LVMH touts ‘special bond’ with China as ‘subdued’ backdrop weighs on sales

French luxury giant LVMH Group kicked off a global open-house event showcasing its craftsmanship in Shanghai on Thursday, as the event’s founder Antoine Arnault hailed a “special bond” with Chinese customers at a launch event in Paris.

It came as the group faced pressure from sluggish demand in China and a backlash over a lawsuit against a local tea company.

At the launch event at the Samaritaine department store in central Paris for this year’s Les Journées Particulières, first initiated by Arnault in 2011, he mentioned the Shanghai event, which was the first among 71 venues across 13 countries to open to the public for the three-day event.

“For the first time since the event was created, several LVMH houses have come together in a single venue to share our savoir faire and its dialogue with Chinese culture,” said Arnault, who holds multiple roles within LVMH and is the son of its chairman and CEO Bernard Arnault. “Because we share a special bond with China and our Chinese customers.”

The exhibition in Shanghai will gather 15 brands from the group, including Louis Vuitton, Dior, Celine, Tiffany and Bulgari. Visitors will get a behind-the-scenes look at how some of the group’s iconic products are made, such as Louis Vuitton’s Speedy P9 bag.

LVMH held an opening ceremony in Zhangyuan, a historic neighbourhood near Nanjing Xilu, on Thursday, featuring a Chinese calligraphy ceremony.

Four venues in China will participate in this year’s event: two in Shanghai and one each in Hong Kong and Ningxia.

The event came as the group announced disappointing numbers from China earlier this week in its third-quarter results: sales declined 5 per cent in Asia excluding Japan, caused mainly by a sharp macro-led deterioration in Chinese consumer sentiment, according to the group.

Louis Vuitton’s lawsuit against local brand Molly Tea further complicated the situation for the French luxury giant in the world’s second biggest luxury market.

The local tea chain was ordered by a Chinese court to pay 10.3 million yuan (US$1.5 million) in restitution in July over its use of a logo similar to the French brand’s four-petaled flower. The initial ruling, despite the appeal, sparked heated online debate and drew public sympathy for the Chinese company.

“[It’s] very difficult to size a precise impact, but it’s probably fair to say that it had a negative impact, at least at the beginning of the quarter,” said Cecile Cabanis, LVMH’s chief financial officer, during an earnings call on Monday.

“The news flow has not been particularly good in China in the summer, so this has really weighed on the feel-good factor and created a short-term subdued Chinese backdrop. We hope it will subside. We need to do more, but we have not stopped investing in China.”

Like in previous years, LVMH will participate in this year’s China International Import Expo, set for Shanghai early next month.