Luxury brand LVMH or will encounter the "integrity door" Hangzhou breach of contract

As a result of alleged unilateral breach of contract, LVMH's company, Louis Vuitton Watch & Watches Hong Kong Limited (LVMH Watch & Jewellery China Regional Headquarters) was sued by a special distributor in Hangzhou and demanded an economic loss of 8 million yuan.

The world’s largest luxury goods group, LVMH, will encounter “integrity door”. The Shanghai Oriental Morning Post reporter learned yesterday from the Hangzhou Intermediate People’s Court that due to the unilateral breach of contract, LVMH’s company—Lou Wei Xuan Watch & Watches Hong Kong Co., Ltd. (LVMH Watch & Jewellery Business China Headquarters) was a special dealer in Hangzhou. Sue to court and demand compensation for economic loss of 8 million yuan.

What attracts attention is that the dealer named “Hangzhou Baoliang Keyi Co., Ltd.” owns the world’s largest specialty store under the brand name of Lu Wei Xuan Watch & Watch Hong Kong Co., Ltd. (hereinafter referred to as Hong Kong company).

At the end of last month, the Hangzhou Intermediate Court accepted the case and sent a copy of the complaint to the Hong Kong company. As of yesterday, the Hong Kong company has not made a written reply to the court. The Shanghai representative office said in an interview with the Shanghai Oriental Morning Post reporter on the incident that since it has entered the legal process, it is not convenient to express any opinions.

It is reported that the case is expected to open in January next year.

Cooperation monthly sales up to nearly one million

If it wasn’t for the end of the day, LVMH’s watches, TAG and DIOR, may still be one of the best selling luxury brands in China.

In April last year, TAG Heuer Watch & Jewellery Hong Kong Co., Ltd., the operating company of two brands of TAG Heuer and Dior, decided to focus on the “Luxury Brand Street” at the West Lake, where more than 30 top brands have been concentrated—Hangbin Hubin International Famous Street. Set up TAG Heuer and Dior Watch brand stores. Its partner of choice is a trading company specializing in international brand-name watch distribution or agency—Hangzhou Baoliang Science Instrument Co., Ltd. (hereinafter referred to as “Baoliang”).

On October 1, last year, the Hong Kong company and Bao Liang signed a three-year cooperation agreement. In the previous May, at the request of the Hong Kong company, Bao Liang and the owner of Hubin International Famous Product Street signed an eight-year store rental contract, and the former was responsible for the design and decoration of the store's image.

Yesterday, Bao Liang, General Manager of Bao Liang, introduced to the Shanghai Oriental Morning Post that there were two agreements signed between the two parties. One was the “Special Retailer Agreement” on TAG Heuer and the Other was “Special Retailer Agreement on Dior Watch”. 》 Two agreements with basically the same contents mainly agreed: Hong Kong company authorized Bao Liang to open a TAG Heuer (Dior) flagship store at Hubin International Famous Goods Street, and sells TAG Heuer (Dior) watches in a general retail manner; the agreement requires Bao Liang to maintain regular inventory and display quantity at least. Table 140, Dior watches only 120, once sold, should be ordered to make up for the authorized agents. On September 26 last year, Hong Kong company authorized agents and Bao Liang signed a supply agreement. On November 11, Bao Liang set up a store company, Locke (Hangzhou) Trading Co., Ltd. As the representative of the sales of TAG Heuer and Dior brands, he should be the chairman of the company.

After completion of the above procedures, on November 13, 2005, the store held the opening ceremony of the TAG Heuer brand; on January 22 this year, the opening ceremony of the Dior brand was held again. According to TAG Heuer Time, an internal publication of the TAG Heuer China office, the TAG Heuer Hangzhou store is "the world's largest TAG Heuer store." “And the Dior Hangzhou Hubin International Famous Street Store is the only specialty store in China that has not taken a direct operation and is authorized to operate.” It should be said.

The "sweet period" of Bao Liang's cooperation with LVMH has begun. There are more than 10 years of experience in top brand operations. "As a result of both parties' efforts, sales have steadily climbed, and the store's monthly sales have reached a maximum of nearly one million yuan. The outlook is optimistic," he said.

　 Lack of food LVMH's new top executive wants to change

However, the optimism of Lian Ping did not last long.

In August this year, Lian Ping suddenly discovered that his store was stopped for no reason. “Cause there is a shortage of goods in the Hangzhou store, and even no goods are available for sale.” He told the Shanghai Oriental Morning Post that due to this, in November, the monthly operating cost of more than 10 million stores only 20,000 yuan sales.

