---
title: "Production halt? CHOW TAI FOOK responds! Journalists investigate the factory"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/205692254.md"
description: "Chow Tai Fook's Shenzhen factory recently suspended production, attracting attention. The company announced resource adjustments and the relocation of some production departments to the Shunde factory in Guangdong, stating that there is no suspension of production. On-site investigations found that employees are gradually leaving the factory, with some employees stating that the changes in the factory were expected. Notices about the suspension of production at the factory have been circulating online, but the specific situation is unclear. In summary, there are adjustments and relocations happening at Chow Tai Fook's Shenzhen factory, but the specific reasons and impacts are still unclear"
datetime: "2024-06-06T06:15:50.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/205692254.md)
  - [en](https://longbridge.com/en/news/205692254.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/205692254.md)
---

> Supported Languages: [简体中文](https://longbridge.com/zh-CN/news/205692254.md) | [繁體中文](https://longbridge.com/zh-HK/news/205692254.md)


# Production halt? CHOW TAI FOOK responds! Journalists investigate the factory

Chow Tai Fook Shenzhen Factory Suspended Production? A recent online post has attracted widespread attention.

In response, Chow Tai Fook Jewellery Group Limited, a company listed on the Hong Kong Stock Exchange, released a statement on June 5th announcing that in order to further adjust the allocation of corporate resources, enhance operational efficiency, the group has decided to reorganize and re-plan certain departments at the Shenzhen factory, as well as relocate some production departments to the Shunde factory in Guangdong.

The statement indicated that the adjusted business accounts for a small proportion of the group's main business in Shenzhen, and there is no suspension of work or production. This partial adjustment will not affect the group's operations or its long-term investment in the Greater Bay Area.

What is the actual situation at the spotlighted Chow Tai Fook Shenzhen factory? On June 5th, a reporter from the Shanghai Securities News visited the Beishan factory in Yantian District, Shenzhen.

## Investigating the "Suspended Factory" of Chow Tai Fook Shenzhen

At 3:25 pm on June 5th, the reporter met Ma Dong (pseudonym) carrying bags at the entrance of the Chow Tai Fook Shenzhen Beishan factory. "Today, I'm moving the last few things, and I won't be coming back. I've been working at this factory for over ten years, and I definitely don't want to leave." He is an old employee at the factory and mentioned that since last week, colleagues have been clearing things out, gradually leaving the factory, and he is one of the last to leave.

According to Ma Dong, his inlay department had no orders throughout last year. At the beginning of this year, some employees whose contracts expired did not renew and left. "So we anticipated the changes in the factory, just not sure if there are management issues."

The reporter noted that on the evening of the 4th, a notice about the suspension of work and production at the Chow Tai Fook Shenzhen factory circulated online, bearing the name of Shenzhen Chow Tai Fook Jewelry Manufacturing Co., Ltd. According to the National Enterprise Credit Information Publicity System, Shenzhen Chow Tai Fook Jewelry Manufacturing Co., Ltd. was established in 2012 with a registered capital of 50 million RMB, located in the Beishan Industrial Zone Phase II, Yantian District, Shenzhen. The company is wholly owned by Chow Tai Fook Jewellery Goldsmith (Shenzhen) Co., Ltd., an associated company of the Chow Tai Fook brand. The latter has invested in over 70 external enterprises, with over 30 already deregistered, and more than 70% of its 100+ branches have been deregistered.

The notice mentioned that due to changes in the market environment, strategic adjustments for business development, and the need for production transformation, the shareholders have decided to relocate the production manufacturing business of the Beishan factory and transfer related production lines, equipment, raw materials, and other assets. The "production manufacturing departments of the Beishan factory" will cease operations from June 1, 2024, involving the "High-end Jewelry Department, Inlay Department, Oil Pressure Department, and C2M Experimental Center."

Ma Dong informed the reporter that the Beishan factory has a total of 9 floors, with the conference area on the 2nd floor and administrative offices on the 3rd floor, while the production related to precious metals starts from the 4th floor, where his inlay department is located. "Currently, only employees on the 7th to 9th floors are working, and most employees on other floors have already left." Another frontline employee who declined to reveal their name revealed: "Chow Tai Fook has provided two options for employees, one is to take compensation and terminate the contract; the other option is the so-called Shunde plan, where employees at the Shenzhen factory can choose to relocate to Shunde."

In Ma Dong's view, almost no one is willing to choose the Shunde plan, "mainly because of the wage issue, the treatment at the Shunde factory will be much worse than in Shenzhen, and the number of workers there is already saturated. In the inlay department where I work, there are nearly 40 people, but only two apprentices are willing to go to Shunde."

After nearly 30 minutes of waiting and repeated communication, around 15:55, the reporter was finally allowed to follow a human resources staff member into the factory. Subsequently, the staff member asked the reporter to wait in the meeting room for the internal communication results. However, after waiting for nearly 1 hour, the reporter did not receive any on-site response.

