When Ebay paid EUR 40 million to LVMH

The Paris Commercial Court passed sentence on June 30, 2008, that eBay was responsible for the online sale of counterfeit and breach of the exclusive distribution channels of the company. The total compensation amounted to € 40 million, which were immediately paid Parfums Dior, Kenzo Parfums, Parfums Givenchy, Guerlain SA, Christian Dior Couture and Louis Vuitton Malletier. The judges blamed considering that eBay also breached its duty to verify that the vendors who were holding a lot of operations were duly accredited in the Trade Register.

Alibaba and counterfeiting. Already this year, continue to the problems caused by counterfeiting for the luxury industry in general and for LVMH, one of the main producers in particular.

An important problem facing Louis Vuitton is the prevalence of fake handbags readily available in China, which may have contributed to damage the image of the brand. To combat this problem , the company has signed an agreement with Alibaba, the largest online retail giant, which recently debuted with great success on the New York Stock Exchange, to prevent the sale of counterfeit of Louis Vuitton bags in its e-commerce site Taobao. Alibaba and Louis Vuitton have already signed a memorandum of understanding on October 11, 2013, which included a number of preventive measures to stop counterfeit, for example, a system for removing fraudulent websites. The measure can not do anything to prevent illegal purchases in traditional markets, but it’s a start for the fight against counterfeiting.

However, it is a mistake to blame Alibaba of the pernicious boom of buying fake bags, shoes and other ornaments luxury in China. The firm is fighting this practice. As reported last week The Economist www.economist.com «over 2000 employees working to end over 100 million fraudulent ads a year. These efforts have won praise even the inflexible US regulators, who removed to Taobao from its blacklist of sites that do not fight against counterfeiting».

In any case, Taobao buyers can still find fakes pretending to be Manolo Blahnik shoes or handbags Coach, all for a few dollars. A company that aspires to be a world class market for quality products has yet to improve in their fight against counterfeiting.

LVMH expects to grow in China. The study on the results of LVMH published in The Luxonomist by Eurodeal  saw how the company, which obtained  in 2014 record figures in both sales and profits, having solid grown, for example, in the US. presented a dangerous growth stagnation in Asia, although the directors of the company such as its Chief Financial Officer Jean-Jacques Guiony were hopeful about sales prospects, especially in China.

Since the beginning of last year and due to the slowdown in Chinese economic growth as well as the fight against corruption undertaken by the president of China, Xi Jinping, luxury brands like Louis Vuitton, so successful traditionally in China have been particularly affected.

A main reason for this is that has been a shift in China’s demand for products with flashy logos, driven both by the aforementioned anti-corruption officials, as well as a change in fashion trends in China, which have affected the bright liquidity position there that Louis Vuitton has been providing to the entire conglomerate.

The company has been making efforts to address this problem. A prominent strategy has been to reduce the promotion of its classic leather products with logo printed, opting instead to advertise their products for something more low-key, as it was revealed in a recent store opening in Beijing where the famous brand ambassadors were dressed in clothes and accessories from Louis Vuitton, but with very few logos in sight.

This is an example of one of several strategies that performs Louis Vuitton in China’s market to reaffirm its exclusive brand image in changing landscape that is taking place in the luxury industry in China.