Will the Recession Kill the Luxury Industry?

In this chapter, I will be guided by such sources as:

• Brand new justice: the upside of global branding by Simon Anholt, 2003, Oxford, UK
• The theory of the firm and Chinese enterprise reform: the case of China International Trust and Investment Corporation by Qin Xiao, 2004, New York, USA
• http://www.wikinvest.com/wiki/LVMH

 
 

4. Practical issues. Case of China

 

Today, the purchase of goods or manufacturing outsourcing in China - the only possible solution for many companies. The reason for this is the world's largest human resources in China, as well as minimal organizational costs of enterprises in China, due to a literate public policies and infrastructure in China.  

Accommodation at the enterprises of China, or the so-called outsourcing of manufacturing, using both large and medium-sized and small companies. Most manufacturing outsourcing in China enjoy the company of light industry, household appliances, instrumentation, information technology, electronics, furniture, interior design and decorating materials. Many of them bought goods from China alone a Chinese manufacturer.  

Production Outsourcing in the first stage begins with identifying potential suppliers of goods. From the long list of Chinese companies based on a set of standardized methods of analysis selected from 2-3 companies which are already using specialized for the industry analysis is the final choice of supplier of goods.  

When speaking about the manufacturing outsourcing in China should be borne in mind not only China but also Taiwan. Despite the fact that legislation and the tariff policy of all these three regions, historically and geographically similar, different, in general, we can think of them as a single region in terms of finding a supplier of goods. Thus it is necessary to take into account the differences, as in the historical specialization, and in the level of staff skills and the mentality of not only the above regions, and provinces of China. Specific differences and peculiarities of working with Chinese suppliers of goods is well known to our company and is one of the factors taken into account when determining the suppliers of goods in China. For a complex organization of production outsourcing to address the whole spectrum of problems in production and supply of goods in China will be most effective to involve a company specializing in these processes that can professionally and quickly as possible to organize them.

http://www.china-market888.ru/page82  

In this chapter, I will be guided by such sources as:

• The theory of the firm and Chinese enterprise reform: the case of China International Trust and Investment Corporation by Qin Xiao, 2004, New York, USA
• Annual Tax Report of People's Republic of China over the last 5 years

 

5. Implement the outsourcing: Uzbekistan overview

 

Today’s Uzbekistan has a large experience in handling outsourcing activities in its territory. Recent joint projects of machinery, textile and clothing industry shown by the fact that the profits from the production takes place to be as it is for investors and for the state. Extensive development of mechanical engineering at the territory of Uzbekistan is a huge potential for development of Uzbekistan and the index of the ease of production. In this proposal, I will complete undertake a full analysis of the tax system at the local level, consider aspects such as import and export policy of Uzbekistan and the problems linked with administrative issues, undertake a full analysis of internal resources as labour and raw materials. 

In this chapter, I will be guided by such sources as:

• Annual reports of textile and clothing manufacturers based in Uzbekistan
• Administrative regulations of the Republic of Uzbekistan
• Tax and custom regulations of the Republic of Uzbekistan

 
 
 
 
 
 
 
 
 
 
 
 

7.   METHODOLOGY

To determine whether it is profitable to produce luxury goods in the territory of Uzbekistan, I am planning to make a comparative analysis of the data to find the correlation between the two sides, here I explain how:  

1. Outsourcing strategy for LVMH in China:

Based on the annual reports of the company I will analyze the income growth of 15 workshops of the company LVMH, 5 of which are directly based in China.

All necessary data on the share price, indexes and stock returns are available on the company's website: www.lvmh.com.

In addition, I will trace the interview administration of the company, which are directly involved in the daily trading of the stock market.  

Objective: to determine how big the presence of human factor in the decision-making process with regard to outsourcing and its impact on their decision-making and business activity  

2. Find updated information on research in the luxury industry and its development during a recession such reviewers as Abrams Research (www.abramsresearch.com).  

3. As the main source of research, I will take into account the most recent annual report LVMH, which is available directly on their official website.  

4. As a comparative analysis, I am planning to compare several reports of manufacturers of the Uzbek market of production and sales, such as UzbekTashSelMash, UzDAEWOOauto, which perform the function of foreign companies outsource.  

5. Conduct quantitative analysis of the outsourcing business model in order to determine the impact on the Uzbek industrial base justification funds invested by LVMH and profit in the future.  

There are various methods and models published in magazines, in order to assess the impact factors of foreign trade and interstate market and price policy of the luxury industry.

For the most appropriate model for our research, I will analyze the work as follows:

• The Outsourcing Revolution by Michael F. Corbett, USA, 2004
• Strategic Outsourcing: A structured Approach to Outsourcing Decisions and Initiatives by Maurice F. Greaver II, New York, USA, 1999
• Brand new justice: the upside of global branding by Simon Anholt, 2003, Oxford, UK
• The theory of the firm and Chinese enterprise reform: the case of China International Trust and Investment Corporation by Qin Xiao, 2004, New York, USA

 

The results of my research will be based on scientific books, journals, reports, data and information related to this industry. 

8. REFERENCES

• CORPORATE STRATEGY IN THE WORLD Luxury goods industry by G.A. Papiryan, LG Consulting, 2006. Russia

• Merrill Lynch Research; Eurostat, 2009
• Corporate Reports: Hoovers Online, http://www.hoovers.com
• Corporate web site of LVMH Group, http://www.lvmh.com
• Corporate web site of Gucci Group, http://www.guccigroup.com
• Betts K. 2006. The height of luxury. Time
• Jones A. 2005. Chinese tourists: Industry is pinning hopes on rapid expansion of latest market segment. Financial Times http://www.ft.com
• LVMH: Hardly Growth Trough Acquisitions. 2002. Lehman Brothers Global Equity Research. Lehman Brothers: N. Y.
• Matlack C., Brady D. Berner R., Tiplady R., Tashiro H. 2004. The vuitton money machine. BusinessWeek (22 March). http://www.businessweek.com
• Tagliabue J., Horyn C. 2001. Suddenly, at LVMH, money is an object. New York Times http://www.nytimes.com
• Wetlaufer S. 2001. The perfect paradox of star brands: An interview with Bernard Arnault of LVMH. Harvard Business Review 79 (9): 116–123.
• Windle C. 2005. China luxury industry prepares for boom. BBC News. http://bbc.co.uk
• http://wapedia.mobi/ru/
• http://www.china-market888.ru/page82

 
 
 

Business Journals:

• Abrams Research Luxury Brands Survey & Report, May, 2009
• LVMH: Annual Report, 2009

 

Main sources:

• Official web site of LVMH Group, http://www.lvmh.com
• Official web site of Gucci Group, http://www.guccigroup.com
• Official web site of Prada, http://www.prada.com

 

9. BIBLIOGRAPHY

• The Outsourcing Revolution by Michael F. Corbett, USA, 2004

• Strategic Outsourcing: A structured Approach to Outsourcing Decisions and Initiatives by Maurice F. Greaver II, New York, USA, 1999
• Brand new justice: the upside of global branding by Simon Anholt, 2003, Oxford, UK
• The theory of the firm and Chinese enterprise reform: the case of China International Trust and Investment Corporation by Qin Xiao, 2004, New York, USA