China’s largest retailer `by market value, Chow Tai Fook, has responded to economic headwinds in its home country by investigating plans to expand in the US market, according to a report on Bloomberg.com.
The company plans to start the new US wholesale business, which will sell diamonds to retailers there, within a year and has set up a team to conduct feasibility studies. Unlike its own-brand diamond franchise, Hearts on Fire, Chow Tai Fook will look to sell polished and rough diamonds to other retailers.
Chow Tai Fook purchased Heart on Fire in 2014, with a view to introducing the luxury diamond brand to mainland China. However, an economic slowdown and depressed consumer consumption on the mainland and in Hong Kong, led to a 46-percent decline in income for the fiscal year ended March 2016.
By breaking into the wholesale markets, analysts argue that by aiming at a lower-margin part of the market, it will allow the Chow Tai Fook to test the waters.
“We are interested in the U.S. market because it has the largest demand for diamonds in the world. It contributes to 40 percent of diamonds sales,” said Chow Tai Fook managing director Kent Wong.
