A solid-gold Angry Birds necklace from Chow Tai Fook, which is targeting younger, mid-range consumers. (Chow Tai Fook)
In another sign that the growth slowdown in China’s luxury market is far from uniform, Hong Kong jeweler Chow Tai Fook posted 34 percent mainland growth in its third-quarter sales yesterday. The success comes from the fact that the homegrown competitor to Cartier and Tiffany & Co has had a few things going for it in the past several months: it not only benefited from China’s gold-buying rush, but also pursued a concerted strategy of marketing to middle-class consumers as high-end luxury struggled.
Gold is an auspicious color in China, and it was a profitable one for Chow Tai Fook over the past year: ever since gold prices started plummeting in March 2013, Chinese consumers have been taking advantage of the investment opportunities by rushing to the nearest jewelry store to stock up on gold bars and coins, driven by a strong inclination toward investment in hard assets. According to a more detailed description of this phenomenon by Gwynn Guilford at Quartz,
Since it’s difficult to hold other currencies in Chinese bank accounts—and even then, there’s a limit to how much a customer can hold—gold has even more than its conventional appeal as an inflation hedge. (Note that in addition to bars and coins, Chinese investors often buy jewelry for investment purposes as well.)
Perhaps worst of all, the closed capital system makes it extremely difficult for Chinese households to invest their money outside China. That gives them few options in which to hold savings—the domestic stock market is volatile and unappealing, while real estate prices are sky-high.
Chow Tai Fook knew how to capitalize on this trend through social media marketing. Since prices tanked, the jeweler has published a daily gold price announcement on its Sina Weibo account with the hashtag #Chow Tai Fook’s daily gold price# (#周大福今日金价#), complete with an image of a gold bar emblazoned with the brand’s “lucky baby,” a cartoon character that appears on one of its jewelry collections.
The gold bar image featured in Chow Tai Fook's daily gold price update on Sina Weibo. (Sina Weibo/Chow Tai Fook)
This use of cartoon characters also extends to Angry Birds and Hello Kitty jewelry, which have been part of the company’s strategy to target young, middle-class consumers with pieces at lower price points. In order to appeal to younger shoppers, the brand has also been highly active with additional marketing campaigns on Chinese social media. For example, its Angry Birds jewelry played a starring role in its Qixi Festival, or “Chinese Valentine’s Day” Sina Weibo campaign in August 2013, when the feathered mobile game characters were used to represent magpies that appear in the traditional myth of the holiday.
Since gold sales are expected skyrocket in China for Chinese New Year, the company looks set to have a good start to 2014. Its marketing campaign for the holiday features—of course—specially decorated gold bars and gold cartoon necklaces to celebrate the year of the horse.
An ad for Chow Tai Fook's year of the horse necklace. (Sina Weibo/Chow Tai Fook)