In Chinese, the name Lao Feng Xiang loosely translates to ‘old auspicious phoenix’. The traditional Chinese jewellery maker was founded in 1848, less than 10 years after Charles Lewis Tiffany started the Tiffany brand in New York.
The company got its start by purchasing used gold and silver wares and then melting down the metals to produce accessories and other ornaments. It became so famous that many prospective in-laws flocked to the store to purchase gold jewellery – typically a pair of gold bangles and a necklace with dragon and phoenix motifs – ahead of the wedding of their children (still a custom in many parts of China today).
By the turn of the last century Lao Feng Xiang had become such an icon in Shanghai that Du Yuesheng, the most powerful mob boss of the Bund, was a frequent customer, buying jewellery as gifts for his mistresses and to bribe government officials, says Xinmin Evening News. Soong May-ling, the wife of Generalissimo Chiang Kai-shek, was also a VIP shopper at Lao Feng Xiang.
Unsurprisingly the luxury brand experienced a reversal in fortune after 1949. It was transformed into a faceless state-owned trading firm, and only reverted to its old name in 1985. There were more twists to come. In 1998 it was acquired by Chinese First Pencil.
At the time, the state-owned pencil maker was debating between investing in a piano maker and Lao Feng Xiang, before eventually settling on the latter. Wang Ensheng, the company spokesman, told the China Daily that between the two, the SOE believed that jewellery was an emerging industry with enormous development potential.
It turned out to be a smart move. “If it wasn’t for the acquisition [of Lao Feng Xiang], the fate of Chinese First Pencil is not going to be anything like it is today,” says Xinhua.
In 2009 Chinese First Pencil renamed itself Lao Feng Xiang Holdings. The state firm still manufactures pencils but it’s main focus is now traditional Chinese jewellery – the latter business accounts for more than 95% of its annual revenue, and 90% of its profit.
WiC became curious about the company thanks to Deloitte Touche Tohmatsu’s recently published report ‘The 2015 Global Powers of Luxury Goods’.
Lao Feng Xiang had never appeared in our pages, so we were intrigued when it was placed 16th on the ranking – with revenues of $4.2 billion in the fiscal year of 2013 – placing it ahead of both Tiffany and Burberry in terms of sales.
So what makes the company successful? Even though the majority of its sales still come from gold jewellery it has since expanded into trendier items that include diamonds and platinum in an effort to appeal to younger consumers, says Shao Yang News.
In the last few years, Lao Feng Xiang has also been ramping up its overseas strategy. In 2012, it opened its first overseas outlet in Sydney, Australia. Two years later, it unveiled a retail outlet on New York’s Fifth Avenue. This year, it has invaded Hong Kong’s busiest shopping district Tsim Sha Tsui with further plans to open another 10 to 20 stores in the territory in the next three years, says Hong Kong’s Apple Daily.
A new outlet in Vancouver, Canada, is also said to be under construction. The company expects markets outside of China to contribute Rmb10 billion ($1.6 billion) in sales over the next three to five years.
“We are prepared to build up ourselves as a world-famous popular brand instead of a luxury brand,” says Wang.
Perhaps Hong Kong’s leading jewellery retailer Chow Tai Fook should take heed.
Lao Feng Xiang’s aggressive expansion into the third- and fourth-tier Chinese cities could soon put it in direct competition with the Hong Kong-based jewellery giant. According to Lao Feng Xiang’s official website, it now as more than 2,700 stores in its global network.
Chow Tai Fook, which was founded in 1929, is still the clear industry leader, and ranks on Deloitte’s list as the fourth-largest luxury goods company in the world after LVMH, Richemont, and Estée Lauder. But Lao Feng Xiang has history on its side…
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