There are 3,537 gold franchise stores in China, accounting for 97%, and many stores have run away, leading to a wave of rights protection, and dealers have been fined for false publicity

China Gold Store. Photo by reporter Wu Wei

Yangtze River Business Daily News ● Yangtze River Business Daily reporter Huang Cong

China Gold (600916. SH) suddenly closed down, and tens of millions of dollars worth of gold disappeared.

In the past few days, a total of more than 10 consumers have revealed that the China Gold Concept Store in Beijing Shuangjing R&F Plaza, Guiyou Building, Shandong Gold and other stores have closed their stores and "run away", and the gold stored in their stores cannot be redeemed.

At the same time, China Gold's Hangzhou flagship store and Henan Jiaozuo store were also exposed to empty "stores".

A reporter from the Yangtze River Business Daily found that the 2022 annual report shows that China Gold has opened a total of 3,642 stores. Among them, the company has 105 directly operated stores, accounting for only 2.88%, and 3,537 franchised stores, accounting for 97.12%.

China Gold is also keen to open franchise stores because it is more "profitable".

In 2021 and 2022, the gross profit margin of China's gold direct sales model was 1.69% and 2.46%, respectively, and the gross profit margin of the distribution model was 4.68% and 6.03%, respectively.

In the 2022 annual report, China Gold introduced that the company has expanded its online distribution channels and greatly increased its online market penetration.

A reporter from the Yangtze River Business Daily found on the Douyin platform that there are more than 70 accounts with the word "Chinese gold" and "enterprise certification".

Among them, an online distributor of Chinese gold called Shenzhen Xinyuan Jewelry Co., Ltd. has multiple accounts with the word "Chinese gold", with a total of tens of millions of fans.

However, in June and August 2023, Shenzhen Xinyuan Jewelry Co., Ltd. was fined for false advertising and price violations.

At the same time, the Yangtze River Business Daily reporter also noticed that the pure gold bracelets sold on the account of Shenzhen Xinyuan Jewelry Co., Ltd. were sold at a price significantly lower than the market price.

Tens of millions of dollars worth of gold are missing

Tens of millions of dollars worth of gold have disappeared from China's gold stores.

According to the report, in the past few days, a total of more than 10 consumers have revealed that the China Gold Concept Store in Beijing Shuangjing R&F Plaza, Guiyou Building, Shandong Gold and other stores have closed their stores and "run away", and the gold they have stored in the store cannot be redeemed. At the same time, China Gold's Hangzhou flagship store and Henan Jiaozuo store were also exposed to empty "stores".

Judging from their subscription contracts, this escrow service is called "China Gold Investment Gold Bar Worry-free Reservation", and the victims' deposit weights range from 100 grams to 400 grams, some have been saved for a year, some have been saved for three or four years, but now all of them cannot be withdrawn.

One victim revealed that consumers like him had invested up to 10 million yuan but did not get it back.

A senior executive of China Gold, who asked not to be named, said that the franchise store in Beijing was operating illegally and that the person in charge of the store was currently in custody.

According to industrial and commercial information, the main body of the company behind the China Gold Concept Store in Beijing Shuangjing R&F Plaza is Beijing Sandingyuan Gold Jewelry Co., Ltd. (hereinafter referred to as "Sandingyuan").

Sanding was originally established in December 2010 with a registered capital of 3 million yuan, the legal representative is Lin Jianbao, and Yang Shurong is the actual controller behind the company.

Some consumers said that when they contacted China Gold Official, they were told that the store was a franchise store and was not authorized to carry out deposit business.

One victim argued that China Gold should be responsible for the supervision and compliance review of its franchisees. Buying gold and escrow gold in the store is a trust in the brand of China Gold and this central enterprise, and China Gold should not destroy the trust of the people.

A lawyer said that in this case, China Gold R&F Store did not explicitly inform consumers that it was the franchisee or franchisee, which made it difficult for ordinary consumers to distinguish what kind of legal relationship they belonged to, and it was difficult to determine the actual business entity of the store involved in the case.

The number of franchised stores in North China decreased by 217

China Gold's main business is the sales and commissioned processing of gold jewelry products, including gold products, K gold jewelry products, etc.

At present, China Gold is promoting the expansion of marketing channels in the form of "direct sales + distribution".

