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Running head: LVMH IN CHINA:CRACKS ITS EMPIRE OF DESIRE? 1LVMH in China:Cracks Its Empire of Desire?Scott E IvesDavenport University
LVMH IN CHINA:CRACKS ITS EMPIRE OF DESIRE? 2AbstractLouis Vuitton, the flagship brand of France’s Moet Hennessy Louis Vuitton S. A., better knownas LVMH.This company produces luxury brands such as handbags, champagne, cognac,watches and perfumes.This paper will focus on analyzing an international companies’ currentsituation, evaluate the strategic alternatives for LVMH, and selection of the best strategy fromalternatives and recommended objectives to maintain or improve their competitive position.
LVMH IN CHINA:CRACKS ITS EMPIRE OF DESIRE? 3LVMH in China:Cracks Its Empire of Desire?LVMH is a global producer of luxury goods; they produce products that include dresses,handbags, watches, champagne, cognac and watches.All these products are high-end and to theChinese market are considered a status symbol.The wealthy want to be seen with theseproducts, and the less wealthy hope to achieve the wealth to be seen using these products.Thishas all led to massive growth in China due to high demand.The market in China has changed asthey have become more sensitive to the perception of wealth, when comparing to otherdeveloped nations such as the US and Europe.LVMH has had stagnant growth from 2013-2016,they are hoping that it is temporary. This paper will focus on what they could do to rekindlegrowth in the Chinese market.[ CITATION Fra176 \l 1033 ]Question 1LVMH is known for its pricing, high, and prestige of its products.The Chinese wanted tobe associated with their prestigious product.Owning this product meant that you were wealthy,and the people of China wanted to be associated with wealth. In China if you owned a LouisVuitton bag, you may be considered a person with high social status or a person that had wealth.Louis Vuitton’s steep prices and glamour bestow prestige exclusively on its customers, and this iswhat Chinese luxury customers value the most—to be recognized as wealth elites with highsocial status.[ CITATION Fra176 \l 1033 ]One thing that makes Louis Vuitton stand out is its uniqueness, and part of that is thehigh-end price a consumer pays for that uniqueness.Like all other luxury brands, LVMH has to
LVMH IN CHINA:CRACKS ITS EMPIRE OF DESIRE? 4constantly fight against counterfeiting of its products, especially the Louis Vuitton brand.China’s dominance in manufacturing and its lack of intellectual property law enforcement havemade the country home to more than 80 percent of the estimated $300 billion counterfeitindustry.With the counterfeit industry being home in China, it makes the product cheap enoughfor anyone to purchase and obtain.The people of China purchase LVMH because of its status, ifeveryone has the ability to obtain their products, it loses its luster, thus making it less desirable tothe elites of the country.Counterfeiters see the aggressive growth, and want to cash in, becausethere is a market for the product.