(Yicai Global) Jan. 11 -- Chow Tai Seng Jewellery Co., one of China’s three biggest jewelers by market share, plans to set up a microfinance company in a move designed to help it mitigate risks through a new income stream.
Chow Tai Seng will invest CNY300 million (USD46 million) in the venture to meet demand for capital from small-sized merchants in the country, the Shenzhen-based company said in a press briefing today. It will recruit finance professionals to run the business.
Microfinance has taken off in China, with about 9,000 companies now operating in the sector. Despite a recent tightening of the regulatory environment, it is still a growth market. New lenders and firms seeking to diversify their businesses, such as Chow Tai Seng, are being drawn into the sector.
Chow Tai Seng’s jewelry brand is worth CNY30.2 billion (USD4.7 billion), according to the Gems & Jewelry Trade Association of China. Its core business is the design, promotion and supply of own brand jewelry, mainly diamond-set gold.
Demand for jewelry and other luxury goods picked up in 2017 after shrinking for a number of years mainly because of the government’s anti-corruption crusade, which kicked off in late 2012.