CHOW TAI FOOK, a Hong Kong-based jewelry brand, has decided to relocate its production from the Shenzhen factory to Foshan and ceased production on June 1, according to a company statement.

The factory, located in the Beishan area of the Yantian District, which began operations in 2017, abruptly notified some of its employees of the decision. They mentioned that the stockholders had decided to relocate the production lines to its base in Shunde, another city in Guangdong.

The renowned Hong Kong jeweler, established in 1929, operates another facility in Huangpi, Wuhan, the capital of Hubei Province. While the Shenzhen factory also houses a research and development center, the Foshan facility was the brand’s first factory on the Chinese mainland, established in 1988.

While production line workers at the Shenzhen factory have the option to relocate to Shunde, many are hesitant to do so as they have settled in Shenzhen, as reported by a company official to Jiemian News.

The company intends to pay its employees their regular wages in June and provide living subsidies in July. They will also address compensation issues for laid-off employees in accordance with local labor laws and regulations, as per a notice to employees published by Dute News. According to the company’s report as of midyear 2023, the jewelry group employed 28,700 individuals, with 83.7% of them based on the Chinese mainland.

A former employee at the Shenzhen factory hinted that high operating expenses were a leading cause of the shutdown. However, analysts attributed the closure to rising gold prices, which have made consumers cautious and less willing to purchase gold accessories.

Gold prices began surging in the final months of 2023 following a significant rally triggered by central bank purchases and growing investor concerns over the Israel-Hamas and Russia-Ukraine conflicts.

Forecasts indicate that gold prices are expected to reach new highs later this year, with a projected peak of US$2,300 per ounce in 2025, according to a report from J.P. Morgan.

Chow Wun Sing, chairman of another Hong Kong jewelry brand, Chow Sang Sang, recently cautioned about declining sales at his company, attributing it to the skyrocketing gold prices.(Li Dan)