Bernard Arnault | Full Q&A | Oxford Union

[Music] [Music] thank you so much for uh for joining us here this afternoon um I'll start off by just asking uh questions myself and then after after I've done that we'll open up to audience questions uh which I'm sure there are plenty um so starting off with just a question about your background I was wondering is it true that your first career choice was to be a professional pianist it's not exactly true no no I'm good amate pianist I like very much music but uh I realized quite early in spite of playing quite well I had not the level of becoming a real professional especially uh I have a lot of friends are very good pianist and I know that some weeks ago you received my friend long long yeah I had he came I see him each time he's in Paris because you know we have a a foundation L Von foundation and he he gave the first concert there and last week he gave a master class which was fantastic he came with young uh kids of between 10 and 15 that were we are playing wonderfully and the way he's explaining the interpretation is incredible but okay no I I I I cannot I I could not be real professional so then how was it that you arrived in the uh luxury sector you arrived in the luxury sector uh for um uh I would say uh family reason because when I was managing family business which was in a different sector I happened to uh enter in contact with a group in France that was uh having problems uh business problems and in this group there was Christiano and I was interested by business and I want you to turn around this group and build on which I think was at the time the best asset and the best asset was Christian and and I was interested in Christian for a long time the first time you know you are very young but the first time I was in New York it's in 71 and I remember the first time I arrived at Kennedy Airport I took a cab and at the time the president of the US was Richard Nixon by the way they were devaluating the dollar during the summer where I was there I bought dollars and my dollars went down but I arrived at the airport and I started to talk to the driver and he loved France and he was interested in politics so I asked him and he did not like Nixon so he was talking about that said you love France so what do you know in France do you know the French President it was Mr pomu at the time nobody here remembers but uh he said no I don't know the French President but I know Christian and immediately stuck me and show that the name of Christian Dior is one of the if not the most known all over the world in many country when I go to China when I go everywhere it's the name which is the most wellknown so as far back as 71 I understood the power of of a name it's not enough but I think it's one reason also when by chance I was in contact with the real company I think it's when I had the idea of doing this and of course the luxury sector spans over so many different um products but what do you think the definition of luxury is uh first of all I don't like very much the world luxury because you have something attached to it which means show off which mean something of nonsignificance something Fu something that is useless and I think a better definition is combination of quality and creativity it's how I Define what we do uh obviously these products because of the very high quality they they have because of the high level of innovation they're expensive but the reality is really uh behind uh the appearance behind the price it's the quality and The Innovation that people are looking for so for me it's a definition and in the group we are really concentrated on this how can we create the most uh Innovative products and and the the creators or the scientists that work with us in the many Laboratories we have they have complete freedom to express new ideas and after that we have to transform them in um reality all over the all over the world but this is really luxury and when you do that often as a question how do you Market the product I don't know if in this room you have students in marketing but I often meet students in marketing and in spite of the group being number one with the students in France in in desirability to to work in the group I always tell them we don't do marketing because marketing is against what a company like us should do because marketing what is marketing marketing is to analyze what the customer wants and then try to follow what the customer is looking for and uh test what you create following these Trends and try to to do it we do completely differently we create new products and sometime it fails but when it's successful the customers follow so the marketing is not for us part of the product creation so marketing is after the marketing is when uh we have these products how with these products which people want maximize the desire because our business you ask a question about luxury luxury for for me is how can you create desire the most important word in in our business is desire how to create desire and when you have the product then you have to create good environment in the shops and you have to present it well you have to do uh well good films if it's a perfume uh good advertisement either in the magazine or in the internet if it's a if it's a a product that the way I I see and we see in in my group the way to the way to put product in contact with the the consumers um so following on for what you were saying about how you um how you create that desire for a product undoubtedly the um the internet and um those sorts of media streams have affected so many Industries um I was wondering is tech technology and the use of Internet universally a good thing um in your business sector or are there brands that you purposely try to keep offline MH internet is more and more important and if I judge by the budget uh that we spend uh in the media uh we are reducing gradually the amount spent in magazine to increase the spending in the internet all the internet media so it's more and more important and what is key also is the fact that now more and more the customer they want to first when they want a product they go immediately on their computer on their uh telephone and they check the product so the way brand is presented to the world is extremely influenced by the internet which explain why when you are on the site of a brand not only you see the product but you see the history