LVMH praises Chinese crackdown on counterfeiting
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LVMH praises Chinese crackdown on counterfeiting

Luxury titan LVMH, the company behind brands like Marc Jacobs, Guerlain, and Bulgari, has had a long slog against counterfeiters in China. Weak intellectual property (IP) regulations have resulted in decades of famous brands losing out to cheap knock-offs that carry their logos and copy their designs. But now, according to LVMH, Beijing has turned the tide against the scammers. That bodes well for LVMH (which showed strong demand from the country in its last quarterly earnings), as well as luxury more generally, which is being driven in large part by Chinese consumers.

LVMH’s share price has appreciated by 8% so far this year

graph 1211 lvmh

Source: Yahoo Finance

China is currently in the midst of a trade war with the U.S., after President Donald Trump used frequent IP violations to justify the imposition of tariffs on a slew of Chinese exports. The IP violations in question include the counterfeiting of major brands. However, speaking at the China International Expo last Thursday, executives from LVMH and sneaker-maker Nike were praiseworthy of the country’s efforts to control knock-off merchants.

According to Valerie Sonnier, global intellectual property director at Louis Vuitton Malletier, China has helped to create a “much improved environment for brands” over the last decade, and has done “much more than some other countries.” She singled out the crackdown on “sophisticated” counterfeiting rings in Guangdong province, which put a halt to exports of fake Louis Vuitton bags to Dubai and the U.S.

Wang Hejun, chief of the trade remedy and investigation bureau at China’s Ministry of Commerce, said: “It’s unrealistic to expect any country to root out counterfeiting and IP infringement completely. One shouldn’t rashly impose unilateral sanctions and disrupt multilateral rules because of a few problems with IP protection."

Disclosure
Dominion holds LVMH in its Global Trends Luxury Fund.


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