A Laopu Gold store in Tsim Sha Tsui, Hong Kong.
Shanshan Kao/Forbes Asia
Xu Gaoming, who began his career as a clerk in the local fisheries bureau in the 1980s, became China’s newest billionaire last week with the successful listing of his jewellery company, Lao Pu Jin, in Hong Kong.
Forbes estimates the 59-year-old entrepreneur has amassed a fortune of $1 billion. His net worth is based on his stake in Laopu Gold Co., known in China as the “Hermès of gold jewelry” for the intricate designs and high prices of its earrings, necklaces and bracelets. Laopu Gold’s shares have soared 97.5 percent since the company raised HK$787.7 million ($100.8 million) last week by offering 19.5 million shares at HK$40.50 apiece.
The Beijing-based company said it would use the funds to increase brand awareness and expand internationally.
Shanshan Kao/Forbes Asia
The jewelry features unique craftsmanship, imperial patterns, gourds, Hulu, Considered a symbol of good luck and protection in local culture, the bracelet retails for as much as 44,680 yuan ($6,145).
With gold prices soaring, some wealthy customers are considering Laopujin’s products as an investment.The company’s prospectus said it expects sales to reach 3.2 billion yuan ($437 million) in 2023, more than double the figure in 2022. Profit jumped nearly fivefold to 416.3 million yuan.
Laopu Gold’s products are sold on Alibaba and JD.com, but most sales are made through its 33 physical stores across 14 cities in China.
“Laop Gold has established itself as a niche brand in the gold-based jewellery market,” said Blair Zhang, senior luxury and fashion analyst at Shanghai-based research firm Mintel. “The company attaches great importance to maintaining its luxury image. It has placed emphasis on highly intricate craftsmanship to build a differentiation strategy.”
Laop Gold did not respond to an emailed request for comment.
Born in Hunan province in 1964, Mr Xu was about 20 when he started work at the fisheries bureau in Yueyang, near southeast China’s picturesque Dongting Lake, according to local media reports. He took a correspondence course at Huazhong Agricultural University and earned his degree in 1988, according to the company’s prospectus.
Xu has worked for the city government for more than 10 years. Local media reports said he launched a startup selling tourist souvenirs and cultural products in 1995. In 2016 he founded Laopu Jewelry, which focuses on what it described in its prospectus as “traditional gold jewellery”.
Two of Xu’s relatives sit on the company’s board of directors. Xu’s son, Xu Dongbo, is a shareholder but does not appear to be involved in management, according to the prospectus. The company had previously hoped to list in mainland China, but two attempts in 2021 and 2022 fell through after local authorities questioned the reason for the listing. The company’s profit margins were much higher than the industry average, and there was potential for problems with related party transactions.
Laopu said in its prospectus that it had resolved these two issues. It also attracted well-known investors, including Chinese web giant Tencent Holdings Inc. and China Southern Asset Management Co. Ltd., to its Hong Kong listing.
But Laop Gold faces stiff competition: Chow Tai Fook, the jewellery brand run by Hong Kong billionaire Henry Cheng, is the market leader because it covers all product categories, and is trying to attract more young consumers with its trendy designs, Mr Chan said.
Other problems facing Laopujin include rising raw material and rental costs that could eat into profits, said Zhang Yi, founder of Guangzhou-based consulting firm iiMedia Research. Moreover, consumers may no longer see jewelry as a good investment in the future, as gold prices cannot stay so high forever.
When that time comes, the company will have to rely on unique designs to maintain interest, said Mr. Zhang, who likened Laop Gold’s products to antiques, saying it was the cultural elements that had driven up prices over the years.
“In terms of cultural heritage, I think Laopu Jin has already developed that capability,” Zhang says. “So far, the company has deployed a really, really successful differentiation strategy.”
