Managing Asia

Managing Asia

The world’s largest jeweler upbeat on China demand

Reporting by Christine Tan, Written by Ansuya Harjani
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The world's largest jeweler upbeat on China demand
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The world's largest jeweler upbeat on China demand

The world's largest-listed jewelry retailer, Chow Tai Fook, is expecting a year of solid sales despite the slowing economic growth in China – its biggest market – and the impact of Beijing's crackdown on luxury gifts.

Kent Wong, managing director of the Hong Kong-listed firm, forecasts single-digit earnings growth in the financial year ending March 2014 from the year before, driven by a gold rush in the mainland after bullion prices fell sharply in April-June.

"I think this year will be better than last year," said Wong said in an interview with CNBC Asia's Managing Asia. "Even though the economic growth in China is slowing down, people are still willing to spend money," he said.

(Read more: China's biggest jeweler sees gold in the masses)

The company, which runs more than 1,800 stores in China, saw a 13 percent fall in net profit to $5.51 billion Hong Kong dollars ($710 million) in the year ended March 2013 owing to higher costs and weaker consumer spending.

There have been concerns that a moderating Chinese economy – whose growth slowed to multi-year lows this year – coupled with moves by the new government earlier this year to crackdown on exuberant personal spending and gift-giving by officials, could further hurt the company, which derives over 50 percent of its revenue from mainland China.

In response to the headwinds, Chow Tai Fook – which caters to clientele across the wealth spectrum – has stepped up its focus on affordable jewelry, noted Wong. "We have already adjusted our strategy to create some new designs at an affordable price," he said.

(Read more: China gold consumption set to cool in 2014)

Wong said the company has seen "minimal impact" from Beijing's anti-corruption drive as the majority of their customers purchase jewelry for their personal use. "Government officials usually like to buy watches, jewelry is quite a personal taste," he said.

While Chow Tai Fook generates revenues that are almost double that of Tiffany & Co's, it does not have the global presence of its U.S. competitor.

Wong said he aspires to change that. "It is my dream that one day we can become a global jeweler. But most important we must safeguard Chinese culture," he said.

He doesn't expect the increasing number of international players in China to pose a threat to Chow Tai Fook's business, believing that the market is big enough to accommodate multiple players.

(Read more: Gold rout boosts sales of world's largest jeweler)

"We welcome different competitors in the market so that the standard of service and craftsmanship [can be raised]," he said

—By CNBC's Ansuya Harjani; Follow her on Twitter: @Ansuya_H