The historic jewelry brand Lao Feng Xiang Co.,Ltd. (ASX: 600612) announced on July 1, 2026, that its subsidiary Lao Feng Xiang Hong Kong Co., Ltd. has formally terminated its planned equity investment in Maybach Luxury Asia Pacific Limited (MAP). This $24 million (approximately 170 million RMB) deal, once seen as Lao Feng Xiang's landmark move into the luxury goods sector, has been concluded after nearly nine months.
Simultaneously, another subsidiary, Lao Feng Xiang Premium Trading (Shanghai) Co., Ltd., signed a new Brand Agency Agreement with Maybach Trading (Shanghai) Co., Ltd. This shift transforms the collaboration from a cross-regional equity partnership model to a pure brand agency agreement focused solely on the China market.
The dramatic reversal—from 'investor' back to 'agent', from 'Asia-Pacific expansion' to 'China agency'—reflects not just the failure of a cross-border investment, but also the deep strategic anxiety of this century-old brand under the dual pressures of a receding gold bull market and stalled high-end brand development.
A High-Stakes Gamble Mired in Controversy From the Start
On October 9, 2025, Lao Feng Xiang announced its plan for the Hong Kong subsidiary to invest in and subscribe to 2,000 voting common shares of MAP, representing a 20% stake post-issuance, for a total investment of $24 million.
The target company, MAP, was a regional subsidiary established by Maybach Luxury (MIOL) to develop the Asia-Pacific market. Maybach, the German ultra-luxury car brand, entered the luxury goods business in 2009, formally establishing MIOL in 2013. Its business spans optical products, equestrian gear, fashion apparel, sporting goods, and fragrances. It's crucial to note that MAP's operations did not involve Maybach automobiles, focusing solely on licensed luxury goods under the Maybach brand.
The original plan envisioned Lao Feng Xiang gaining non-exclusive distribution rights for Maybach Luxury in Asia-Pacific and exclusive rights in Shanghai, with a goal of opening about 75 stores in the region from 2025 to 2030. The company hoped to leverage the Maybach brand to break out of the traditional gold jewelry segment and enter diverse high-end consumer fields like sportswear, optics, and equestrian products, transforming from a traditional jeweler into a comprehensive luxury operator.
However, this cross-sector acquisition was shrouded in significant controversy from the outset.
First was the staggering valuation premium. Regulatory filings revealed the transaction used an income-based valuation method, valuing MAP at $126 million as of June 30, 2025, while its book value of shareholders' equity was merely $1,300—an appraisal increase of 9,692,207.69%. The Shanghai Stock Exchange immediately issued an inquiry, demanding Lao Feng Xiang fully explain the rationale for using the income method given MAP's lack of historical operating performance.
More concerning was the fundamental risk related to brand licensing. According to the Investment and Shareholder Agreement, MAP was required to obtain the Maybach trademark license from its shareholder MIOL. However, the final acquisition of this license depended on the actions of Mercedes-Benz Group AG and Daimler AG (the trademark owners). There was a risk that the license might not be obtained before the agreed deadline of March 31, 2026, due to inaction by the owners. This meant that the core value of the 20% stake Lao Feng Xiang planned to buy for 170 million RMB—the right to use the Maybach brand—was left hanging in the balance.
Furthermore, MAP itself was only registered in Hong Kong in February 2025. At the time Lao Feng Xiang was planning its investment, MAP was still in an early platform stage, with its Asia-Pacific channel development more in the planning phase than a mature network. In essence, Lao Feng Xiang was betting 170 million RMB on the future of a 'shell company'.
In March 2026, Lao Feng Xiang announced a delay in the investment settlement, leading the market to anticipate a change in the deal.
Three months later, the decision was made. According to Lao Feng Xiang's announcement, Maybach Luxury authorized its wholly-owned subsidiary in China, Maybach Trading (Shanghai) Co., Ltd., to independently conduct commercial activities in the country. This structural adjustment directly caused significant changes to MAP's original business model, scope, and brand licensing conditions, rendering the original equity investment plan unfeasible.
After negotiations, Lao Feng Xiang Hong Kong terminated the equity investment in MAP and signed a Termination Agreement for the Investment and Shareholder Agreement. Concurrently, Lao Feng Xiang Premium Trading signed the new Brand Agency Agreement with Maybach Trading (Shanghai), shrinking the cooperation scope from the originally planned Asia-Pacific market to just China.
It is noteworthy that Lao Feng Xiang's announcement specifically emphasized that no funds had been actually paid for this investment, and it would not affect the company's normal production and operations or harm the interests of minority shareholders. However, 'not yet paid' does not mean there was no cost—nine months of strategic uncertainty, consumption of management resources, and market skepticism about Lao Feng Xiang's strategic execution capability are all unquantifiable hidden costs.
Gold's Rollercoaster and a Brand Ceiling: Lao Feng Xiang's Era of Contraction
Lao Feng Xiang's termination of the Maybach investment coincides with a period of severe adjustment in the gold market.
On July 2, 2026, Lao Feng Xiang's pure gold quote was 1,230 RMB per gram, up 1.81% from the previous day but down a staggering 483 RMB from the year's peak of 1,713 RMB, a drop of over 28% in half a year. International gold prices similarly fell from a historic high of $5,709 per ounce at the start of the year to around $4,000 by early July.
