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Chairman of LVMH, Bernard Arnault TalkAsia Interview Transcript

Airdate: February 12th, 2005

LH: Lorraine Hahn
BA: Bernard Arnault


LH: This week on TalkAsia: A business visionary who's gone from engineering, to owning the world's biggest luxury products empire. This, is TalkAsia. Welcome to TalkAsia, I'm Lorraine Hahn. Asia has a strong love affair, with brand names, and no one, owns as many as our guest this week, French businessman Bernard Arnault. First, it was Christian Dior, then in 1989, Arnault merged Moet Henessy and Louis Vuitton. Today, he controls 48 percent of l-v-m-h, and boasts a number of other coveted brands under the group including Dom Perignon, Fendi, and Tag Heuer, just to name a few. As chairman of the 12 billion dollar empire, he spends much of his time criss-crossing the globe visiting his stores, a personal favorite activity he confesses and taking care of his 56 thousand employees around the world.

I recently caught up with Bernard Arnault in Hong Kong. He talked in detail about the delicate balance between business and creativity, the challenge of managing so many different brands, not to mention being the father of five children ranging from five, to 28 years old! But first, let's hear from the man himself why he thinks, he's managed to build the world's largest luxury-brand group.

BA: I think it's a passion , it's my passion maybe for creativity. Because the group is built on creativity-on creative talents, on many fantastic designers, like John Galliano, Marc Jacobs, Eddie Slimman, Christian Aqua and many others-and we have really a commitment in the group for creativity, and what I like in business is a combination between creativity and the business growth of the enterprises, which are in the group. And I think it's fun, to work in such an environment because it combines innovation and business sense-it's what I like to do

LH: How difficult was it for you to turn LVMH into this luxury empire?

BA: I think it takes time. In the luxury business you have to build on heritage. On brands, on history and part of France history and it takes time. We are really very lucky to have so many fantastic brands. But to grow them we should not be too much in a hurry. They are growing fast, but they have to grow accordingly to the market and to the capacity we have to deliver good products. If you take Louis Vuitton for instance, we have constantly new products and the problem we are also constantly, is to be able to deliver the products because we are so attached to the quality.

LH: I mean it's one thing to say you've been in the business for a long time and therefore you earn respect, but to keep it there and keep it growing, considering the amount of competition that's out there these days-that's difficult?

BA: Yes, there is competition but we welcome competition. I think what is good in this business we have always new designers, new entrepreneurs, some that are starting from scratch, and some that are coming to us to get some help, and we like to do that. Part of the group is like a venture-capital group, we help new designers, new enterprises and we see if after some years they have a proven success, we continue and then we can back them for longer and stronger growth. It's very interesting to do

LH: I read that you had said the key is to find the right match between the right designer, for example. (BA: Yes, yes) How do you do that? How do you find another John Galliano, how do you find..?

BA: I don't know, it's difficult to find. I think what is key to success-you are right to raise the point-is, for brand like Christian Dior or Louis Vuitton, to have a designer that is really completely in line with the legitimacy and the history of the brand. And I think the success of John Galliano at Dior is a good example. Because at the beginning, I felt when I chose him, that in his own design, in his own talent and his own creativity, there was something obvious of Mr. Dior himself. And it's a reason why it works so well, because the customer feels it, it feels that the match is not something that you bring which is completely not in coherence with the brand. But on the contrary, the designer talent is completely linked to the history of the brand. Same thing with Marc Jacobs, at Louis Vuitton, first time I met him I ask him 'how will you see Louis Vuitton?' and he came back a few days after with a big design board, showing how he would see Louis Vuitton with new products and I was fascinated. I immediately said the designer would be really fantastic for Louis Vuitton-and that's what he did. Now we are working with him for several years, and we will continue at least for ten years. But he is very rare. To find such a match is very rare and it's not enough to be successful. To be successful you need also, in a company like that, to have a management team that can work with a designer and make it really work smoothly and you need what I call, 'inspired management". It's only when you have this-very unique match-that you can really efficiently invest in the brand and push it on the planet. It's when you can get success. It's in a way a fragile combination that you have to watch all the time. And really follow very closely.

