When Ramesh Tainwala took over as CEO of luggage giant Samsonite International this month, he got an important lesson in the nuance of phrasing in China.
When China’s government cracked down on anticorruption, Samsonite’s business took a hit. Why? According to a story in the Wall Street Journal, some state-owned businesses had been giving the luggage to business associates, a move that they now worried might constitute an illegal gift by the anticorruption sweep.
“We have a B2B business, which was around 10 percent of our revenue in the past. Basically, the airlines are buying it for their crew, the banks are buying it for (consumer reward programs), and sometimes the state-owned enterprises are buying it for their senior managers as a gift,” Tainwala said. “When this austerity drive was rolled out, everything came to a standstill.”
That changed when the government was persuaded to clarify guidelines. That made the problem go away, as the luggage purchases were no longer seen as gifts and were therefore acceptable.
“Part of the business has come back to us. There was clarification from the government that luggage for the airline crew is like a kit, so it’s not really like a gift. The banks run redemption schemes for consumers. That is also seeing some growth momentum.”
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