BEIJING — When Louis Vuitton opened a store in the basement of the Palace Hotel here back in 1992, Bernard Arnault had trepidations, encountering a city where mostly bicycles rolled through the dusty streets. Even the faucets in his hotel bathroom worked sporadically at best.
"I remember saying to the teams at Vuitton, 'Are you sure this is the right time to open up in Beijing, because there doesn't seem to be an enormous number of clients,'" the chairman of LVMH Moët Hennessy Louis Vuitton recalled with a wry smile.
How quickly things have changed. Today, Beijing's broad, spotless streets are clogged with cars, water gushes 24/7 from fountains in front of fancy hotels and Vuitton's boutique in Shanghai's Plaza 66 complex does more business than the store in Chicago.
"The development over the past 15 years has been spectacular," Arnault said in an interview last week, just a few hours before Fendi staged a dazzling fashion show atop the Great Wall, the wife of the Chinese prime minister seated at his elbow. "It's still technically a socialist country, but it operates with a free market economy that is many times more liberal and efficient than a number of European countries.
"If the economy continues at the same rate, 25 years from now China will be the greatest global economic power, which means we will have a potential comparable to the United States today," he declared. "If things continue at this rhythm, [China] will be the most important country on the economic agenda for a business like ours."
In a wide-ranging discussion, Arnault shared his views on everything from the prospect of Chinese fashion brands to the country's growing reputation for innovative architecture.
And he was unequivocal that China would soon leapfrog over the top three global markets for luxury goods — the United States, Japan and Europe — to become number one. Last year, Asia excluding Japan accounted for 17 percent of LVMH's revenues, which totaled 15.31 billion euros, or $19.23 billion at average exchange rates. Asia's sales compare to the 26 percent of revenues that comes from the U.S., 13 percent from Japan, 15 percent from France and 22 percent from the rest of Europe.
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