China’s New Consumption: #1 Laopu Gold, a scam or real luxury?
The stock that gained 1,132% in a year
While investors continue to question the strength of Chinese consumption amid lingering deflationary pressures, it's ironic that some of the best-performing stocks in the past year have been in so-called “new consumption” — discretionary consumer brands that resonate deeply with Gen Z and younger demographics.
They’ve even outshined China’s media darlings of 2024 — the “Six little dragons,” a group of Hangzhou-based AI startups led by DeepSeek. But in the secondary market, the real winners are arguably the “Three sisters”: a trio of such new consumption brands that have surged on the Hong Kong Exchange — Mixue, Pop Mart, and today’s spotlight, Laopu Gold. (We’ve written about every one of them over the past year.)
That’s what makes the current consumption landscape in China so paradoxical — a tale of two extremes, if you will: on one hand, brands are complaining about margin pressure and over-competition, yet on the other hand, certain consumer companies are selling like we’re in a boom cycle.
What’s driving this divide?
This is exactly why “new consumption” deserves attention — not as a macro beta play, but as a hunt for alpha. It’s about finding those rare, structurally advantaged opportunities that can deliver outsized returns and long-term growth in China. And that’s what this newsletter series is about.
Today, we start with Laopu — often called “China’s Hermès” — to explore whether China is truly creating a homegrown luxury house, or if it’s just another stock bubble wrapped in gold.
*This post is not sponsored by Laopu Gold; Please subscribe and stay tuned for more explainers on China’s “new consumption” opportunities in upcoming posts.
Why Laopu isn’t China’s Hermès
Many investors and netizens alike have been calling Laopu the next Hermès of China. But does that comparison hold?
Laopu’s gross margin is about 41% — far below that of luxury giants like Hermès (~70%) or LVMH (~67–68%). In fact, by this metric, Pop Mart — despite offering plastic toys as its main product — is more “luxury-like,” with margins of ~60% in 2023 and ~67% in 2024.
More importantly, Laopu doesn’t quite embody the core attribute of true luxury: symbolic design with no apparent utility. Despite pricing its products with fixed prices (not by gold-weight), Laopu’s products are still closely tied to the gold price. Many buyers see their purchases as part jewelry, part investment. That’s a fundamental distinction: Hermès is mostly about exclusivity and timeless aesthetic, not asset value. But for many consumers, Laopu still has that “utility” tag — a hedge against uncertainty, not pure indulgence.
Yet its stock price has skyrocketed. Since we flagged Laopu in November 2024 in our newsletter, its share price has climbed over 300% — and more than 1,130% since its IPO. Frankly, the surge is almost scary — and many fear it’s driven purely by the gold rally of 2024.
This naturally raises the question: whether we are approaching a ‘bubble bursting’ moment, especially with the post-IPO lockup expiring this June, which may add selling pressure.
So is Laopu just another speculative hype? What’s really behind the surge — a genuine shift in taste, or just a gold rally?
To answer that, we need to understand where Laopu fits in China’s luxury consumption ecosystem.
The context: China is rediscovering its own luxury legacy
For centuries, China was the world’s atelier of luxury — exporting tea, silk, and porcelain to European elites. But this rich heritage collapsed with the Opium War. Only after 1949 and especially post‑1978 reforms did China re‑enter world commerce, but largely as the world’s factory – making foreign brands’ goods – rather than a source of homegrown luxury.
Between 2017 and 2021 China’s domestic luxury market nearly tripled in size, driven by a young affluent class. Chinese consumers now account for roughly 22–24% of global luxury spending (Bain) – up from one‑third before the pandemic – with forecasts saying China could reach 35–40% of the market by 2030 (Bain). In 2012 China surpassed Japan as the world’s largest luxury market, and, remarkably, 80% of China’s luxury buyers are under 45 (compared to just 30% in the U.S.)
Despite this huge market, until recently nearly all super‑premium brands in China were foreign. Chinese consumers do buy local heritage items (domestic names like Chow Tai Fook or Lao Fengxiang dominate gold‑jewellery sales), but most high‑end purchases are Vuitton or Chanel. China has few home‑grown luxury houses that match the image of a Cartier or Hermès.
For a long time, Western luxury brands filled the gap simply because China didn’t have its own. It’s a bit like Starbucks — it enjoyed the haydays when boutique coffee shops were rare in China, and just drinking coffee felt premium. But once local options emerged, the novelty faded. (I have a separate post on Why Starbucks is failing big in China)
Similarly, many Chinese consumers never fully connected with the values or cultural stories behind foreign luxury. For years, luxury purchases were more about scarcity and social signaling — the bag or watch you carried helped you impress clients and partners.
The desire for luxury and high-end goods has always existed in China. But only recently have more Chinese consumers begun seeking not just prestige, but meaning — a shift from simply thinking “I own something valuable” to “I want to understand why it’s valuable.” It’s a move toward owning something one can truly appreciate and connect with — beyond the surface-level status that comes from a hefty price tag.
