The world's arbiter of good taste--and one of the richest men in Europe--controls fashion companies such as Hermès, Louis Vuitton and Bulgari. This year LVMH bought a stake in Chinese casual-wear company Trendy International Group.

 

As chairman and majority owner of LVMH Moët Hennessy Louis Vuitton SA, which includes high-end brands Givenchy, Tag Heuer watches, Donna Karan, Fendi and Moët & Chandon champagne, and of Dior and other companies, Bernard Arnault is required on a daily basis to balance the business needs of his sprawling empire with the exquisite good taste those brands must convey. What Arnault thinks matters globally. His is a $22 billion company in a $200 billion business. “They say God is in the detail,” says Sidney Toledano, CEO of Dior and a longtime Arnault buddy. “Here, the boss is in the detail.”

 

“I just don’t like it. I don’t like it at all,” Arnault complains as he examines a red-rimmed cotton canvas bag. The shelves of Dior’s sunlit showroom are neatly stacked with dozens of purses, totes and clutches in leather, shearling and python. To one side sit $1,900 serpent-shaped crystal-encrusted sandals with 6-inch-heels and shiny patent-leather ballerinas. Yet Arnault is fixated on this one $750 tote. He tugs disapprovingly on a round plastic pendant on the bag’s handle. “Can this be taken off?” he asks the cluster of Dior executives standing behind him. He takes the bag off its perch and continues: “The black and gray versions of the bag are already bordering on the commercial, but the red goes too far…it’s just not Dior.”

 

In the emerging markets LVMH is counting on for its future growth—countries such as China, India and Russia, where owning branded products is still a way to exude status and achievement—there is also economic uncertainty. Arnault remains sanguine. “In 1998, the Russian economy was on the brink, and then it rebounded. It happened quite quickly. India too—I have no doubt it will rebound,” he says, opening a silver pill box and popping an artificial sweetener into his coffee.

 

“China is the most interesting part of the world for me now. I go there two or three times a year, most recently in Dalian, where we’ve just opened in a new mall. There are so many people who are getting to the stage where they want to consume, who want to be part of a club.” Over the next five years, Arnault expects China to account for 20 percent of LVMH’s sales. “China is feeling the effects of the crisis, but less than the U.S. And when you consider that Chinese tourists are now buying as much as Japanese tourists, when there were virtually none just 10 years ago, I’m not so worried.”