of the brand you see the craftsmanship which is behind and more and more customers are looking at that and they want to understand what is really behind the brand and they like the product but they want to see more and with the Internet it's extremely easy and and also they want to be able to buy the product uh easily we have now in many countries including the okay you can buy your product and get it very fast in a shop or if you go on the internet you see what is available in the shop in center of London if you want such or such product you can find the availability of the product which is growing faster and faster and and we uh more and more invest in the way we we work with internet company the problem being they are uh as you see more and more profitable because now uh they get more and more um smart to manage the their revenues for instance at the beginning on Facebook when a brand was sending a message to uh its followers you could get them immediately today it's not the case when you send a message you can get maybe one or 2% of your followers even a brand like your that have million of followers they don't get the message unless you pay something to Facebook and then you can go on many followers and you can even get on the competitors followers if you pay so if you are J and if you pay Facebook you can send your products on the followers of Channel and for the Facebook it's a good mine because many brands are doing this and and is one reason why they are so uh profitable not not all of them are doing that yet but more and more are going to do it and do you think that the mainstream platforms such as Instagram and Facebook improve the chances of new brands and um young designers um to establish themsel or is it difficult because they're forced out by bigger companies who can afford much uh much more expensive marketing campaigns such as Louis Vuitton Dior yeah as I just explained it's more and more important because more and more people are looking at it so Instagram for instance Instagram it's not yet you should not yet pay to get your message spread out but it will come I think shortly so when you do this it's really extremely efficient it's becoming extremely costly and obviously for smaller companies it's more difficult but it's not something that you can absolutely live with uh for instance in a group we have a small company that is not doing any advertisement that is not doing so far uh what I described on Facebook or uh internet or uh Instagram or anything else or SnapChat or something and this company small but is growing 50 it's doubling every year because the product is something that uh we have created and that encounter big success and and we cannot produce enough it's small but we started this from scratch what 3 years ago four years ago and this year it will do 50 million and and next year last year it was 25 next year it will be 100 it's small profitable so you you you should not generalize this it's very important but you can succeed at least at a reasonable size at the beginning without it if really the product is not just marketing if you do if you do marketing like a real consumer group I think that is not possible but if you produce something that is really unique it's it's possible and um would you say that apple is now a luxury or your definition your improved definition of luxury uh a company that well uh Apple is a fantastic company and I I happen to know Steve Jobs and when he started the shops he came to us to ask advice and you can see uh is many of these shops are not far from Louis Von for the told me I would like advice and I would like to see if we can put Apple shops in the same area of Lis V and at that time he was criticized enormously everybody thought it's completely crazy to sell Apple products in a shop because at that time he was selling the Apple products only uh through wholesaler like for instance D and I remember at the Time Michael Dell saying it's completely crazy it will never work so so that's an example of contrarian thinking you know that that is working so I was not helping but advising a little bit um and I must say I was myself a little doubtful of selling at that time it was um not iPhone it was a the iPod product in in in the shops but it it was working and we discussed the future and uh I asked him do you think uh St that your telephone is to answer your question about luxury your telephone is going to work as successfully in 20 years and he said I don't know because there are some Evolution and some newness and so on and just to to laugh with him I told him you know that's the difference between us because my doino I can guarantee you it will be sold and successful in 20 years and that's also a luxury uh specificity luxury one part of the products should be timeless that's a paradox to be successful you have to have the combination between modity and timelessness that that's a combination that we try to keep and to have a product from Louis vuon which is was a started in the middle of 19th century some products are the same for many years but also they should represent the utmost modernity that's the combination and well that that is what is fun and a key to success thank you and so Apple I don't think you can put it in the same category in spite of it being fantastic absolutely fantastic company thank you very much um with the uh world that is constantly uh globalizing um how do you adapt uh products a luxury products to different communities around the world for example how do and gabana have recently released a collection of hijabs is this something that you think your own Brands will do in the near future we tend to keep the same products everywhere we we don't think um people are looking at our products uh to be done differently in a country from another country I think they want to to buy part of the European uh ariv and we try to keep that we try to show what we do in the creativity of our atellier in France and we we don't think we should modify and obviously some products are more successful in Europe in the US or or in the Far East but we we try to keep the same products thank you and um on a different topic um somewhat related uh lots of attention is of course given to given to China as an emerging emerging market and very much established Market and I was wondering how do you approach China as a market well China is one of the most important market now