Pursuit for higher profits can be a dangerous job. Italian suit maker Ermenegildo Zegna has sued the MTR for allegedly failing to honor a previously agreed contract on shop lease at the Elements mall. Apart from managing the city's (along with Melbourne, Stockholm and London's) subway transport system MTR Corporation also develops and manages a string of properties located close to the subway stations. These include Worldwide House, Maritime Square and Elements Mall.
The lawsuit emanated from one Ermenegildo Zegna shop at Elements Mall in Kowloon that has subsequently been leased to LVMH Moet Hennessy Louis Vuitton, effectively breaching the contract with previous tenant. Zegna paid HK$2.8 million for the lease. Apparently Louis Vuitton offered more. That meant better profits, but it may also be a signal for trouble.
As Hong Kong drives away from recession, businesses have continued expansion to be closer to where luxury consumers go. These could mean more contract breaches and lawsuits like Ermenegildo Zegna's in pursuit for bigger profits.
MTR Corp is more popular with its efficient train system across the city, but majority of profits come from its managed properties.
Photo credit: knoizki
Story credit: Bloomberg
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