China Gold let 97% of stores run as franchises — one walked off with 60 kg of gold

China Gold (中国黄金, 600916.SH) is China's largest gold jewellery retailer. Of its 3,642 stores, only 105 are directly operated — the rest are franchises. To a customer walking in, there is no visible difference: the signage, the receipts and even some bank-transfer counterparties all carry the China Gold name. In December 2023 the flagship Beijing 'Concept Store' in Chaoyang district, which had operated for fourteen years, shut its doors overnight.

The store had been selling a product called 'Worry-Free Booking': customers bought investment gold bars and left them with the store for safekeeping, receiving an annual bonus of 2.5% of the consigned weight in pure gold. Many customers renewed year after year without ever seeing the physical bars. When the store closed, roughly 60 kilograms of consigned gold — worth over ¥50 million by the victims' own tally — could not be returned. The franchisee's parent company had reduced its registered capital from ¥10 million to ¥3 million and swapped its majority shareholder the day before the closure.

China Gold's response was that the store was a franchise, that it had never authorised consignment services, and that it bore no legal obligation to cover the losses. Multiple local regulators issued risk warnings about 'gold consignment scams'. The case exposed the structural risk of a model in which a brand earns trust through its name, collects fees through its franchise network, and disclaims responsibility when the network misuses that trust.