and it has evolved very fast I remember the first time I was in China it was in 91 it's not that far and the first time in 91 I arrived in Beijing there was no car and only bicyles and we were opening the first Louis Von shop and I remember I called my team said are you sure we are going to be successful and they said two things one Louis vuon and the group we are a group of pioneer so it's good to start in a country where we have no competitor we were the first one and two Strang enough since a few weeks the shop was open we sell the most expensive products uh in a country where everybody was going by bicycles so we started there from there and then happen what everybody knows and today China is uh very very big very developed economically and we have around 30 Louis Von shops many others and the market is uh is good there are some U question about China now because of the growth and because of the problem that you have seen on the stock market there and the in the in the currency but I think think the analyst observers uh are under evaluating the real fundamentals of the Chinese economy I I think it's still growing 6 7% which is quite High the consumption is going well it's growing and the state is really in charge for a lot of reason that you may not like but he is in charge of making the economy following a path which is oriented towards growth and they have a lot of of Reserve so I am quite confident that China will stay as a number two global economy and for us it will continue uh to be uh really powerful uh you have a lot of here in the UK for instance not a lot of Travelers coming from from China so I'm not very concerned but there are changes a few years ago when you you you go to Japan for instance you have no Chinese you had no Chinese today when you go to Japan because of the low Japan currency and because of the strong un you have a lot of of Chinese and you have more and more Chinese traveling all over the world and the economy is I think aimed to continued growth maybe not 10% as it was in the past but between five and seven which is quite substantial so so I'm I'm confident and and the Chinese to answer a question about the product in the market is more and more educated at the beginning a lot of Brands were successful relatively easily because it was new but the Chinese they have learned very fast and now they are like like the US consumer they are very very informed and very selective so so it's a challenging Market Market but for strong Brands it's full of potential which other markets do you see in the next um in the next few years uh do that you think that luxury groups will be fighting over for for the economy you have two big engines which is the US and China but in the developed Market the economy is going to continue to be to be good as a friend of mine told me uh uh some months ago when I asked him about what do you think of the the future of the of the economy he is very confident but he said uh for the next 20 years I think we'll have 80% of good years we'll have 20% of bad years and in the 20 we have 10 very bad and 10 just bad but I am not able to tell you exactly when the bad will arrive so uh I tend to agree to that because today the world globally is gr relatively well but you have this uncertainty about the the level of money available and the the the money created by the the banks the the European Bank the Federal Reserve they they are printing money tons of money so what what will happen if this printing of money is not sufficient to really stimulate the economy and for the time being it's it's what we see the economy in Europe is so so in spite of the interest rates being negative and in spite of big influx of of of money so what will be the consequence will it create the next Crisis personally I think it's not unlikely that within the next few years there is a new uh crisis of a different type because of this amount of money which is unbelievably high and because of the level of debt of many of of many countries so uh we have to adapt but also when you have a crisis we tried as a business manager of of the group of elv match to take advantage of it because we have very little debt and when the the market is becoming to be less good we can we in the past we went through many crisis we are able to grow faster than the competition and sometimes also uh it's a good period to to find Opportunities but you have to be patient and try to avoid to invest when everything is too expand because you see people in the stock market when it's going to grow fast they try to buy and on the opposite when he going down the people try try to sell faster and faster which is strange but it's good to be uh sometime contrary to that it's not easy it's not easy thank you so much there just a couple more questions for me before I'll move on to questions from the audience um you United by Prince Charles in uh 2012 for your services to Britain and I was wondering on your opinion um on what difference it will make to lvmh if Britain decides to Stay or Leave um the European Union I think for the group uh economically it will not make a big difference uh as an observer of the situation I would not interfere because I am not a UK citizen with a politic decision of the UK but from outside I cannot imagine uh that the UK take advantage economic of a movement like this I think a movement like this would not benefit to the UK economically because it will separate your country from the rest of Europe with all the trade which is involved with all the exchange that would be more difficult so it will create I think and again it's seen from outside and I don't want to take part of the debate but it should be economically negative for for for the UK so it's all I can say but we we have the same people in France that also want France to to create not only Europe but also the currency uh it's strange for me to to see um that you know in in politics if I take the the French example uh we use as an argument things and logic that everybody knows is not going to work but it is good in terms of rhetoric and and power because it's different when in France politicians say we should stop the Frontiers it's stupid but uh it has some power on the on the media and and and and most of the time person who says that know that it's completely IR realistic but it gives her some audence it's a different with business you know in business you see the result