Will fixed-price jewelry increase in price? Chow Tai Fook responds

Latest Response.

Recently, there are reports that Chow Tai Fook will raise the prices of “fixed-price” gold jewelry, with a new round of price adjustments officially implemented on May 15, with some styles increasing by 10% to 15%.

On May 14, Chow Tai Fook responded to the above situation to Securities Times reporter, saying: “Jewelry pricing is determined based on multiple factors, including raw material costs, design and production, operating expenses, taxes, and brand value. Market environment and consumer expectations are also considered. This price adjustment only involves a very small portion of products, and most products’ prices remain unchanged.”

Previously, several gold jewelry brands’ “fixed-price” gold jewelry prices rose repeatedly amid the surge in gold prices, including Chow Sang Sang, Jun Pao, Lao Pao Gold, and others.

However, a visit to multiple brand gold jewelry stores in Shenzhen found that many brands’ “fixed-price” gold jewelry generally launched discounts of varying intensity. But even after discounts, the unit price per gram of these “fixed-price” gold jewelry still exceeded the prices of gold priced on the same day. “Discounted ‘fixed-price’ gold jewelry generally includes products with a total price below 5,000 yuan, and the craftsmanship of complex traditional gold bracelets and other products does not see a significant decrease,” said a staff member on site.

For a long time, the pricing models in the gold jewelry industry mainly fall into two categories: “fixed-price” and “weight-based labor fee.” The weight-based labor fee model prices based on the real-time price of gold, calculating the total price according to the weight of the jewelry, plus labor costs. “Fixed-price” directly tags a price per piece, which includes the cost of gold materials, craftsmanship, brand premium, and other comprehensive costs, without separately breaking down weight and labor costs. Industry insiders say that most domestic gold jewelry companies mainly adopt the “weight-based labor fee” pricing model, under which the company’s profit margin is directly affected by fluctuations in the price of gold raw materials. As “fixed-price” gold jewelry becomes increasingly popular, many jewelry companies are now increasing the proportion of “fixed-price” products. Although “fixed-price” gold jewelry is often priced much higher than gold priced by weight, it usually has better design and more stable prices.

Some store managers also said that in the context of accelerating gold price increases, the sales of “fixed-price” gold jewelry have actually increased. Recently, with international gold prices fluctuating within a narrow range, the sales of “fixed-price” gold jewelry have seen a slight decline.

In addition to gold jewelry consumption, some major banks have also begun to lower the risk level of gold accumulation products. On May 12, ICBC announced that one week later (May 19), the risk level of the Ruyi Gold Accumulation Business products would be lowered from R3 (medium risk) to R2 (low-medium risk). At the same time, the customer risk tolerance threshold will also be lowered from C3 (balanced) to C2 (conservative and above). In early January this year, due to increased market volatility at that time, ICBC issued an announcement raising the risk threshold for personal gold accumulation products to C3. Industry insiders believe that this downgrade of the risk rating to C2 means that some conservative investors who were restricted from trading due to the higher thresholds at the beginning of the year will regain eligibility to participate.

【Author: Wu Jiaming】 (Editor: Wen Jing)

Keywords: Gold Price