LVMH’s Bernard Arnault on “Reverse Globalization”

1. You have stated that LVMH’s business model today involves “reverse globalization.” What is this?

“Reverse globalization is when products made in the West are sold to clients in the world’s new and developing economies. Our products are attractive worldwide because of their authenticity and the European traditions that they embody; they cannot be outsourced. So for us at LVMH, this means producing in euros and dollars and selling in reals, in roubles, in renminbi, in rupees.”

2. What effect does this have?

“This has created a new paradigm in which elements of the pre-industrial economic model — the boutique, the craftsman and personal service — are merged with those of the post-industrial model: the Internet, instant information, increased mobility and leisure. This also brings positive economic consequences to western countries, by creating good jobs, enhancing artistic heritage and ensuring the continuity of cultural models.”

3. What is the biggest challenge that comes with globalization?

“Adapting to change raises new challenges for companies and countries alike. America believes that free trade is the right objective in the context of globalization, but with the right rules to avoid unfair competition, which can undermine the economic and social fabric of the world. We at LVMH share that view of unfair competition, which impacts us most through counterfeiting of our products.”

4. Why is counterfeiting dangerous?

“Counterfeiting is far from a victimless crime — it can involve child labor, organized crime, drug trafficking and most alarmingly has been linked to funding terrorism. It exists both on our streets and online, and we partner with law enforcement in the United States and around the world to fight it.”

5. In your eyes, what is U.S. society’s most inspiring value?

“The fact that the Declaration of Independence includes the ‘pursuit of happiness’ among the rights of all people is, I believe, very telling about America. Only nations that have faith in the individual, in freedom and democracy, can truly offer their citizens the pursuit of happiness.”

6. Can these values guide international affairs?

“Yes. It is in defense of these values of freedom and individual happiness that the United States and France are leading the fight against despotism and darkness in Afghanistan and in Libya.”

“Reverse globalization has created a new paradigm in which elements of the pre-industrial economic model are merged with those of the post-industrial model.”

7. What do you admire about the United States?

“First, I greatly admire American entrepreneurship and through it, the American people’s unique ability to adapt to challenges and opportunities, to bounce back from periodic crises and difficulties and reinvent themselves and their country every time.

“Second, there is the idea that corporations are also citizens with social responsibilities, a concept that I think of as distinctly American and one that has had an important and positive impact.”

8. Does the concept of corporate social responsibility guide how you do business?

“I’m proud to say that we have adopted this principle at LVMH — and we apply it not just at home in France, but around the world.”

9. How so?

“We are deeply dedicated to philanthropy, to supporting the arts, medical research and education as well as to sustainable development. This means we constantly look for ways to do our work in greater harmony with our societies and our planet. This includes a commitment to reducing energy consumption and production of greenhouses gases, respecting international environmental conventions, working to protect soil and promote biodiversity and much more.”

10. And finally, what other responsibility does LVMH take seriously?

“Because of the unique nature of what we do, we have a special responsibility to respect and foster the traditions that are the essence of our products by employing thousands of artisans and craftsmen who work in our ateliers and wine cellars around the world. In doing this, we are preserving man’s handiwork at a time when it seems otherwise to be disappearing.”

Editor’s note: The quotes in this Read My Lips are drawn from the speech Mr. Arnault gave upon accepting the Woodrow Wilson Award for Corporate Citizenship conferred by the Woodrow Wilson International Center for Scholars in Washington, D.C., on April 7, 2011.