Chow Tai Fook will remain focused on China
Updated: 2014-10-02 05:20
By ZHENG XIN in Beijing(China Daily USA)
Despite buying the US-based luxury diamond company Hearts On Fire for $150 million, Chow Tai Fook Jewelry Group Ltd, the world's largest pure-play jeweler by market capitalization, said it will not consider tapping into the US market in the next five to 10 years.
The purchase of the Boston-based diamond company, announced in June, was a move to supplement its brand and product mix, said Tai Fook Chairman Dr Henry Cheung, during a press conference in Wuhan on Sept 25.
"As China's diamond jewelry sales have grown significantly over recent years, the acquisition of the entire stake of Hearts On Fire could help complement our product portfolio with an exclusive premium diamond jewelry line while raising our profile as a world-class diamond expert in the jewelry industry," said Cheung. "It is in line with the group's strategy to optimize product mix and promote higher value products in accordance with the spending profiles of consumers."
Cheung said the group will remain focused on its business in the Greater China region, and Hearts On Fire will be run as a standalone business within the group under CEO and Chairman Glenn Rothman.
"China is still in its developing phase and the market is far from saturation in the country," he said.
With the unique design and cutting techniques of the upscale diamond company Hearts On Fire, the Hong Kong-based company Chou Tai Fook with 85 years of heritage could further balance its products and provide a variety of jewelry to its customers, he said.
Hearts On Fire, which specializes in premium bridal and fashion jewelry, has always promoted its cutting and polishing technology, as well as master craftsmanship and design excellence.
Cheung said the group is confident that the Hearts On Fire products will be popular in major markets, including Hong Kong, Macao and the Chinese mainland.
Analysts have described the acquisition as a rewarding deal for Chow Tai Fook, considering China's rapidly growing diamond sales and fluctuating sales of gold jewelry due to changing gold prices.
The group also plans to open 200 more outlets in China each year for the next 10 years to meet increasing demand from consumers, especially those in the third and fourth-tier cities.
"Driven by an emerging middle class and ever increasing purchasing capacity in the country, China has seen a fast growth rate for diamond jewelry sales over the last decade," said Wong Siu Kee, managing director of the company.
"When the market in China is beyond saturation, we might look further into the US market, but it might be years later," he said.
The company has set up a jewelry industrial park in Wuhan, Hubei province, to produce more than 60 percent of its jewelry, with an annual capacity of more than 1 million pieces. The industrial park will supply products for all of the company's retail outlets in China's mainland.
In addition, providing more than 10,000 jobs in Wuhan, the jewelry production base will also be the logistics center, exhibition hub and jewelry craft-training center for the group.