politics well it can just be ideas and who knows where these ideas will need well we shall see the result um the last question for me before moving on uh is just that the the financial times reported recently that you may be interested in acquiring Burberry and I was just wondering um if you could comment on this well I will be very open I am not very interested it's a magnificent company but uh it's not on our agenda thank you very much with that I will move to questions from the audience so please raise your hand if you would like to ask a question I will go first to the um member on the front row in the glass oh there's you're both in glasses the one nearest to me hi thanks for your remarks um congratulations on the new Foundation Louis Vuitton's home in Paris I'm wondering if you can speak a bit about both the foundation and your personal collecting habits and if you you can specifically answer the question what makes a great art collection H the art collection ah the the the collection yeah well the the art collection you know in the foundation that we have we have a collection which is part collection of the foundation part my own collection and we have also temporary exhibition twice a year with uh association with museum for instance this year we have announced we have fantastic exhibition with the collection uh that was bought at the beginning of the 20th century by this Russian uh magnet stukin and which is now in Russia in the museum in Moscow and in St Petersburg and there masterpieces from painter of that time that nobody wanted to buy they have masterpieces from matis Monet Goan we will have 150 paintings coming to Paris uh it will be open in October this year it will last three or four months so you should come and and and have a look I think it will last four months and we wait we we are expecting 1 million visitors in the in the museum so this is really something that uh we try to do twice a year and for the selection of the art that we own uh we are doing it for maybe 20 25 years and we try to uh we have advice we have a very very good curator who had been the managing the artistic director of the museum The Muse La very very knowledgeable and that help because she knows the artist and she knows also the good collection and she she is helping us to to buy but uh I cannot describe all the the process it's her that really uh knows the artist and the living artist and that put us in contact with them we we commission also some of the artists to do things specifically for the foundation it's very very interesting to to work with them and that's a long process thank you for your question uh we'll now go for the member on the a just you mentioned uh quantitative easing and you mentioned the threat of money printing uh and the possibility of another crisis on the horizon what are the two or three things you most worry about for the future of your business do you worry about the cost of the materials um that you use to make your goods do you worry about consumer appetite for luxury spending if you take a a Long View if you think about 10 years or 20 years what what are the things that most concern you for the future of lvmh first of all I think uh in a business which is successful as is his business I always say to my team you should be thinking uh that the worst is coming and you should be never you should never be satisfied and you should be always uh frighten and under in a way State of Mind is to be uh positive paranoid and always in the situation think of what can go wrong and always put you in question is what we do uh really enough are we doing uh the good Innovations uh are we managing in the right direction what can go bad and in our business uh what is really uh important is to keep the level of innovation so for the long term I think we have the teams that assure us to create enough new invention new products uh to keep on with the growth of the market uh but it's a constant um quest uh we see maybe every year 20 between 20 and 25 % of new products and we have to look at them in every detail to make sure that the level of innovation is really sufficient because the tendency in in a group that work well is sometime and we try to avoid it uh some form of Autos satisfaction uh and uh when you see the the results from the Press I prefer frankly to have some critics than to have as we did during the last release of the numbers people everywhere saying oh it's fantastic the numbers are great and blah blah blah which is not good for the state of mind uh you know at the beginning when I started the group we did a turnaround and I think to be really good long term you should keep that same state of mind as a company even if it's successful should be manage in a way as if it could get under within the next 12 months and so it gives you a different perspective different perspective in terms of investment in terms of hiring people in terms of uh new acquisition so that's the state of mind so with this that we try really to keep and uh we try to uh see what the future uh big problems can be and I see as I said maybe a big a crisis like the one in 2008 coming within the next five to to 10 years but uh a crisis like this for our type of activities which is linked to consumption uh is something we can manage and not only we can manage but we can also in some cases take ADV advantage of it you have seen dur during the last crisis uh some investors uh should take some us investors like War Buffett they did at at a time where everybody thought uh the world was going to collapse in fact uh they did the best investment possible so at our scale uh in the our Market we did the same and we bought shares in other companies uh when everybody was thinking that the end that the end of the luxury business at the end of almost everything stock market went down I remember in uh 2009 having bought for the Group shares of lvmh at 39 today it's what 150 so and and people were selling because of the general mentality when you open the newspaper you you you you saw that's really the end everybody was was depressed so on one end we try to be uh thinking of the worst but on the other end we are optimistic I try to be uh optimistic long term but pessimistic short term and that's good state of mind I think thank you for your question um we'll now go to the question at the back uh which brand of champagne made by your group is the your favorite