As a matter of fact, Laopu has never officially claimed to be “China’s Hermès,” despite many investors and netizens jokingly making that comparison. Instead, the company has positioned itself as the leading maker of “古法金ancient gold” — goldware rooted in traditional Chinese craftsmanship. And that’s precisely the gap it fills: not just in the market, but in the evolving mindset of the consumer. That emotional and cultural resonance is where the gap is, and Laopu's core business moat.
Traditional craftsmanship isn’t new to China. But for a long time, the collectibles market — such as handcrafted goods and jade pieces — stayed mostly in private but very vibrant groups or auction houses. These items were often resold among collectors at sky-high prices, sometimes as expensive as luxury bags or jewelry. Still, the market remained niche and exclusive with opaque pricing and no real presence as a consumer-facing brand.
Now, Laopu fills that gap. It’s the only publicly listed brand offering gold products rooted in traditional Chinese craftsmanship and aesthetics. And because of that, it's hard to compare: it doesn’t compete head-to-head with Western brands or local goldmakers focused more on metal value. It’s playing a different game altogether.
What is the origin of Laopu’s craftsmanship?
Last year, I wrote about how “intangible cultural heritage” became a key trend in China’s consumer market. Many brands now routinely claim connections to ancient recipes, color palettes, or craft traditions — but often just as a marketing gimmick. Very few have real craftsmanship behind the narrative.
So, does Laopu really have the craftsmanship it claims?
Founded in Beijing in 2009, the company went public in Hong Kong in June 2024. Despite only ~30 stores nationwide, Laopu earned 9.05 billion HKD in 2024 and a staggering 167% year-on-year growth of revenue.
How? Laopu has “all‑in” on traditional craft and premium marketing. It sells only “ancient gold” (古法黄金) jewelry – 24‑karat pieces made by lost‑wax casting, repoussé, filigree (fine-gold wire work), engraving and inlay – resulting in a subtle matte finish.
Laopu also ties itself to China’s heritage. According to its IPO prospectus, the company was the first in China to promote ancient gold jewelry as a branded category (*). It traces its know‑how to Beijing’s Arts & Crafts filigree workshop (工美花丝厂) – a state‑run factory (managed by Beijing Gongmei Group, founded in 1954 as "Beijing Arts and Crafts Service Department") whose master goldsmiths inherited techniques from the Qing‑dynasty imperial workshop (*).
In other words, Laopu’s craftsmen trace their lineage back to imperial court artisans — a rare talent both back then and even more so in today’s market. This kind of craftsmanship is a truly "limited resource" that can’t simply be replicated by copying someone else’s designs.
One of Laopu’s signature craftsmanship, the "flower‑silk filigree", is particularly difficult to polish finely: it requires pure handcrafting to draw gold into fine threads. Below is what a "flower-silk filigree" pandent looks like:
It isn’t surprising, then, that Beijing has designated “flower‑silk filigree” as national intangible heritage. The city even opened a heritage base (东方艺珍) in 2021 to display filigree art and teach its methods, inviting master artisans to train a new generation (*).
For decades, Beijing’s filigree factory had fallen into decline – its 1958‑founded plant collapsed by 2002 (*) – so this revival is part of a broader push to preserve endangered crafts.
The market for Laopu’s style of gold is booming. From 2018 to 2023, the domestic ancient‑gold jewelry segment exploded from roughly RMB13 billion to RMB157 billion (*), with analysts projecting further growth.
So far Laopu’s success has been almost entirely on the home market – international expansion is untested – but its ascent shows that marrying intangible heritage with luxury retail can resonate with today’s Chinese elite.
Major state-owned arts and crafts institutions — such as Beijing’s Arts and Crafts Institute (工艺美术研究所) — are now exploring high-end product lines. At the same time, the government is actively promoting “Guochao” (“national trend”) fashion, which reimagines traditional elements like Beijing opera motifs, embroidery, and cloisonné in modern, marketable forms.
If Laopu Gold is any indication, Chinese artisanship can be repackaged as luxury rather than mere souvenir or commodity. Whether they can achieve global cachet akin to Vuitton or Cartier remains to be seen. But in Beijing’s flagship shopping districts, one can already hear customers ask in Chinese about the story behind a necklace – a small revolution in luxury’s history.
My take on investing in Laopu: what is Laopu's moat, does it really have a moat for business?
Naturally, you might wonder — since cultural heritage isn’t copyright-protected like Pop Mart’s IP, what’s stopping others from copying Laopu’s designs if they find the right craftsmen? Does the business really have a moat?
Keep reading — my thoughts on Laopu's business moat and our latest offline sales data for Laopu Gold in April and May are available behind the paywall. You can also get free access by sharing us.