Big Luxury’s new China threat is mini-Richemont

Laopu Gold Co

12/06/2025 09:47

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

By Yawen Chen

LONDON, June 12 (Reuters Breakingviews) - European luxury groups have been grappling with a weakening Chinese market for the past year.  Shares in the likes of $270 billion LVMH LVMH.PA have been whipsawing on news of softness in the region. But now, a Chinese competitor may make it harder for brands like Richemont’s CFR.S Cartier and LVMH’s Tiffany & Co. to stage a comeback.

Laopu Gold 6181.HK has enjoyed a meteoric rise. Sales of its high-end, handmade and vintage-style gold jewellery, surged by nearly 170% to 10 billion yuan ($1.4 billion) last year, fuelling the Hong Kong-listed company’s share price. It is now worth $20 billion, making it the seventh-largest luxury group in the world by market value behind France’s $25 billion Gucci-owner Kering PRTP.PA.

That success runs counter to the challenges facing Laopu’s established competitors. Executives say China’s economic headwinds including a real estate crisis have dented luxury spending. Even Richemont, which outshined peers thanks to the popularity of its jewellery, endured a 23% collapse in China sales in the fiscal year that ended in March 31. Meanwhile, industry bellwether LVMH’s Asia sales – mainly from China – fell 11% last year.

Still, European bosses are so far downplaying the risk from Laopu. Last month, when Richemont’s chairman and controlling shareholder Johann Rupert was asked about the company, he said he “absolutely respects them and watch them”, but his brands like Cartier and Van Cleef & Arpels appeal universally and have investment value at international auctions. LVMH’s deputy CEO Stéphane Bianchi, meanwhile, explained that domestic brands may be in favour because of the rise of Chinese nationalism.

But Laopu is on a mission to take market share by mirroring successful European brands like Hermès International HRMS.PA. It markets directly to customers via its own shops, offering a premium service via a growing army of sales assistants. It also sells at fixed prices despite fluctuating gold prices. And perhaps, more importantly, its products contain more gold and gemstones than rivals, which offers consumers more bang for their buck. Laopu’s best-selling gold and diamond pendant necklace in its Chinese online shop, for example, costs 11,268 yuan ($1,566), while the cheapest Van Cleef bracelet in the UK online store costs 1,360 pounds ($1,840).

For now, investors are keen to get in on Laopu’s success. It trades at 26 times its expected earnings for 2026, beating Richemont and LVMH, according to data from Visible Alpha. If Laopu continues to grow at its current pace, this gap could widen.

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CONTEXT NEWS

LVMH’s deputy CEO Stéphane Bianchi warned on May 28 that Chinese customers have been pulling back on consumer spending amid signs of weakening demand for luxury goods, Bloomberg reported citing his comments to National Assembly lawmakers at a Paris hearing.

LVMH has also noticed Chinese consumers taking a greater interest in local brands, Bianchi said. Without naming specific labels, he said some Chinese jewellery companies have seen an explosion in demand.

Laopu's valuation outshines European luxury rivals https://www.reuters.com/graphics/BRV-BRV/zdvxamzaepx/chart.png

(Editing by Aimee Donnellan; Production by Streisand Neto)

((For previous columns by the author, Reuters customers can click on CHEN/yawen.chen@thomsonreuters.com))