Bao Liang speculated that being "off food" was probably due to Hangzhou store is LVMH's only "Dior" authorized stores. Prior to this, LVMH only had "Dior" outlets and no authorized stores. There are signs that LVMH’s new senior executives have different views on opening the “Dior” franchised stores and their predecessors.

"From March to July, LVMH executives repeatedly asked to switch off the Dior store." Lien Ping said, "But the two sides failed to reach an agreement. The main reason is that we do not agree. The store has just opened its business. not kidding?"

In September, Bao Liang sent a letter demanding that the Hong Kong company's supply be fruitless. On October 17, Bao Liang sent a long letter to the general manager of the Shanghai office of Hong Kong company Zheng Shijue, saying that he would fulfill the agreement, deliver the goods as soon as possible, and explain the refusal to deliver goods.

On October 24th, the Hong Kong company's representative office in Shanghai wrote back: As a result of the investigation, Bao Liang did not have Dior Image Shop at all, nor did it operate the legal license of the image store, and there was evidence that the store operator was not Bao Liang, and the licensed products obtained were Third-party sales in stores, "have been a serious violation of the agreed retailer agreement." The "third party" referred to by the Hong Kong company's representative office in Shanghai means the company's store company that should be even chairman of the company's chairman --- Luo Ke (Hangzhou) Trading Co., Ltd. the company.

On October 30th, on the accusation of the Hong Kong company's representative office in Shanghai, Bao Liang replied that he believes that Locke (Hangzhou) Trading Co., Ltd. was established at the request of the Hong Kong company. It is only Bao Liang's commercial agent. It has been more than 10 months since Lockeer (Hangzhou) Trading Co., Ltd. was established and had business dealings with Hong Kong. The Hong Kong company has never raised any objections. Bao Liang hinted that it is now proposed that "there is an excuse to find an excuse to destroy the contract."

On November 10, Bao Liang issued a “caution letter” asking the other party “to immediately explain the real reason for refusal of delivery” and “to supply the goods immediately in accordance with the contract”. He also stated that if he still ignored it, the contract would be rescinded and claimed.

　 Sue Baoliang was forced to "fight"

"It was not my intention to go to the prosecution step. It was forced." Ying Lianping said, "We have expressed enough sincerity, but unfortunately - the other party as an internationally renowned company has not shown it to us." respect."

On November 13, the Hong Kong company’s representative office in Shanghai informed Bao Liang that due to the existence of Locke (Hangzhou) Trading Co., Ltd., Bao Liang had “constituted a serious breach of contract” and decided to immediately cancel the “Special Retailer Agreement” with Bao Liang and requested to return the light box. And other promotional products, compensation for various types of losses of nearly 2.67 million yuan.

Bao Liang felt that the other party was "backdating" and responded with a hard-line attitude. He believed that the "notice" was legally invalid and could only be regarded as a Hong Kong company's refusal to perform because it did not have the right to terminate the contract; Refused to perform the agreement obligations, according to Article 49 of the "Contract Law", Bao Liang has the right to request the cancellation of the contract and claim all losses; if the Hong Kong company can not meet its reasonable requirements, Bao Liang will be prosecuted according to law.

One week later, Bao Liang and Locke (Hangzhou) Trading Co., Ltd., which failed to obtain any response from the Hong Kong company's Shanghai Representative Office, sued the Hong Kong company. On November 28, the Hangzhou Intermediate Court filed the case.

In the indictment, the plaintiff stated that the Chartered Retailers Agreement was a commercial contract signed by the original and the defendant and was legally binding on both parties. The defendant should abide by the contractual commitments and perform the contractual obligations, but eventually unilaterally tore up the contract. The plaintiff’s legitimate rights and interests have been grossly violated.”

Based on this, the plaintiff filed a lawsuit request to confirm that the Hong Kong company’s “Notification” for the cancellation agreement of the plaintiff on November 13, 2006 was invalid, and that the inventory watch was recovered and the plaintiff’s various economic losses were repaid by 8 million yuan.

Yesterday afternoon, Bao Liang’s attorney—Zhu Hongwei, the director of Zhejiang Xihu Law Firm, told a reporter of the Shanghai Oriental Morning Post that he was confident of winning the lawsuit because “good faith” is a principle adopted by the two legal system contract laws. “This case The fact that China and Hong Kong companies have violated integrity is clear."

Yesterday morning, after several contact interviews, a Hong Kong company representative office in Shanghai called a staff member of the Shanghai Oriental Morning Post and said: "After soliciting opinions from the company's legal advisor and general manager Zheng Shijue, it was decided that before the trial, media inquiries will not be held temporarily. Give answers, she said. As she has already entered the legal process and expressed his opinion "temporary inconvenience", "I believe the court will have a fair decision, but it is inappropriate to make any argument outside the court."