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The market for French luxury goods in China

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  1. Establishment strategies of the LVMH Group in China
  2. The obstacles facing LVMH in the Chinese market
    1. The area of counterfeiting in China
    2. The cycle of counterfeiting in China
    3. Why is the area of counterfeiting so powerful in China?

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. [...]


[...] Fake Louis Vuitton bags The other victory of the French Group LVMH: The brand of luxury Louis Vuitton succeeded against a counterfeiter in the Peking Chinese market, who sold without any authorization, duplicate products of the company. The owner of the counterfeiting enterprise had to pay 150,000 yuans which is about 18,700 dollars as damages and interests. Of the false bags and other products of Vuitton that were sold, they were about 50 times less than the price of the original ones. [...]

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