With a growth of 9.5% per year, the Chinese economy is experiencing a period of unprecedented economic success. This success is accompanied by a dramatic increase in the purchasing power of part of the Chinese population. Therefore, the Chinese market is becoming increasingly demanding for luxury goods and in particular, for French luxury products.
Approximately, 0.8% of Chinese consumers have high enough income to buy imported luxury goods. We are witnessing the emergence of a new Chinese elite that is characterized by a new system of values: they are becoming more individualistic and "modern". This new elite needs to distinguish itself from the rest of the Chinese people and luxury is a means to assert their social status. It also gives them the means to express their individuality.
France has a prestigious image in China: A country that is perceived as cultural, artistic and romantic. It is also the country that best symbolizes the luxury worldwide. Indeed, 75% feel that France symbolizes luxury. Thus, to study the opportunities and dangers of economic growth for the French luxury companies, we have chosen to focus on the French group LVMH. We decided to study the situation of LVMH in China, because LVMH is one of the groups that best symbolizes French luxury. In fact, according to a survey, the best ambassadors of French luxury abroad are in 1st place Dior, and Chanel and Louis Vuitton in 2nd and 3rd places respectively.
We will analyze the marketing strategy of LVMH in China to answer the following question: What are the opportunities and dangers of the China's economic boom? How can LVMH benefit from this new market?
First, we will study the establishment strategy adopted by the LVMH group in China. Then we will focus on the greatest threat faced by French luxury in China, which is counterfeiting. We'll see how the group manages to deal with this problem. Finally, we will analyze the new steps taken by the Chinese government to attract foreign companies and especially the luxury companies.
Overview of the establishment of the LVMH Group in China: Different establishment strategies.
[...] For this, China needs further revaluation of the RMB, and a new financial system has to be put in place, i.e., a financial system based on domestic demand and the balance between direct finance and indirect finance. Interest rates Frequent increases in interest rates and monetary policies are aimed at controlling credit flow, thereby encouraging the entry of investments in China. The Chinese stock market The exchanges in Shanghai and Shenzhen are very successful as regards the accounts of institutional investors. [...]
[...] The measures taken by the French government regarding the counterfeit by the Chinese of French luxury goods: In addition to increasingly strong cooperation with the Chinese government, France is taking measures to protect its key companies such as LVMH. One way it recently implemented an awareness campaign. The French Government and the Committee Colbert (French Association of Luxury Brands) have launched this campaign. This campaign has put forward through TV commercials, electronic materials, risks to subjects. The consequences of this purchase are varied, they range from the insecurity of job loss through the power of mafia networks. [...]
[...] This victory, more than the meager compensation, represented a breakthrough for French luxury brands that have always fought against counterfeiting in China. LVMH and counterfeiting The Chinese counterfeit products both domestically and internationally. All indications are that, for both the consumers and for the thousands of companies that make counterfeit products, they are still far from realizing that its wrong to do it. By definition, products are copied to make profits, to make money, and for the colossal success. No doubt to prevent future conflicts between Western and Chinese partners, the best method to be adopted is to help consumers distinguish between original and counterfeit products. [...]
[...] Some prominent figures may show the extent of this phenomenon: According to the Senate, China is the largest producer of counterfeit products in the world especially in regard to luxury goods such as leather, textiles and cosmetics.The WTO (World Trade Organization) estimates that $450 billion annual losses are incurred due to this illegal trade, including billion in France 1. Many agreements to fight against counterfeiting have come about not only due to pressure from major powers, but also from the government's determination to combat this phenomenon. [...]
[...] Then we will focus on the greatest threat faced by French luxury in China, which is counterfeiting. We'll see how the group manages to deal with this problem. Finally, we will analyze the new steps taken by the Chinese government to attract foreign companies and especially the luxury companies. Overview of the establishment of the LVMH Group in China: Different establishment strategies. The establishment of companies and brands of the LVMH group in China: LVMH is one of the world's largest luxury brands. [...]
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