China's new gold policy in November has affected the jewelry industry.

On November 1, 2025, the Ministry of Finance and the State Taxation Administration of China jointly issued the "Announcement on Tax Policies Related to Gold", which had a significant impact on the jewelry industry. The following is a detailed analysis:

Increased costs and price hikes: 

The new policy clearly differentiates tax management for gold transactions based on investment and non-investment purposes. For non-investment purposes, when member units purchase standard gold for non-investment purposes, the input tax amount is calculated based on the amount indicated on the ordinary invoice and a deduction rate of 6%, compared to the previous 13%. This reduction in the input tax deduction rate from 13% to 6% has directly led to a significant increase in the tax burden cost for raw material procurement in gold jewelry enterprises. For instance, the procurement cost of Cai Bai's gold jewelry business has increased due to the reduction in input tax deduction. On November 4, the listed price of its pure gold jewelry was ¥1,235 per gram, an increase of ¥70 per gram compared to November 1. The per-gram price of pure gold jewelry from brands like Lukfook has also generally risen by ¥60 to ¥70 .

Compressed profit margins for enterprises: 

For gold jewelry enterprises mainly engaged in retail, the implementation of the new policy has led to adjustments in the tax structure, especially as sales of non-investment purpose gold products are subject to value-added tax, which has compressed their profit margins. On November 3, many leading stocks in the A-share and Hong Kong-listed gold jewelry sectors fell sharply in response. Chao Hong Ji's stock price dropped by the daily limit at one point, while those of Chow Tai Fook, Lao Feng Xiang, and others fell by more than 3%. In the Hong Kong market, Chow Tai Fook's stock price plunged by 8.67%, and other companies like Lao Pu Gold, Lukfook Group, and Chow Sang Sang also followed suit.

Possible changes in market demand: 

In the short term, the increase in costs will push up the prices of gold jewelry, which may suppress some rigid consumer demand. In the long term, the new policy helps distinguish the investment and consumption attributes of gold, and some consumers who originally planned to purchase gold jewelry may shift to buying gold bars, forming a trend of "shifting demand from jewelry to investment gold bars".

Standardized development of the industry: Although the policy has an impact on enterprises in the short term, in the long term, its implementation is conducive to the standardized development of the market. Chao Hong Ji stated that it is exploring and studying the new policy, and while there will be an impact in the short term, it is optimistic about the benefits brought by market standardization in the long term.

It may take some time before the impact of these policies on the jewelry industry can be fully realized. However, our aim is to produce high-quality products and gain the trust of the market and customers through such products.