In response, a brand staff member from Chow Tai Fook's Hong Kong headquarters told the reporter that the main responsible persons at the factory were not in the office area.

During the waiting period, the reporter checked other floors. On the 4th floor, there were a large number of vacant workbenches and large containers being packed. On the 5th floor, a female employee confirmed to the reporter that the company's equipment clearance and a large number of colleagues leaving had started since last week.

In the precious metal testing department on the 9th floor, the reporter saw that the on-site staff were still working. The relevant person in charge stated that the Shenzhen factory is not being shut down this time, but rather being relocated, with Foshan's Shunde and Huangpi in Wuhan being Chow Tai Fook's main production bases. "Our equipment will be transferred to Foshan, and if frontline workers are willing to go, there is no problem. If they are unwilling, then the human resources department will handle it."

Around 17:00, the official Weibo account of Chow Tai Fook Jewellery Group Co., Ltd. issued a statement, stating that in order to further adjust the allocation of corporate resources, improve operational efficiency, the group has decided to adjust and re-plan some departments of the Shenzhen factory, and relocate some production departments of the Shenzhen factory to the Shunde factory in Guangdong. The businesses involved in the adjustment account for a small proportion of the group's main business in Shenzhen, and there is no situation of shutdown or cessation of production.

The statement also mentioned that during the business adjustment process, the group has been maintaining good and close communication with the affected employees, handling their labor relations in an orderly manner on a legal basis and providing compensation.

## "Skyrocketing" Gold Prices and Pressured Gold Jewelry Sales

Chow Tai Fook Jewellery Group Co., Ltd.'s performance report for the first half of the 2024 fiscal year shows that during the reporting period (the six months ending on September 30, 2023), the group's turnover increased to HKD 49.526 billion. The main operating profit increased to HKD 5.989 billion, and the main operating profit margin rose to 12.1%. At the group level, the gross profit margin for the first half of the 2024 fiscal year increased by 140 basis points to 23.8% after adjustment, mainly due to the rise in gold prices improving the retail product gross profit margin of gold jewelry and products. This offset the impact of the rising proportion of gold jewelry and products.

Data shows that international gold prices have been soaring since the beginning of this year. Possibly influenced by this, the prices of gold jewelry have also been rising On June 5th, CHOW TAI FOOK, LUKFOOK JEWELLERY, CHOW SANG SANG, and XIE RUILIN announced that the domestic gold jewelry price was generally around 716 yuan/gram on that day. Although it did not reach the high of over 742 yuan/gram in late May, compared to the domestic gold jewelry prices of around 636 yuan/gram for the above-mentioned brands in early March, it is still about 80 yuan/gram higher on June 5th.

In March this year, when reporters visited many gold and jewelry brand stores in Shanghai, they found that the best-selling products were mostly gold jewelry with a weight of less than 10 grams. With the rise in gold prices, consumers are making more cautious purchasing decisions. For brand franchisees, with the goods already in stock, the sales pressure is even greater.

The first-quarter financial report for 2024 released by the listed company CHOW TAI FOOK showed that during the reporting period, affected by external economic factors, the gold market prices rose rapidly after the Spring Festival, coupled with the post-holiday effects, the enthusiasm for gold consumption and downstream customer replenishment was suppressed, and the sales of gold products were to some extent affected after the holiday, leading to more cautious consumption expectations.

A report released by the China Gold Association shows that in the first quarter of 2024, the rapid rise in gold prices, combined with factors such as gold jewelry processing fees and high brand premiums, has strengthened consumer wait-and-see sentiment, leading to a certain degree of suppression in gold jewelry consumption, increasing sales pressure on gold jewelry retailers. The high gold prices and large fluctuations have increased the production and operation risks for gold processing and sales enterprises, causing wholesale and retail enterprises to be more cautious in purchasing, with rising raw material costs and decreasing shipments for jewelry processing enterprises, and some small and medium-sized processing enterprises even shutting down and taking holidays.

Wang Lixin, CEO of the World Gold Council China, recently stated that in the first quarter of 2024, the total domestic gold jewelry demand in China was 184 tons, a 6% decrease year-on-year. However, from a value perspective, the domestic gold jewelry demand in the first quarter still increased by 9% year-on-year, reaching about 90 billion yuan, marking the highest quarter for gold jewelry demand in terms of value since records began, and the second-highest single quarter for gold jewelry demand (second only to the second quarter of 2013).

Wang Lixin mentioned that the demand for gold jewelry consumption was very strong in January and February this year, but the continuous surge in gold prices in March suppressed consumption, resulting in the overall lackluster performance of gold jewelry demand in the first quarter.

Authors: Liu Yipeng, Zeng Qingyi, Source: Shanghai Securities News, Original Title: "Shutdown and Production Stoppage? CHOW TAI FOOK Responds! Reporters Investigate Factories"

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