1. LVMH Watches & Jewelry Consulting Report Version 1.4 Prepared for: Monique LIN, CFO of LVMH Watches and Jewelry for Greater China Prepared by: HKUST Consulting Group Date: Oct 31, 2009 Author: Jennifer CHENG (08938148) Olivia NG (08933875) Peter KWAN (09806196) Tommy NG (96027571) Victor LU (08933928) HKUST Consulting All Rights Reserved All Rights Reserved

2. Storyline 1/2  Situation  TAG Heuer, a brand from LVMH Watches and Jewelry division of LVMH, is a Swiss watchmaker known for its sports watches and chronographs. The brand has presence in many countries and China has been recognized as the most important market for TAG Heuer to develop since year 2000.  Complication  Sales and revenue growth of the watches segment in China is lagging behind relative to the Fashion and Leather sector. During the economic downturn in 2008, the sales have dropped dramatically by 35% despite the rapid growth in 2007 compared with year 2006.  Answer  TAG Heuer should adapt its marketing communication strategies to better suit the China market and more effectively utilize various distribution channels to increase the sales in China.

3. Storyline 2/2  Rationales 1. The Chinese is mainly interested in brand image (77%), and less interested in styles (less than 10%, whereas that figure is usually around 18%). 2. The Chinese population may not be as influenced by the existing international brand ambassadors. 3. The Chinese customers are preferring the Top Brands and less aware for the middle brands. 4. TAG Heuer is comparatively spending less in Media advertising comparing to the premium watches in the China market.

4. Global Demand for Luxury Watches

5. Sales Trend in China vs Worldwide

6. Distribution Channels

7. Regional breakdown of Sales on TAG Heuer

8. Regional Sales 2009 vs 2008

9. Media Spending in China ( 2009 vs 2008 1st Half Year )

10. Media Spending by Top 20 Brands ( 2009 vs 2008 1st Half Year )

11. Media Ranking by Top 20 Brands ( 2009 vs 2008 1st Half Year )

12. Premium Watches spending on Media (2009 Jan-June)

13. Premium Watches Spending in RMB"000(2009 Jan-June)

14. Jewelry Watches Spending in RMB"000(2009 Jan-June)

15. Magazine Spending 2009 vs 2008

16. Magazine Spending Ranking by Brands 2009 vs 2008(First Half)

17. Change Log Version # Change Date By Whom Change Description 1.0 Sep 27, 2009 Tommy Ng Document Created 1.1 Sept 30, 2009 Olivia Ng Revised situation/complications + added charts 1.2 Oct 1, 2009 Peter Kwan Add Competitor Charts and Tables 1.3 Oct 3, 2009 Peter Kwan Revised Dummy Pack 1.4 Oct 3, 2009 Victor Lu Revised Stroyline