LH: How involved are you in the creative process?

BA: I'm quite involved and I like it. I meet the designers very often, we discuss the products, they show me their ideas, we discuss the ad campaigns and every new invention that we can find for the future. I like it, I like that combination between creativity and the creative process and the organization needed to make a business like this successful worldwide.

LH: Mr. Arnault, Louis Vuitton for example accounts for more than 50%, correct? Of your...(BA: Around 50 LH: Around 50) How are you going to use that strategy and implement it let's say for other brands so that they, and their profit margins, also increase?

BA: The strategy is quite simple, we have Louis Vuitton, we have Moet Chandon, we have star brands like Christian Dior and we have smaller brands. And we push every effort to make the smaller brands go to the level of the star brand, but it takes time. It may take ten years to reach the level of profitability and the level of growth. And again, we push only when we have the right combination, which also takes time to build. It's not an easy business, it's a business of passion that takes time. But when it's done right the potential is enormous

LH: Up next on TalkAsia- How a family of entrepreneurs, inspired Bernard Arnault to dream...and create.


LH: Welcome back to TalkAsia The chairman of l-v-m-h Bernard Arnault had little fashion background. He graduated with a Bachelor of Arts and science degree from France's elite Ecole Polytechnique de Paris. But that didn't stop him from not just entering, but conquering the world, of luxury goods

BA: I think I always was interested in the combination between creation and products. When I was working in my first job engineering construction, what I liked the most was working with architects and making buildings that had this creative side coming from the architect and that were making them a big success. It's what I do with fashion today, with cosmetics, in this group, is to mix creativity and business sense.

LH: Why luxury goods? What was the attraction?

BA: Oh the attraction because I think in France and in Europe, it's one of the best assets of the country. Like the good wine, the good brands, haute couture-it's Europe, it's France, and it's what the country can offer the best. So it was really there, and I saw maybe I was advanced enough to see the potential. Twenty years ago it was not so obvious to combine several brands and make a real leader worldwide, and it's what we did.

LH: What gave you the confidence to go ahead and push for that?

BA: I think I had that in mind immediately when I first invested in Christian Dior because Christian Dior is one of the best known names worldwide, maybe the best, most well known French name. And when I bought it I saw that around that name it was possible to build something. At the time the industry was consolidating and I saw the potential, maybe that is why I was successful because I was the first to see that and to take steps to build a group around this Christian Dior brand, that was the first brand, then Louis Vuitton and then the others.

LH: Mr. Arnault, very little is really written about you and your family and your personal side of your life, can you give me an idea of how you were brought up-the kind of childhood you had, maybe?

BA: Oh I was brought up in the north of France, and I had a very enjoyable childhood with my family working as entrepreneur. 12:19:25 I think my grandfather gave me the business sense, and he was really inspiring me as well as my father, to become a business man (LH: How so, how so?). Because they had a building company in the north of France, and when I finished my study in the polytechnic in Paris, I went to work with them directly. And at 25, they put me as CEO of the company, that was a small company with 1,000 people and I started like this. And so I was always very interested in business, and then I grew the business-the family business-to what it is today.

LH: What is the biggest lesson that, let's say, your grandfather, or even your father taught you when it comes to business?

BA: I think what they told me is you need to be perseverant. You should never discourage, you must have good ideas and go to the end of your ideas with perseverance and stick to it. It's what we do, you know we are not too much affected by worldwide events, we try to continue on our way and I think in business it's really key to success and also to seize the right opportunities when you see them.

LH: Who would you say was a bigger influence on you as a child-your mother, your father, grandfather?

BA: I think maybe my grandmother, because I happen to live in her house for many years after my grandfather died. She was a catholic, and she was very strict and very nice and she gave me the sense of work. And I spent maybe 15 years with her, preparing school and all I did as a student. And I think she gave me a lot of sense for work and a very education.

