Retail Networks and Real Estate: the case of Swiss luxury watches in China and Southeast

Thierry Theurillat and Pierre-Yves Donzé

No 15-28, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: Shopping centers are among the most significant places to sell luxury goods in East Asia. However, the relations between retail networks of luxury companies and access to land and real estate still need to be addressed. On the one hand, an extensive literature highlights how the turn to luxury industry since the 1990s has enabled some European countries to maintain their comparative advantage on the global market and at the same time to keep a significant part of their production non-globalized. Yet, an issue that remains to be addressed is the way European luxury companies are able to enter and expand their sales networks in emerging countries. On the other hand, while real estate has become a major economic circuit in East Asia, there is still a lack of works about the property industry and companies f concrete strategies and business models. This article is hence an exploratory study that tackles the issue of real estate within the strategies of the main actors of the Swiss watch industry, namely Swatch Group, Richemont and LVMH, which have massively invested in their retail network in China and East Asia since the 1990s. While these three companies went through local retailers until late 1990s, they managed to expand their sales networks by increasingly controlling the retail spaces in China and in some Southeast Asia countries, such as Hong Kong, Singapore, Malaysia, Thailand, and Taiwan, increasingly influenced by Chinese consumers. For these countries which now represent a major part of their respective market shares, the Swiss watch groups rarely invest directly in large-scale real estate projects like shopping malls. They however have various strategies of control and integration between retail and the commercial real estate industry.

Keywords: Swiss luxury watch companies; China and Southeast Asia; retail real estate (search for similar items in EconPapers)
JEL-codes: L81 L85 N85 R3 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2015-10
New Economics Papers: this item is included in nep-cna, nep-net and nep-sea
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