Rumors On Sale Of LV Building In Shanghai

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At the Xian Xia junction of Zunyi Road, a brand new building is eye-catching. The ivory wall looks like a huge "boot" from the side. This is the SHANG Jia center, known as the "LV building".

It is said that this is the first large shopping mall built by LVMH group in China.

Recently, however, news came out that LVMH group's fund will sell 50% of the group's holdings.

The project, which was prepared in 2007, did not come into operation until 2013. During that time, great changes have taken place in China's luxury consumption market.

According to insiders, the first commercial real estate project in China, which was highly valued by LVHM boss Bernard Arno, is far less than expected. If it is possible to take back the original investment, it will be fortunate.

Selling "rumors"

SHANG Jia center is located in Hongqiao's high-end business district in Shanghai. Compared with traditional Lujiazui and Huaihailu Road, Hongqiao business district belongs to the new business district that Shanghai government has built in recent years, but until now, popularity is still slightly insufficient.

"Bernard Arno was also fooled by the concept of high-end business circles in Hongqiao. The joint gambling king He Hongshen family carried out the investment of 500 million US dollars, and each side accounted for 50% of the equity."

Luxury industry people told China business newspaper reporter, but the former should have never expected that a high-end business circle's training cycle would be so long.

The LV building was broken down in May 2009 and opened in mid 2013.

Under the call of Bernard Arno, LVMH group's LouisVuitton (Louis Weedon), Dior (Dior), Fendi (Fendi), Celine (CELINE) and other major brands were all settled.

LVMH's old rival, the peak group, has brought many clocks and jewellery brands such as Earl and MontBlanc to the SHANG Jia center.

In addition, it attracts many independent brands such as Burberry, Tod 's.

"From the perspective of brand names, all of them are big names in the international market. It is nothing more than the most luxurious shopping center of Shanghai line-up," he said.

The luxury industry insiders say that the rise of the SHANG Jia center is also full of expectation. It is considered the only luxury shopping center in Shanghai that can be opposed to Hang Lung Plaza.

But from a simple comparison, we can see the gap between SHANG Jia center and Hang Lung Plaza.

The first batch of shops signed a rental of 30 yuan / square meter / day, while the first floor of Hang Lung Plaza in Nanjing West Road was quoted at about 120 yuan per square meter per day.

The real estate advisory body, CB Richard Ellis, is responsible for introducing the fact that, as a new business circle in the last two years, there are not many people shopping in this area. The luxury shopping atmosphere is far from mature. Therefore, it is not surprising that LVMH group can not wait to sell the equity interest of the SHANG Jia center.

The reporter called LVMH Group China company, hoping to verify the rumor of "sell building", but did not receive any response.

The former luxury industry said that the investors of the SHANG Jia center were actually

The group's private equity funds, which have been very frequent in China and Asian markets in recent years, are in China, such as the acquisition of Chinese restaurant jadeite restaurant group, the local cosmetic brand Guangzhou pill Mei and other activities, and also invest in several jewelers and apparel manufacturers.

However, the profit driven nature of fund investment will not take too long a profitable project.

The "LV building" took place in 2007, when luxury goods were in the golden stage of development in China.

The performance of several major luxury goods groups has been booming, maintaining a double-digit growth rate.

Now the market dividend is over, and the market environment is no longer what it used to be.

In the 5 years from land to business, on the one hand, the continuous anti-corruption of the Chinese government led to the consumption of domestic luxury goods in the cold winter.

On the other hand, the continued warming of overseas shopping also makes China's local luxury consumption channel more diversified.

Even in Shanghai, high-end shopping malls have sprung up over the past few years to further divert the luxury market.

Earlier analysis said that LVMH group built "LV building" aimed at self built channels, but the industry generally believe that it is not realistic.

First of all, the mode of self built channel is not compatible with the business mode of LVMH. The luxury group is still a light asset operation company.

Secondly, LVMH group of so many brands, if the use of land cover model, the chain of funds can not eat.

In addition, there is still a problem with LVMH self built channels, that is, how to attract other competitive brands to enter.

A luxury agent in Italy said that in China, cooperation between brands and shopping malls is often a game.

The best position between brands is to compete with the market.

Some brands pay monthly rent to the shopping mall on a fixed amount, and the other mode is "shopping mall" according to brand sales performance.

The rules of cooperation between the two sides are nothing more than "big shop bully" or "big customer bully".

After LVMH owns the mall, the relationship between brand and shopping malls becomes "internal contradictions".

The reason why this "LV building" can attract many brands of its competitors is that the two sides are different in category, the latter is strong in watches and jewellery, while fashion is weak, and LVMH is just complementary to it.

But if we want to turn it into a self built channel, we will encounter greater resistance from competitive brands.