LH: Mr. Arnault let's look at you before and look at you now-what would you say has changed, or what even have you learned?

BA: I think in business, you have to learn to be patient. Maybe I'm not very patient myself. And I think what I've learned the most is be able to wait for something and get it when it's the right time.

LH: Up next on TalkAsia- Bernard Arnault's aspirations for the china market. And at 55, what more does he hope to accomplish?


LH: You're back with TalkAsia and our conversation with chairman of l-v-m-h Bernard Arnault. Last September, Louis Vuitton unveiled its flagship store in Shanghai. Boasting over 900 square meters, it's currently the biggest luxury store in China, and reflects the group's aggressive expansion plans there. With everyone eyeing a piece of the action, I asked him how he hopes to stay competitive in China?

BA: You know, it's the same all over the world-I think we have the same competition even more in the US or in Europe. 12;24:48 The key is to be the best, to offer the best products and I think with the brands we have, with the attention to quality we have. In China, those customers look very much at quality, even more than in many other countries. That's why we are so successful, even with expensive products.

LH: What do you think is the most challenging issue, or issues, facing the group here in Asia?

BA: I think in Asia, the challenge as I said, is how the country as a whole will continue at that pace-of growth. Because that pace of growth is going to change a lot of things, in the mentality, in the way people behave. And today, China has really succeeded because of its stability. So my feeling is, how are they going to maintain this fantastic stability in a very fast changing economic situation. I think this is a challenge we face, how the global region will evolve in stability with such a fast growth. If they succeed to do that, no doubt, in the next generation it will be the major area of the world, economically. And I hope, it will be done smoothly.

LH: Also in Asia there is a push towards developing local brands, local designers-do you see that side of the market maybe eating into your market share?

BA: Not really, I think on the contrary, that we can cooperate. I think we can really work with great talent here-and work with them. It's what we did, for instance with the (LH: with the bag, right?), with the Japanese artists, Takashi Murakami, we worked with him to build, to create these fantastic bags. And I'm sure there are other artists here, with whom we could work and with whom Marc Jacobs, at Vuitton, or other designers with whom we can work to find great ideas like this. And so it's not really competition, I think we can cooperate, in the best sense (3:11)

LH: Right, but you've always been passionate about the arts right? (BA: Yes, yes). It's always been one of your loves?

BA: It's very close to what we do -- and every of our designers is completely involved in contemporary arts, like Marc Jacobs. We very often go together to see the large exposition, of contemporary art worldwide. He's very connected to contemporary artists-like Eddie Slimman.

LH: How do you find or where you do find a peace of mind a time to just wind down? Because obviously, I am assuming this of course, you move around in a very exclusive a very elite social circle and maybe there's time where you want to be alone or want to just hang loose?

BA: Yes, but with kids ranging from 5 to 28 you are really in front of reality all the time. So I know circles you mentioned, but I don't live far from reality. I am really, completely in reality. And when I travel like this I like to go to the shops in the streets and see where is the real world-it is a world we are going to talk to, so we have to know it.

LH: As one of France's, probably, richest men you seem to have everything. But have you personally do you think achieved everything you have wanted, so far?

BA: No, no, no, no. I am still really orientated to the future. And I want to continue to grow my group, it's really my work but it's also my pleasure. It's what I have in mind, we have succeeded in making this group number one in the world, and I want for the next ten or fifteen years continue to grow it-and there are a lot of things to do with our designers, with our products, with the changing so fast of the world-and especially in this area of the world, but also in the US where it's, things are going very fast now. There are a lot of opportunities, even more today than a few years earlier. There's still a lot of projects.

LH: A man who turned his vision, into reality. Chairman of l-v-m-h Bernard Arnault. And that is TalkAsia this week. Be sure to check out our website at c-n-n dot-com slash-TalkAsia for upcoming guests. And you can let us know who you'd like to see on the show. That address, TalkAsia at c-n-n dot-com. Thank you very much for joining us. I'm Lorraine Hahn. Let's talk again next week.

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