A prolonged legal dispute over a high-value contract lasting nearly two years has finally reached a resolution. On October 22, Chow Tai Seng Jewellery Co., Ltd. announced that it had received a second-instance civil judgment from the Shenzhen Intermediate People's Court in Guangdong Province, which rejected the appeal and upheld the original ruling. The lawsuit, amounting to 211 million yuan, concluded with Chow Tai Seng being ordered to pay 2.78 million yuan in compensation. The company stated that it had already adequately provisioned for bad debts against the disputed 2.78 million yuan, and therefore, the judgment would not impact its current or future profits. Nevertheless, Chow Tai Seng is still facing significant performance challenges, with a nearly 50% year-on-year decline in revenue for the first half of 2025 and a steep 59.12% drop in franchise revenue. On October 23, reporters noted that the price of gold jewelry at Chow Tai Seng had decreased to 1,223 yuan per gram, down from a peak of 1,292 yuan per gram on October 21.
The lawsuit, which attracted attention, began in early 2022 when Chow Tai Seng planned to collaborate with Shenzhen Shuibeika Information Technology Co., Ltd. and China Unicom (Shenzhen) to promote the "Chow Tai Seng·Shuibeika" package service. However, the project was halted during the preparation stage due to objective reasons, leading to the termination of the partnership by mutual agreement. Shuibeika then initiated a dispute with Chow Tai Seng, demanding 211 million yuan in compensation. In December 2023, Shuibeika applied for property preservation in court, resulting in the freeze of some of Chow Tai Seng's bank accounts, totaling approximately 80.45 million yuan. Following a trial, in August 2024, the Luohu District People’s Court of Shenzhen ruled that Chow Tai Seng should compensate Shuibeika 2.78 million yuan while rejecting other claims made by Shuibeika. The latter appealed the first-instance ruling, but the Shenzhen Intermediate People's Court recently made a final decision, dismissing the appeal and maintaining the original verdict. Chow Tai Seng's announcement noted that the company had adequately provisioned against the 2.78 million yuan receivable and that the frozen bank accounts would be legally unblocked.
However, the company is under severe operational strain. The 2025 semi-annual report indicated that Chow Tai Seng achieved a revenue of 4.597 billion yuan in the first half, a year-on-year decrease of 43.92%, while the net profit attributable to shareholders fell slightly by 1.27% to 594 million yuan. The impact of high gold prices has hit its plain gold products particularly hard, leading to a year-on-year revenue drop of 50.94%. Notably, there has also been a significant contraction in its franchise business. Chow Tai Seng reported a net reduction of 290 stores in the first half of the year, leaving a total of 4,718 stores by the end of June, including 4,311 franchise stores, with 395 closures during the reporting period, resulting in a closure rate of 9.16%. The shrinkage in franchise business directly affected the company's revenue. According to financial reports, franchise revenue dropped to 2.425 billion yuan in the first half, down 59.12%, with store closures impacting revenue by 246 million yuan, which accounted for 5.35% of total revenue.
To address the performance pressure, Chow Tai Seng is accelerating its shift to online sales. In September, the company partnered with Wuyou Media Group and others to establish a joint venture, Sanya Chow Tai Seng Wuyou Co-creation Cultural Technology Co., Ltd., with a registered capital of 50 million yuan. Chow Tai Seng contributed 22.5 million yuan, holding a 45% stake, while Wuyou Media Group contributed 15 million yuan for 30% ownership. Additionally, Chow Tai Seng's Vice Chairman and Deputy General Manager, Zhou Feiming, invested 3 million yuan for a 6% stake. Wuyou Media Group is a well-known new media marketing MCN agency. Industry experts view this collaboration as Chow Tai Seng's intent to engage in short video and live commerce. The company stated that the joint venture would leverage a "traffic + supply chain" and "content + products" complementary logic to establish a shop-broadcast system based on the Chow Tai Seng brand matrix, aiming to scale up the effect of jewelry shop broadcasting and implement a "live streaming diversion + store conversion" model.
However, some industry experts are cautious about this strategy. Zhou Ting, head of the Customers Research Institute, pointed out that while increased live commerce may boost sales in the short run, it cannot fundamentally resolve the declining sales issue. She further analyzed that the trend of luxury branding has become evident in the jewelry industry, with gold and jewelry brands gradually moving towards high-end positioning, leading to a potential exit of mass-market brands from the mainstream. Reliance on live commerce may accelerate the mainstreaming process of brands, shortening their lifecycle and ultimately diminishing their value and potential for high-end development. The volatility in the gold market adds further uncertainty to Chow Tai Seng's transformation. International gold prices are consistently at historic highs, pushing domestic gold brands to raise prices. Chow Sheng Seng completed partial price adjustments for "fixed-price" gold jewelry by the end of September, with increases around 10%. It is reported that Chow Tai Seng has also adjusted some "fixed-price" gold jewelry prices, with hikes ranging from 6% to 10%, and certain products seeing increases as high as 30%. As gold prices surged again recently, Chow Tai Fook plans to raise retail prices of gold products by 12% to 18% by the end of October. However, given the turbulent international gold prices, the feasibility of this plan remains uncertain. On October 21, Chow Tai Seng's gold jewelry prices peaked at 1,292 yuan per gram, but by October 23, they had dropped to 1,223 yuan per gram. With the dual challenges of increasing gold price volatility and industry restructuring, it remains uncertain whether Chow Tai Seng can reverse its declining performance through online transformations and pricing adjustments.
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