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World Federation Of Diamond Bourses

Interview with Mr. Conroy Cheng, Vice Chairman of Chow Tai Fook

Conroy Cheng WFDB

Q. How has Chow Tai Fook, one of the largest and most important jewelry retailers in Asia, been impacted by the Covid pandemic? How has it been impacted by local and global economic trends?

The ongoing impact of the pandemic, combined with geopolitical instability and rising inflation globally, created challenging conditions for businesses.

Despite the macro-economic challenges and pandemic-led business disruptions, our business demonstrated resilience, supported by favourable store opening momentum in Mainland China (the “Mainland”) and strength in gold jewellery and products. In the Mainland, revenue during the first half of FY2023 (1HFY2023, i.e. April – September 2022) increased by 6.2% year-on-year. We also recorded healthy progress in market share gain in the Mainland during the period.

In Hong Kong, consumer sentiment and store traffic improved significantly in 1HFY2023 since pandemic-related restrictions were gradually relaxed. Hong Kong market’s same store sales experienced solid growth of 15.1% in the period, thanks to stable local demand.

Q. What is the current situation in the Hong Kong and China diamond and jewelry markets? How do you see these markets going forward?

The weakened macro conditions and pandemic measures affected relevant spending on gem-set products in 1HFY2023. Nevertheless, our new Wonderful Life Collection, which combines gold and T MARK diamonds, has received an overwhelming response since launch in July 2022. We believe this Collection will support new sales growth in the gem-set product category.

Also, our premium HEARTS ON FIRE brand achieved outstanding result both versus last financial year and pre-pandemic levels during the period. Its retail sales value was up 62.6% in the Mainland and 50.2% in the Hong Kong and Macau market on a year-on year comparable basis. 

Going forward, we will increase our efforts in promoting our higher-margin gem-set and collection-based jewellery.

Q. CTF also has an important presence in the US market. How do you see this market now and in the next year?

The US is an important market for Chow Tai Fook and we have strong exposure there to both the diamond and jewellery categories through our HEARTS ON FIRE jewellery brand. Over almost three decades, HEARTS ON FIRE has established a broad presence among North America’s luxury independent and department stores channels where it is renowned for its quality and exceptionally cut diamonds.

In 2021 and so far in 2022, the sales of HEARTS ON FIRE in the US reached historical highs. This reflects our loyal customer base and more broadly the renewed consumer interest in diamond jewellery borne from COVID. Once again after at least a decade, the diamond category grew and became more relevant and important to consumers as symbols of enduring love and relationships.

Following almost two years of sustained growth, particularly on the heels of a sharp COVID rebound, we see some pockets of the US market slowing. Inventory has built up and some retailers have adopted a ‘wait-and-see’ approach amid economic uncertainties and potential slowing of consumer spending.

While there will always be cyclical factors, diamond jewellery consumption in the US remains unparalleled and we believe the overall market fundamentals are robust and indicative of continued growth.

In 2023 and beyond we are increasing our investment in the HEARTS ON FIRE, a sign of our commitment to, and positive outlook for, the US luxury jewellery market.

Q. What are the challenges and opportunities facing the Asian diamond and jewelry markets? The US markets?

Diamonds and jewellery have touched the hearts of both US and Asian consumers in a new way in the past two years and we want to ensure that this connection and sentiment remain strong.

Beyond the inherent beauty and rarity of diamonds, and delivering attractive designs, an enriched consumer experience is the biggest opportunity to maintain and increase the “share of wallet” of diamond jewellery.

We have wonderful products but overall we need to do more on telling its story and enabling customers to experience its beauty.

We also know the importance of transparency in the diamond industry has never been stronger. Governments, companies, NGOs and consumers are increasingly demanding about the systems and sources that deliver fashion items to market. Our T MARK diamond is inscribed with a set of unique serial numbers, allowing customers to identify the diamond and retrieve its record from procurement to manufacturing. We turned a diamond’s life journey into a reliable and unique marking, which is made possible by the Group’s agile business model and decades of expertise and innovations.

Through our planned relaunch of HEARTS ON FIRE with new and relevant storytelling and customer experience we have the opportunity to do just that. A focus of this relaunch will be to shine a light on our exceptionally cut diamonds and we will be working closely with selected retail partners to pass the message to the consumers through new training, point-of-sale tools and branding.

To satisfy stakeholder needs for confidence, the diamond industry must demonstrate the extraordinary level of transparency and scrutiny that it is subject to, while acknowledging that progress has to continue. It is a key objective of Chow Tai Fook to work together with leading industry associations and organisations to do just that.

Q. Tell us about your journey in the jewelry industry, how you began and where you are now.

I joined Chow Tai Fook Jewellery Group in 2007 and was appointed as an executive director in July 2011 and became vice-chairman and executive director in June 2022. I’m now responsible for strategic direction and corporate transformation of the Group as well as managing the Group’s diamond and gemstone raw materials.

Apart from my role within the Group, I am actively involved in industry organisations such as serving as a member of the executive committee of the Diamond Federation of Hong Kong, China and a board member of the World Diamond Council.

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