The Fall of Chiba Jewelry: A Gamble Driven by Gold Prices and Low-Price Strategies
Hello everyone, I'm your financial analyst. Today, we're going to talk about Chiba Jewelry, a well-known jewelry brand that once featured Hollywood star Anne Hathaway in its advertisements and had over 200 stores across the country.
Recently, this brand has completely collapsed: the founder is missing, the stores have changed their names, the online stores have been emptied, and employees have not received their salaries for half a year. This is not just the failure of a company; it's a typical case of a Chinese jewelry company trying to break through the market with a "low-price, high-volume" strategy during a "gold bull market," only to collapse due to a broken capital chain.
To help you understand the logic behind this, I've broken down the news into the following five key aspects and explained in plain language how Chiba Jewelry ended up where it is.
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1. Major Strategic Shift: From Selling Diamonds to Selling Gold, but Losing Profit
Core Issue: To adapt to the market, Chiba Jewelry gave up its high-profit business but failed to establish a new competitive advantage.
Looking back at 2017, Chiba Jewelry was a leader in the industry, with revenues of 1.357 billion yuan and nearly 100 million yuan in profit. At that time, it sold both gold and diamonds (non-gold jewelry), with diamonds and set jewelry having higher gross margins. When you buy a diamond ring, most of the cost goes towards the brand's premium and design fees, which are the most profitable parts for jewelry companies.
However, things changed. Young people no longer prefer diamonds, thinking they're not valuable and prefer gold for its value and ease of liquidity. To capture this trend, Chiba Jewelry made a bold move in 2024: it focused entirely on gold jewelry.
The data is stark:
- 2024: Revenues from non-gold jewelry plummeted from 166 million yuan to 53 million yuan; revenues from gold jewelry increased from 493 million yuan to 703 million yuan.
- 2025: Gold jewelry accounted for as much as 95.45% of total revenues, with non-gold jewelry almost disappearing.
Plain Language: It's like a tailor shop that used to make money by selling high-end custom suits (high profit) suddenly deciding to only sell fast-fashion T-shirts (low profit but high volume). Although it sold more T-shirts, the profit was minimal, and the company became vulnerable to any disruption. Chiba Jewelry transformed itself from a high-profit brand to a low-profit retailer, significantly reducing its resilience.
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2. The Low-Price Trap and the Costly Impact of Live Streaming
Core Issue: To gain market share, Chiba Jewelry engaged in price wars and relied on expensive live streaming, resulting in increased sales but not increased profits.
Since the gross margin on gold jewelry was low, how did Chiba Jewelry compete? The answer was low prices + live streaming.
- Low-Price Strategy: In 2024, the company's gross margin dropped from 22.55% to 15.47%. This means that for every 100 yuan worth of gold sold, it used to earn 22 yuan, but now it only earns 15 yuan.
- Live Streaming Gamble: To boost sales, they partnered with top influencers. The news mentioned that a single partnership with a top influencer could generate over 100 million yuan in sales. Sounds impressive, right?
But the math doesn't add up. A former employee, Wang Li, revealed that Chiba Jewelry's product prices were already low, and adding in the costs for hosting influencers, commissions, and advertising, the actual profit from these deals was almost non-existent or even loss-making.
Plain Language: It's like selling apples in a market. To attract customers from the next stall, you lower the price to the cost level and hire an influencer to promote the products, taking a 10% commission. You sell a lot of apples, but most of the money goes to the influencer and logistics. In 2024, Chiba Jewelry's net profit did increase by 311%, but this was mainly due to cutting advertising and employee salaries, not because business improved. This kind of "savings" is not sustainable.
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3. Deadly Price Hikes and the Gold Price Volatility
Core Issue: Hiking prices at the wrong time, combined with extreme fluctuations in international gold prices, disrupted consumer purchasing patterns.
In 2025, Chiba Jewelry tried to turn things around by raising prices, a very risky move:
- August 2025: Management suddenly announced a 10%-20% price increase on gold jewelry. Gold prices were already high (over 1,000 yuan per gram), and this move scared off customers.
- Internal Disruption: After the price hike, employee morale plummeted, especially in the online department, who saw the decision as a mistake.
- External Shock: Just as people were hesitating, the international gold price plummeted by 6% in October 2025, setting a multi-year record.
Plain Language: It's like a milk tea shop with average business that suddenly raises prices by 20% while competitors are offering discounts and gold prices drop sharply. Consumers think, "If the price of gold has dropped, is it a good deal to buy now?" Everyone waits and sees no sales. Chiba Jewelry not only lost its price advantage but also lost consumer trust due to the price fluctuation. As a result, revenue plummeted by 42.95% in 2025, to only 438 million yuan.
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4. Broken Capital Chain: Inventory Becomes "Dead Money," and the Company Depends on Loans to Survive
Core Issue: The company had 1.5 billion yuan in inventory but only 930,000 yuan in cash, a typical case of "having goods but no money." It eventually collapsed due to inability to repay loans.
Here are the key figures:
- Cash: From 104 million yuan in 2016, it dropped to 933,700 yuan in the first half of 2026.
- Inventory: 1.535 billion yuan, accounting for 96.54% of total assets.
Plain Language: Imagine having a house full of gold bars worth 150 million yuan, but only 93 yuan in cash. When creditors (banks) come knocking, you need to melt, sell, or liquidate the gold to pay them. Chiba Jewelry's inventory turnover rate was extremely low (0.12 times in the first half of 2026), meaning the gold was selling very slowly and became "dead money." The company had to rely on short-term loans (133 million yuan) to operate. A failed loan in August 2025 was the final straw. Without cash inflows, it couldn't pay salaries or suppliers, leading to a complete halt in business.
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5. The Outcome and Reflection: The Missing Founder and the Management Blunder
Core Issue: In the face of crisis, the management failed to cut losses or seek external funding, leading to a complete loss of trust.
What would a healthy company do in such a situation?
1. Lay off employees and cut salaries to preserve essential operations.
2. Sell assets to raise cash.
3. Seek investment by selling equity.
Chiba Jewelry did try the third option, with Lin Mingjie attempting to find investors, but to no avail. Why? Because the company's fundamentals were poor:
- Single business focus (on gold).
- Low gross margins (no profit margin).
- Severe inventory buildup (difficult to liquidate).
- Damaged brand reputation (salary delays, price hikes).
Plain Language: It's like a patient in critical condition. Doctors (investors) see that the patient has no money for treatment, toxic inventory, and poor management decisions (such as reckless price hikes and costly live streaming). They decide the patient is beyond saving.
In the end, the founder and his wife disappeared, the stores changed their names, and the online store was taken down. This is not just a business failure but may also involve legal issues. For Chiba Jewelry's employees and franchisees, it was a disaster; for the industry, it's a warning: in the gold jewelry market, without brand value and efficient operations, relying solely on low prices and traffic is not sustainable.
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Conclusion
Chiba Jewelry's collapse was not caused by one factor but by a combination of strategic mistakes (abandoning high-profit businesses), inefficient operations (loss-making from live streaming), poor decision-making (hiking prices at the wrong time), external shocks (gold price fluctuations), and a cash crunch (inventory buildup).
This teaches us a simple lesson: In business, you can't just look at how much you sell (revenue); you need to see how much actual money you earn (cash flow). When your warehouse is full of unsold gold and you have no cash to pay salaries, bankruptcy is just around the corner.