LVMH In China Case Study

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Case Study #3 – LVMH in China: Cracks Its Empire of Desire? Moët Hennessy Louis Vuitton (LVMH) is a leader in luxury products and the Chinese elite love to purchase the luxury products to flaunt their wealth and prestige. However, over the last few years, the Chinese customers have been traveling to France and other European countries to purchase their LVMH products in China are twice as expensive because the prices are lower in Europe and China has high luxury taxes and the euro is weak.
With the fact that the Chinese have been purchasing more of their LVMH products outside of China, LVMH sales in China have leveled off. Counterfeiting continues to be a severe problem with high quality products like those that are offered by LVMH. The future
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It is also something that the middle-class strive to own a Louis Vuitton. The economic slowdown that the Chinese are experiencing will have a significant impact on LVMH because the Chinese market is accountable for one-third of its revenue. LVMH has recognized that customers are shying away from brand overexposure.
The future of LVMH will be to continue to fight the counterfeiting of products. LVMH should also limit their store growth in China. By doing this, it would help reduce costs and it would increase exclusivity as well.
Strategic Initiatives Since the Chinese sales contribute to one-third of the revenue for LVMH, they need to figure out how to keep the Chinese purchasing their products in China rather than traveling to other countries. However, since the euro has collapsed and the luxury taxes are so high, it is easier for the Chinese to travel abroad to purchase their LVMH products. In order to get the Chinese to get back to purchasing Louis Vuitton’s in China, they have started to provide first-rate services and improve their shopping experience. In listening to their customers, LVMH decided to stop opening stores in China, they provided made-to-order bags and logo-free handbags, to name a few. These changes may be successful, however, until the prices are lowered and they are more comparable to those purchase in other European
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The wealthy are no longer flaunting their wealth because pf the high-profile trials that have been taking place in China in regard to corrupt individuals. That being the case, I would suggest to LVMH that they caution that while China has been a high revenue for them, that the trend to purchase their high quality products is lessening and so is the revenue that China was once creating. With China’s economy slowing, it doesn’t appear that there will be a substantial economic growth anytime in the near future that will tip the scales back to the positive gain. LVMH may want to look at lessening their presence in China by closing down some of their store locations that would be considered in their top-tier locations and concentrate more on the second and third-tier city stores that target the individuals that are newly rich and continue to seek out luxury goods.
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