The sharp volatility in gold prices directly impacted Lao Feng Xiang's fundamentals. For the full year 2025, the company achieved revenue of 52.823 billion RMB, a year-on-year decrease of 6.99%; net profit attributable to shareholders was 1.755 billion RMB, a decline of 9.99%, with both top and bottom lines under pressure. Core gold jewelry business revenue was 42.583 billion RMB, down 9.22%, becoming the main drag on performance.
The pressure intensified rather than eased in the first quarter of 2026. Operating cash flow was negative 2.349 billion RMB, shifting from a net inflow to a significant outflow compared to the same period in 2025. The company explained that high gold prices led to increased inventory of gold materials and longer payment cycles from franchisees, tying up substantial working capital in inventory.
Accompanying the earnings decline was a sharp adjustment in the distribution network.
Data from Changjiang Securities research shows Lao Feng Xiang net closed 483 stores in 2025, with franchise stores seeing a net reduction of 499. In Q1 2026, it net closed another 185 stores, reducing the total store count to 5,170. Management explicitly stated the intent to "orderly consolidate low-performing franchise stores, compress inefficient outlets, and avoid blind expansion."
The shift from 'land-grabbing' to 'proactive downsizing' represents a fundamental change in Lao Feng Xiang's channel strategy. This change reflects the harsh reality of the gold jewelry industry transitioning from incremental to stock competition—when gold prices no longer rise unilaterally and consumers become more rational, the old growth model driven by store count expansion is no longer sustainable.
As Lao Feng Xiang struggles with declining performance and strategic contraction, a stark contrast emerges: the performance of 'the Hermès of gold', Lao Pu Gold.
Reports indicate Lao Pu Gold, with just 45 self-operated stores, earned nearly 5 billion RMB in net profit in one year, and secured another 3.8 billion RMB in Q1 2026. The profit scale of 45 stores far exceeds that of Lao Feng Xiang's 5,170 stores. This shocking disparity reveals a brutal industry truth: in gold jewelry, store count is not a moat; brand premium is.
Lao Pu Gold's success lies in its precise positioning within the high-end 'ancient method gold' niche, building far-above-average pricing power and customer loyalty through exquisite craftsmanship, restrained distribution, and powerful brand storytelling. In contrast, despite its 177-year history and network of thousands of stores, Lao Feng Xiang has consistently failed to break through the 'affordable gold' positioning ceiling in its brand elevation efforts.
It was against this backdrop that Lao Feng Xiang turned its gaze to Maybach Luxury—attempting a risky leap from a traditional gold jeweler to a comprehensive luxury operator by borrowing the 'halo' of a German ultra-luxury car brand.
However, this logic itself had structural flaws.
First, Maybach Luxury ≠ Maybach Automobiles. The MAP that Lao Feng Xiang invested in handled licensed derivative products—optical goods, equestrian gear, fashion apparel—not Maybach cars themselves. Whether the ultra-luxury halo of Maybach automobiles can effectively extend to categories like leather goods, accessories, and homewares remains to be tested by the market. The brand power of a car brand's luxury derivative lines is often far weaker than that of the main brand.
Second, a mismatch in channel capabilities. Lao Feng Xiang's core strength lies in its gold jewelry distribution network, while Maybach Luxury involves retail operations for completely different categories like fashion, optics, and equestrian products. Tasking a gold jeweler with managing the Asia-Pacific expansion of equestrian and sporting goods presented a formidable cross-sector challenge.
Third, a question of capital efficiency. Against the backdrop of Lao Feng Xiang's own negative operating cash flow and significant store closures, a one-time payment of 170 million RMB to lock up equity in an overseas entity with weak liquidity was questionable. In contrast, the agency agreement only stipulates a minimum three-year purchase volume of $13 million, with payments settled quarterly and annually in stages, requiring no large upfront capital outlay and offering significantly improved cash flow flexibility. The 'downgrade' from investment to agency is, in essence, a passive financial self-rescue.
Assessing the Strategic Pivot
Returning to the core question: Is Lao Feng Xiang's termination of the Maybach investment a failure or a moment of clarity?
On the surface, it represents the 'abortion' of a cross-sector foray into luxury. But on a deeper level, it may be a rational choice made under internal and external pressures.
Industry analysts point out that compared to a long-term, capital-intensive equity investment, retaining master agent status and shifting to a capital-light cooperation model allows for the continuation of high-end initiatives while helping to reduce capital commitment and financial risk. However, they also caution that a pure agency model, while improving financial sustainability, does not inherently solve the brand growth problem.
Lao Feng Xiang's current management focus revolves around "improving quality and efficiency, precise layout, focusing on the core business, stabilizing operations, promoting transformation, and preventing risks," with an emphasis on "focusing on the main business, strictly controlling large cross-sector investments, and prioritizing working capital for the gold business." This language clearly outlines the company's current strategic priorities: survive first, then talk about transformation.
However, a more profound question remains: If even the halo of a top-tier brand like Maybach cannot help Lao Feng Xiang achieve a high-end breakthrough, what path should its brand elevation take?
Lao Pu Gold, with 45 stores, has proven the power of brand premium. Chow Tai Fook has demonstrated the potential of product differentiation with its 'Heritage' series. And Lao Feng Xiang—this 177-year-old golden brand—is still struggling to find its direction amidst the cycles of gold price fluctuations and the arithmetic of store openings and closures.
Terminating the Maybach investment is not an end, but a new beginning. It marks Lao Feng Xiang abandoning the shortcut fantasy of 'buying a brand,' but it also means the company must now confront the more difficult and prolonged main battle of 'building a brand.' Against the backdrop of receding gold prices and industry consolidation, time may not be on Lao Feng Xiang's side.
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