According to the 2023 semi-annual report, China Gold's sales of gold and karat gold jewelry products can be divided into direct sales model and distribution model. The direct sales model mainly includes direct store channels, key customer channels, banking channels, e-commerce channels, etc., and the distribution model is mainly franchise store channels.

From this point of view, the Sanding that was exposed this time originally belonged to the franchise store of China Gold.

According to the 2022 annual report, China Gold has opened a total of 3,642 stores. Among them, the company has 105 directly operated stores, accounting for only 2.88%, and 3,537 franchised stores, accounting for 97.12%.

It should be noted that the victim found that most of the withdrawals of China's gold franchise stores occurred in 2022, and the number of franchise stores of listed companies decreased significantly in this year.

According to the 2021 annual report, China Gold has opened a total of 3,721 stores. Among them, the company has 91 directly operated stores, accounting for only 2.45%, and 3,630 franchised stores, accounting for 97.55%.

This means that in 2022, there will be 93 fewer gold franchise stores in China. Moreover, in North China, where Beijing is located, the number of stores fell from 587 in 2021 to 370 in 2022, a net decrease of 217 stores.

In the 2022 annual report, the company said that franchisees are partners of the company, and the company will continue to explore collaborative cooperation models with franchisees in the future. Including through the introduction of the "three exemptions and two reductions" franchise policy, exempt management service fees and brand use fees for a certain period of time, exempt from performance appraisal for a certain period of time, based on a certain amount of product guarantee support, and give decoration subsidies to encourage franchisees to open new stores.

China Gold is also keen to open franchise stores because it is more "profitable".

In 2021 and 2022, the gross profit margin of China's gold direct sales model was 1.69% and 2.46%, respectively, and the gross profit margin of the distribution model was 4.68% and 6.03%, respectively.

Online dealers sell gold jewellery at a much lower market price

In the 2022 annual report, China Gold introduced that the company has expanded its online distribution channels and greatly increased its online market penetration.

A reporter from the Yangtze River Business Daily found on the Douyin platform that there are more than 70 accounts with the word "Chinese gold" and "enterprise certification".

The common feature of these accounts is that they all use the LOGO of "China Gold", and the labels are "Central Enterprise Brand, Trustworthy, President Unit of China Gold Association, Stock Code 600916. SH, nearly 3,000 stores nationwide, official genuine fake one pay three" and other words.

The difference is that the suffixes of these "China Gold" account names are slightly different, such as China Gold China Gold Xinyuan Specialty Store Broadcast, China Gold Wanfujin Specialty Store Authorization, China Gold China Gold Jade Flagship Store, etc.

Moreover, the number of fans of more than 70 "China Gold" accounts also varies greatly, such as China Gold China Gold Xinyuan store broadcast fans as high as 8.545 million, the largest number of fans, while China Gold official flagship store has only 11,000 fans.

From the perspective of equity relations, the companies behind these accounts are not directly related to China Gold, and most of them are authorized stores.

The main name of China Gold China Gold Xinyuan Specialty Store is Shenzhen Xinyuan Jewelry Co., Ltd., which was established in November 2020 with a registered capital of 5 million yuan and the legal representative Yu Shaojun.

According to the official website of the Shenzhen Municipal Administration for Market Regulation, in June 2023, Shenzhen Xinyuan Jewelry Co., Ltd. was fined 9,000 yuan for false advertising. In August of that year, Shenzhen Xinyuan Jewelry Co., Ltd. was fined 50,000 yuan for price violations.

Shenzhen Xinyuan Jewelry Co., Ltd. also has accounts such as China Gold Xinyuan Store Authorization Account and China Gold Xinyuan Store, with a total of tens of millions of fans.

On March 28, in the live broadcast room called the authorization number of China Gold Xinyuan Store, a reporter from the Yangtze River Business Daily found that a product called "Ancient Pure Gold Ring Bracelet" was priced at 8280 yuan, weighed 15 grams, and was made of "pure gold".

It should be noted that on March 28, the overall price of gold in major gold stores remained around 673 yuan/gram, of which the gold store with the highest gold price was Zhou Shengsheng, with a price of 675 yuan/gram. The gold store with the lowest gold price is Caibai, which is quoted at 645 yuan/gram.

The above-mentioned bracelet sold by Shenzhen Xinyuan Jewelry Co., Ltd. is priced at 552 yuan/gram, which is significantly lower than the market price.