Luxury association clambers to save its face

(Ecns.cn) -- The World Luxury Association (WLA), a so-called nonprofit research and management organization, attempted to clear up doubts about its credibility to the Beijing Morning Post on Monday.

Questions came up about the WLA after the association released a dubious report on "the top 100 global luxury brands" last month that prompted netizens to investigate the company's background.

A microblogger nicknamed Huazong has been particularly vigilant, attracting attention by exposing a number of things about the firm, including the nationality of its CEO.

He may have attracted too much attention. Huazong has fled the country, claiming he had received death threats from thugs hired by Ouyang Kun, chief executive of WLA's China Office.

Fake names

In recent years, the WLA has created a positive image by releasing information about the global luxury industry. Its research into the interests and purchase power of Chinese consumers has been frequently quoted by academic essays and news sources.

But a report released by the WLA last month brought the organization under scrutiny when Internet users found that many brands listed by the company as "top 100 global luxury brands" were not premium brands at all.

That skepticism was further stoked when Huazong traced the domain name of WLA's official website, which showed the registered country as China, not the U.S.

This caused Huazong to suspect that the WLA was a fake institution. After further investigation he found that the name Ouyang Kun is also fake. The CEO's real surname is Mao, according to Huazong.

Experts such as Mei Xinyu, a researcher at the Chinese Academy of International Trade and Economic Cooperation, have also doubted the statistics in WLA reports. In June last year, Mei questioned the accuracy of a WLA blue paper that claimed Chinese had spent US$50 billion on luxury goods in Europe in 2010.

Profit motive?

The WLA is working for profit and is suspected of tax evasion, Huazong told Oriental Outlook magazine this month. Yet on its China office website it pledges that it's a non-profit association, he added.

In 2008, Ouyang Kun registered WLA (Beijing) International Business Management Ltd, which frequently holds luxury product exhibitions and auctions under the name of the WLA China Office.

This kind of exhibition is very popular in China, especially in second- and third-tier cities, and watch brands and wine companies pay up to 100,000 yuan (US$15,710) to participate, according to the Beijing Morning Post.

Most of the participants take the initiative to cooperate with the WLA even though they knew what the organization really is, because they want to make money, the newspaper added.

Industry watchers say that real estate developers are the closest cooperators with the WLA China Office and pay the association to rank their projects as "luxurious residences."

An employee at the WLA China Office said he was also confused about the association's real background and legality. Nearly half of my colleagues have resigned or left the office without explanation, said the employee.

Fighting back

Despite skepticism from the public, Ouyang has refused to give in and made repeated efforts to manage the crisis.

He said the WLA is an international non-profit organization approved by the U.S. government and certified by the U.S. State Department, and is in charge of regulating the world luxury market, including market research, property rights protection and trade promotion.

Since 2008, the WLA China Office has actively organized numerous events, including luxury product exhibitions, forums and charity auctions across the country, he said.

Ouyang said he changed his name because the original one sounded awkward. The domain name shows China as the registered country because it was registered by a company based in Wenzhou, Zhejiang Province, before the association bought it, he said.

There is nothing wrong with WLA (Beijing) International Business Management Ltd earning money in different ways, Ouyang told the Global Times regarding the company's "nonprofit" status.

Ouyang accused Huazong of "irresponsible" actions and fabricating 90 percent of what he told the public. He also said that much of the doubt had been raised because he is Chinese.

According to Huazong, the doubts persist not because Ouyang is Chinese, but because he has deceived the Chinese.