brand your favorite brand of champagne ah my favorite brand isino thank you very much uh we'll now go for a question from the member there um thank you for coming to Oxford Union my name is Penny pan and my a student at s business school and I'm from China so you mentioned China is important strategic market for your brand it has been and it will it will be but it's quite obvious the brand has doing poorly in recent years in the your main Market China there are many challenges among which I would pick up a few the massive problem of counterfeits the changing governmental policy for corruption um the rising trend for affordable luxury where you'll see competing Brands where like uh uh Kevin uh like a Coach B are doing really well well LV is perceived as a something we don't buy anymore is becoming wake out to how we only buy them people who are rich but lowly uh poorly educated so it seems that the desire in China is gone something you mentioned very important to a product design your marketing strategy so how in your mind the brand will face those challenges in coming years in China Market Market thank you okay China Chinese is a important market and there are challenges we try to be uh following the rules in every country we operate and in China we are not producing anything so uh we avoid uh in doing that some problems that can happen in in some Factor where independently of the government maybe they they use workers too young and things like that that we have a clear policy in the group to really uh not do anything that is not complying with the best practice for the counterfeiting uh it's clear that China is the one of the major sources of the counterfeiting and we try to fight but it's extremely difficult it's extremely difficult because it's a huge market and it's a profitable Market which is in the end most of the time of organized crime so even if the Chinese government officially want to help even for them it's difficult even in China where there is a clear Direction it's difficult and for our teams it's difficult also because we don't want to expose our teams directly to people that can really do can really harm them so we have the help of the government and sometime we are successful I have many examples of entire factories producing counterfeiting uh that with the help of the Chinese government we destroy but the problem is when we destroy when we destroy one Factory they rebuild it uh some kilometers uh further so so it's not very efficient and with the Internet it's even more complicated because you have a lot of sites you can go with the name of a brand and you think that you buy the real product but in reality you buy a fake and there also we fight them but you have ton of them and when some we are successful in making disappear new one appear so it's a a permanent a constant uh fight we spent in the group around 100 million a year to fight that worldwide it it's it's really big big problem you know for organized crime is the second resources after drug trafficking counterfeiting so it's huge and so it's why it's so difficult to fight and in some country the government is more efficient for instance in France it's efficient years ago if you were going to the because they find interesting way years ago if you went to the beaches in the south of France you had people working with counterfeiting when you were Sun basing and offering products and for years they were just arresting the guy and after two days the guy was free so he came back and they found something much more efficient now when somebody like that is working because they they passed a law to do it they seize the products and they destroy it and and now the counterfeiting cell on the beaches in the south of FR had almost disappeared but if you go the next country in Italy they they didn't not do it because there is some uh old links between uh Contra Fitters and some part of the authorities I give you an example I was in V KN the other day in front of our Louis vuon shop you have counterfeit installed selling the products and so what do we do we call the police and the police come but before coming they make the lot of noise for 15 minutes so the guys pack the products they go out and when the police arrive nobody is [Music] left what can we do and two hours later they are back and so we call the police and they back and it's completely inefficient so it depends of the country but it's it's a big it's a big big problem thank you for your question uh if we now go for the member about three rows back on this side um given the improved relationship between Iran and the west and the lifting of sanctions especially between Banks and financial intermediaries would you look at tapping into the Iranian mark market and having formal representatives there given the huge demand that exists uh for luxury Brands and um the need for the Iranians to spend the great amounts on such luxury products thank you no I know I know that the Iranian people like very much our products yes and uh I went myself years ago in Iran before the Revolution it was another time and today we have already a lot of contacts and I think we are going to start with one of our brand uh which is in fact a brand which is selling other brand but you see Sephora you know Sephora a beauty uh chain uh it's very successful and we are just about to to start with this maybe next year in in but I am perfectly aware of the very good taste of Iranian people and and and I know there is very good market and we are just uh we are ready if everything is possible following the rules of our different countries but uh we we would like very much to go and and if if we go the team of my group will go with me and we we we would be delighted to go back we look forward to welcoming you thank you very much for your question unfortunately that's all we have time for this afternoon uh M thank you so much for um for joining us it's been an absolute pleasure for us all to welcome you here if I could ask every want to remain seated whilst moo myself and his guests leave and please join me in thanking one final time but not on [Music]

Channel: OxfordUnion

Views: 448,528

Keywords: Oxford, Union, Oxford Union, Oxford Union Society, debate, debating, The Oxford Union, Oxford University, Bernard Arnault, Gucci, luxury, brands, company, business, forbes

Id: EhNKy5yNIgs

Length: 54min 54sec (3294 seconds)

Published: Thu Apr 07 2016