Business

Business

  • Submitted By: vk8459
  • Date Submitted: 07/01/2015 12:04 AM
  • Category: Business
  • Words: 1677
  • Page: 7

MiniCase 7
LVMH in China: Building Its Empire of Desire
IN JULY 2012, Louis Vuitton, the flagship brand of
France’s Moët Hennessy Louis Vuitton S.A., better
known as LVMH, opened its 16th global “Maison”
at Shanghai’s Plaza 66, a mega luxury mall. The
Shanghai Maison houses the entire range of Louis
Vuitton collections, from high-fashion clothing and
leather goods, to jewelry, watches, cosmetics, and
wines and spirits. The grand opening of the Shanghai
Maison also coincided with the 20th anniversary of the
brand’s presence in China; Louis Vuitton had opened
its first store in the country in 1992, in Beijing’s
Peninsula Hotel.
LVMH’s sales in Asia accounted for one third of its
total revenue by the end of the first quarter of 2013.1
Those results made Asia the largest region for LVMH
in terms of revenues (Exhibit MC7.1). Focusing on
countries rather than regions, China is the world’s biggest luxury market (Exhibit MC7.2), having achieved
an average annual growth rate of 27 percent from
2008 to 2012.
Louis Vuitton loves China, and the Chinese love
Louis Vuitton. In a recent Chinese luxury consumer
survey published by the Hurun Research Institute,
Louis Vuitton topped the list as the number-one and
number-two preferred luxury brand by Chinese men
and women, respectively. Although the brand’s heritage and craftsmanship are attractive characteristics to
Chinese consumers, they are not solely responsible for
opening the wallets of affluent Chinese. Louis Vuitton’s steep prices and glamorous prestige are reflected
onto its customers, and Chinese luxury customers
value being recognized as wealthy elites with high
social status. To stay apart from (or atop) the crowd
is what Chinese customers crave in a densely populated and formerly egalitarian (communist) society.
The brand’s image reinforcement is so powerful that
even many in China’s middle class aspire to become
owners of Louis Vuitton goods. On average, Chinese
Louis Vuitton...

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