Christian Dior arms itself to invest in retail

Christian Dior arms itself to invest in retail

Author | Source: The Economic Times | Friday, May 18,2007 9:00 AM

Christian Dior arms itself to invest in retail

NEW DELHI: French luxury label Christian Dior Couture is converting its franchisee into a subsidiary, which will allow it to invest in retail space, manpower, training and store operations. Until now, it was the Indian franchisee, the Khotes, who were investing money behind the brand.

Christian Dior Couture's (CDC) renewed interest in India comes after the government partially lifted the ban on foreign investment in retail and allowed foreign companies to own up to 51% in single brand companies.

CDC has told the government that it would stick to the rules and sell accessories, garments for men and women, shoes, bags and perfumes under the Dior brand. CDS has given an indicative price for its goods; Rs 58,000 for leather accessories, Rs 17,400 for shoes and Rs 46,400 for watches.

CDC's plans comes a year after its parent company Louis Vuitton Malletier (LVM), also the world's largest fashion house, converted its trading arm into its own company to retail Louis Vuitton range of goods.

While LVM did it by picking 51% in Mumbai's LV Trading, CDC is doing so by converting Christian Dior Trading India Private Limited (CDTIPL), owned by two resident Indians, into its own company.

Further, it plans to invest Rs 20 crore in five years and create opportunities for exports to its worldwide network of stores. LVMH Moet Hennessy Louis Vuitton, the luxury consumer goods group, is the maker of TAG Heuer and Dior watches, Guerlain perfumes and Moet & Chandon champagne.

Following the Indian government's new law a host of brands - Lee Cooper, Etam and others have got into joint ventures with Indian partners. However the chairman of Technopak (a retail consultancy) Arvind Singhal feels, “It's no big deal. In India, the ambit of luxury brands is limited . With just 2-3 stores, they don't make much difference to the economy.''

At the same time the cap on FDI in single-brand retail has prompted many like GAP, Zara and H&M to stay away from India. Analysts attribute many reasons for this.

“Some companies don't want to share their intellectual properties with a partner while some are unsure if a minority Indian partner would take interest in the company's growth plans, especially when real estate prices have peaked in all major Indian cities,'' said Akil Hirani, managing partner of corporate law firm Majmudar & Co.

The industry's common view is that the real growth story would emerge only when foreign investment is allowed in food and grocery retailing which will not only change the retail landscape of the country but also create thousands of job opportunities. At the moment, the law permits foreign companies to own fully-owned subsidiaries in wholesale trade which is accessible only to retailers and institutions.

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