A recent voluntary announcement by ZHOU LIU FU (06168) reveals its efforts to restructure channel balance sheets and value logic. Through its emerging sub-brand "CHAOJIN," the company has introduced a "Co-Creation Partnership Program," which essentially upgrades the traditional asset-light franchise model to a "Joint Venture Partnership System." By establishing regional operating entities (with the company holding 51% and franchisees holding 49%), ZHOU LIU FU not only deepens capital integration and consolidates off-balance-sheet operations but, more crucially, transforms channel partners from transactional counterparts into stakeholders in a shared destiny. This move unlocks significant revaluation potential for the company’s future valuation and profit model.

**Model Innovation: From "Loose Franchising" to "Shared Destiny"** The breakthrough of the Joint Venture Partnership System lies in restructuring the relationship between headquarters and channels through capital alignment. Under this model, ZHOU LIU FU and franchisees jointly invest in brand-operating entities, creating equity-level integration. The company retains 51% control to ensure strategic dominance, while franchisees’ 49% stake aligns interests and shares risks, mitigating short-term opportunism typical in traditional franchises and fostering long-term value co-creation.

Governance-wise, joint ventures adopt modern corporate structures, with standardized boards and management teams, enabling "quasi-subsidiary" operations. This allows ZHOU LIU FU to systematically deploy its mature management systems, digital tools, and brand standards while preserving franchisees’ flexibility in local resource integration. As highlighted in the announcement, the model shares multiple profit streams—brand licensing, wholesale, and omnichannel retail—demonstrating integrated value distribution under corporate governance.

**Strategic Pillars: Four-Dimensional Competitive Edge** The Joint Venture Partnership System strengthens ZHOU LIU FU’s channel moat across four dimensions: omnichannel synergy, premium partner lock-in, consolidation-driven growth, and governance optimization.

1. **Omnichannel Synergy**: Bridging online and offline, ZHOU LIU FU leverages its balanced franchise and self-operated expertise to create a closed-loop system. Online traffic from the flagship brand drives footfall to partner stores, while physical outlets serve as fulfillment and experience hubs, boosting repurchase rates—a perfect fit for CHAOJIN’s target demographics.

2. **Quality over Quantity**: The equity-based mechanism selects financially robust regional agents, shifting focus from scale expansion to shared success. Capital commitments enhance stability and local market penetration, reducing store attrition risks.

3. **Revenue Consolidation**: The 51%控股 structure ensures full consolidation of retail revenues, transcending the limited brand-licensing fees of traditional franchises. This amplifies top-line growth, offering clearer valuation narratives for capital markets. With plans to expand overseas to 200 stores in three years, consolidation will significantly fuel group revenue.

4. **Balanced Governance**: Corporate-style operations maintain HQ’s strategic control while granting regional adaptability. A multi-tiered profit-sharing mechanism (branding, wholesale, retail) fosters efficiency and agility.

**Industry Implications: A New Paradigm for Jewelry Channels** ZHOU LIU FU’s model addresses structural industry challenges. As younger consumers, fast-evolving trends, and fragmented channels pressure traditional heavy-asset retail, the Joint Venture Partnership System uniquely balances control and scalability, ensuring brand consistency while enhancing channel agility—a replicable upgrade path for peers.

Moreover, it systematically supports globalization. Targeting Southeast Asia, ZHOU LIU FU aims for 10 stores in Hong Kong/Macau by 2025 and 200 overseas outlets. Localized partnerships, risk-sharing, and standardized governance mitigate cross-border cultural, regulatory, and operational hurdles, offering a scalable template for Chinese jewelry brands going global.

**Future Vision: From Channels to Ecosystem** Beyond channel optimization, the model marks ZHOU LIU FU’s evolution from retailer to a brand-and-capital-driven ecosystem builder. As the joint venture network grows, the company will cultivate a symbiotic ecosystem anchored by brand equity, equity capital, and digital platforms. Partners transition from mere distributors to strategic collaborators, contributing localized insights to R&D, refining supply chains via operational feedback, and aligning resources with brand growth.

The CHAOJIN pilot represents a revolution in traditional brand-channel dynamics, redefining rights, responsibilities, and profits through capital ties. By harmonizing standardization and flexibility via corporate governance, the model targets both quality scale and sustainable margins.

In summary, ZHOU LIU FU’s channel revolution transcends mere innovation, emerging as a strategic lever for value reassessment. Financially, it drives consolidation and scale; operationally, it builds omnichannel agility; strategically, it bridges domestic refinement and global expansion—all converging into a brand-centric, capital-linked, digitally empowered jewelry ecosystem. Amid consumer upgrades and industry transformation, ZHOU LIU FU redefines symbiotic brand-channel relationships through "shared resources, risks, and rewards," carving a durable moat and setting a benchmark for China’s jewelry sector. Capital markets are poised to reassess the company’s long-term value and growth potential amid this systemic shift.