[News Figures] Arnaud, LVMH Chairman Who Once Surpassed Musk

Transformation from Construction Company to Luxury Brand Enterprise
Building a 'Luxury Empire' through Aggressive Mergers and Acquisitions

Bernard Arnault, Chairman of LVMH

[Asia Economy Reporter Lim Juhyung] Elon Musk, CEO of Tesla, 'briefly' stepped down from the position of the world's richest person on the 7th (local time). The person who took the top spot in his place is Bernard Arnault, chairman of LVMH, known as the 'King of Luxury' who owns numerous leading French luxury companies as subsidiaries.

Arnault temporarily claimed the number one spot on the real-time billionaire rankings compiled by the American financial magazine Forbes on that day. The change in ranking was due to a sharp drop in Tesla's stock price on the Nasdaq, which accounts for the majority of Musk CEO's net worth. At the time of the ranking change, Arnault's net worth was $185 billion (approximately 240.77 trillion KRW), while Musk's was $184.7 billion (approximately 240.39 trillion KRW), a difference of only $300 million (about 390 billion KRW).

The luxury company LVMH, led by Arnault, is the largest market capitalization company in France, ranking first on the French stock market CAC30, and one of the most valuable companies in Europe. As of the closing price on the 8th, its market capitalization reached 360.7 billion euros (about 496 trillion KRW), which is about 130 trillion KRW higher than Samsung Electronics, the top company in Korea (market cap about 360 trillion KRW).

From Construction Company President to Luxury Businessman

Arnault was born in 1949 to a father who was president of a construction company. After graduating from ?cole Polytechnique, an elite French educational institution, in 1971, he immediately joined his father's construction company and received management training.

After inheriting the company from his father, he focused on real estate business and expanded his ventures. In the early 1980s, he moved to Florida, USA, concentrating on real estate development and made a fortune. The direct trigger for the construction company president to enter the luxury industry was in 1984, when he acquired the perfume company Christian Dior's parent company, the Boussac Group.

LVHM logo. / Photo by Wikipedia capture

Subsequently, he acquired clothing and fashion companies such as Louis Vuitton in 1989, Givenchy in 1988, Kenzo in 1993, and Loewe in 1996, and later expanded into the alcoholic beverage business by merging with wine companies like Hennessy, Mo?t & Chandon, Dom P?rignon, and Krug. The company name LVMH is derived from the initials of the representative brands of each business: Louis Vuitton (luxury), Mo?t & Chandon (wine), and Hennessy (cognac).

At that time, most European luxury companies were family businesses with a tradition of passing down the business through generations, often adhering to outdated management. Arnault recognized the blind spots in the luxury industry and conducted aggressive acquisitions, leaving only the long history and image of the brands while completely renewing internal management to enhance competitiveness.

Increasing Owner Control and Emphasizing Marketing and Creativity

Arnault's management prowess, who built a luxury empire starting from a construction company, can be summarized in three main points. First, aggressive mergers and acquisitions and strengthening control; second, global marketing that instills the fantasy of luxury; and finally, steadfast support for designers.

LVMH's Louis Vuitton is the official partner of the world's largest yacht competition, the Americas Cup. / Photo by LVMH Official Website Capture

Today, LVMH consists of numerous private subsidiaries centered around the Arnault family group, the parent company. Christian Dior, which Arnault first acquired, acts as an intermediate holding company holding shares in LVMH. This strengthens the owner's effective voting rights, allowing unwavering leadership despite the complex corporate structure.

The marketing strategy that instills the illusion of high society is also excellent. It sponsors the Louis Vuitton Cup, a typical upper-class sport yacht competition, and features tennis star Maria Sharapova as a model.

He also fully supports the creativity of designers. At one point, he appointed British-born John Galliano as the chief designer of Christian Dior, which was once on the brink of bankruptcy. Galliano continued bold experiments, such as holding fashion shows with outfits made from newspaper, and when some criticized these moves, Arnault supported Galliano by saying, "If it's not shocking, it's not avant-garde."