On Saturday, Chow Tai Fook Jewelry Group Limited (Chow Tai Fook) recently faced a public opinion crisis due to a silver bracelet not meeting purity standards during an inspection, while at the same time, facing long-term customer doubts and high complaints, Chow Tai Fook closed 598 stores in one year, and its stock price has been consistently below par.
May 29th, Chow Tai Fook issued an official statement regarding their silver bracelet that was found by officials to have a silver content below the national standard of 990‰, stating that due to different testing methods, the company sent the same batch of products to the National Gemstone and Jewelry Quality Inspection Center (NGTC) for destructive testing, and the final test results of the same batch of products were all qualified.
The incident originated on May 11, when one of Chow Tai Fook’s silver bracelets on sale was found by officials to not meet the national standard of 990‰ silver purity, with the product being mixed with impurities and counterfeits, falsely passing off disqualified products as qualified ones, resulting in a fine of 739.75 yuan (RMB) and confiscation of earnings amounting to 231.17 yuan. The product in question was also banned from production and sale.
Despite Chow Tai Fook’s explanations regarding the testing controversy from a regulatory perspective, the public opinion controversy has not been completely quelled.
According to a report by Phoenix Financial and Economic on May 31, Chow Tai Fook has frequent compliance issues in product quality, terminal sales, and brand promotion in recent years. There are apparent deficiencies in the continuity and standardization of internal control management, leading to investigations being initiated in multiple locations. In October 2025, Chow Tai Fook was penalized 2025 yuan for false advertising-related violations; in November, it was fined 50,000 yuan by the Shenzhen Market Supervision Administration for improper sales behavior.
Meanwhile, during the 2026 Consumer Rights Day, media undercover investigations revealed problems in the company’s terminal stores: some stores did not actively display the weight of gold jewelry at a fixed price, avoiding the weighing process, using vague sales scripts, and facing post-sale exchange premium disputes, among other operational phenomena.
Irregular terminal operations have led to a large number of customer complaints. According to data from a third-party complaint platform, Chow Tai Fook accumulated nearly 4700 consumer complaints, with 139 new complaints in the past 30 days, focusing mainly on false advertising, consumer inducements, untimely handling of after-sales services, discrepancies between products and promotions, with consumer disputes occurring more frequently than with most chain brands in the industry.
The “Company Research Institute” believes that Chow Tai Fook’s long-term light asset franchise and outsourcing business model have brought long-term and difficult-to-avoid systemic risks to quality control management.
Comparing data from the end of 2024, by the end of 2025, Chow Tai Fook saw a net reduction of 598 franchise stores for the whole year, with a slight net increase of 21 self-operated stores, resulting in a net closure of 577 stores throughout the year.
Market fluctuations have caused the company’s stock price to continuously fall below the issue price since February 2026, remaining in a deep underperformance state. As of the close of trading on May 29, 2026, the company’s stock price was reported at HK$17.21 per share, with a cumulative decline of over 28% compared to the issue price. Public data shows that Chow Tai Fook was listed on the Hong Kong Stock Exchange on June 26, 2025, with an IPO issue price set at HK$24 per share.
The “Company Research Institute” believes that while Chow Tai Fook’s reliance on a light asset model of franchising and outsourcing has led to rapid expansion, it has also disconnected the brand from the core elements of production and terminal control. When channel dividends peak and stock prices remain in long-term underperformance, weaknesses in internal control and standard deficiencies are gradually exposed. If a rigid whole-chain quality system is not established, the next “failure” may only be a matter of time.
Public data shows that Chow Tai Fook Jewelry Co., Ltd., founded its brand in 2004, and listed on the Hong Kong Stock Exchange on June 26, 2025. The company claims to be committed to providing quality products and services for more consumers seeking fashion charm and a better life.
The so-called light asset model is a business model that achieves efficient operation by reducing fixed asset inputs and integrating external resources, characterized by low capital investment, fast turnover, and high returns. Its core strategies include using cooperative outsourcing to reduce production risks, focusing on brand building and research and development innovation, effectively leveraging asset leverage, integrating external resources, and outsourcing non-core links to focus on the core business.