To avoid Laopu's long lines, people working near the iconic Singapore landmark have even taken advantage of weekday lunch breaks.
"The whole office bought not just one piece, but three," Juliana Go, a 58-year-old Singaporean, said of her daughter and her co-workers.
Go had to see Laopu for herself, noting its designs didn't always adhere to traditional impressions of Chinese design. Pearls are "out," she said, adding that gold has investment value.
To maintain its exclusivity, Laopu rarely offers discounts, instead raising its prices at least twice a year, with no reductions even if gold prices fall, Nomura analysts said in a report Wednesday, citing a call it hosted earlier that same day with the Chinese company's management. Nomura added that the company plans to open a store in Japan next year.
The question remains whether Laopu can make it into the ranks of European luxury once initial excitement around the Singapore store fades.
"So far so good, but I'm not sure whether they will continue to be successful or not," said Li Jie, a professor and director of the Luxury Brand Research Center of Shanghai Jiao Tong University. He said Laopu's rise over the last two or three years is based on 16 years of effort, and a product that effectively addresses the functional, emotional and social needs of middle-class Chinese consumers.
Many Chinese companies overemphasize the functional or emotional value of their brands, he said. For the global market, he said, Chinese brands need to move slowly and steadily to consistently build their reputation, such as through the hosting of events.
Part of Laopu's success so far is due to its exclusivity. Chow Tai Fook, a nearly 100-year-old Hong Kong jeweler, has more than 6,500 stores. But as of December, its gross profit margin was 29.5%, versus 41.2% for Laopu Gold, which has taken a more selective approach with fewer than 50 stores.
Li, who is also vice president of The Price Association of China, said he worked with Chow Tai Fook several years ago to develop a heritage line of jewelry, but it didn't take off partly due to management changes. Laopu has since captured the same high-end segment with targeted products, recovering from a soft patch nearly a decade ago when it had to close some stores, Li said.
Laopu's management declined to be interviewed for this story.
It wasn't until late 2016 that Laopu's founder, Xu Gaoming, took direct leadership of product research and development, which now has 20 employees in the departments, according to public records. In a broader management shakeup, Xu became chairman in November 2023.
Laopu's first overseas venture still stayed close to home, pointed out Oliver Wyman consultant Dave Xie. Singapore has a large ethnic Chinese population, while a visa-free policy has attracted many Chinese tourists.
Xie added that other Chinese companies, such as cosmetics brand Florasis, have used heritage-inspired product design and packaging to attract global consumers.
Laopu Gold's story is unfolding at a pivotal moment for Chinese brands — from the craze over Pop Mart's Labubu collectible to BYD's electric cars — as they try to expand globally, despite trade tensions.
Within China, local brands have already captured seven of Tmall's top 15 luxury handbag rankings, said Ashley Dudarenok, founder of ChoZan, a China market consultancy. Overseas, growing interest in Chinese brands is "accelerated by generational preferences for authentic heritage over legacy prestige and geopolitical realignments favoring Eastern manufacturing," she said.
As for Laopu, if it can "balance authentic storytelling with universal appeal, its trajectory could very well mirror the early global ascent of premier European houses," added Dudarenok, who noted that its combination of gold craftsmanship and strategic choice of Marina Bay Sands as its first international flagship store form a "formidable foundation" for becoming a global luxury brand.
The Singapore integrated resort has more than 170 luxury brands, according to Hazel Chan, senior vice president of retail at Marina Bay Sands.
"Laopu Gold is one of the new-to-market brands we are welcoming this year," she said in a statement. "Their first international boutique outside of China will further elevate one of our most in-demand categories, luxury watches and jewelry."
Fashion brand Shanghai Tang, Kering-owned Chinese jewelry brand Qeelin and Haidilao Hot Pot also have stores at Marina Bay Sands.
While many more Chinese companies will likely become premium global players, every success story could coincide with many failures, said Chen Luo, head of China consumers research at BofA Global Research.
But they are giving Western brands a run for their money, Luo said, noting how Chinese companies have had to adapt to fast-changing consumer demands at home.
"My view is that a lot of Western companies, especially U.S. companies, they have got too easy a life."