LOUIS VUITTON Handbag in Shanghai

SHANGHAI — Daisy Liu epitomizes China’s obsession with luxury brands: her shoes are Guiseppe Zanotti, her brooch Chanel, a floral Hermes scarf is stylishly knotted over one shoulder. She won’t, however, tote a monogrammed Louis Vuitton handbag ever again. Wealthy shoppers like Ms. Liu are increasingly turning up their noses at labels they believe have been tainted by the common touch, seeking out understated, and exclusive, merchandise from the likes of Chanel or Hermes instead. That is becoming a big challenges for designers hoping to cash in on the world’s fastest growing luxury market.

“I have two Louis Vuitton handbags but I no longer carry them although they are still in fashion,” said Ms. Liu, a 31-year-old employee at a multinational cosmetics firm.

“I don’t think the brand fits me any more.”

More than a decade of strong economic growth has helped swell the disposable incomes of millions of Chinese, creating legions of men and women with a voracious appetite for status symbols regardless of the cost.

China’s importance for firms such as Louis Vuitton’s parent LVMH and Gucci’s PPR SA is indisputable: last year, as Europe was mired in financial crisis and the U.S. economy faltered, mainland Chinese shoppers spent an estimated 111 billion yuan (US$18-billion) on luxury goods, according to consultants Bain & Co. China is the world’s third biggest market for personal luxury goods, worth at least 160 billion yuan (US$25-billion). In the next three years, it is expected to leapfrog over Japan and the United States to take the top spot, with the luxury segment expanding to 180 billion yuan (US$28-billion).


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