updated 11/18/2005 9:47:47 AM ET 2005-11-18T14:47:47

French luxury goods maker Louis Vuitton opened a flagship store in Beijing on Friday, expressing confidence in its ability to attract China's new rich despite rampant piracy of its shoes, bags and other products.

The three-level, 17,000-square-foot shop in a mall attached to a luxury Beijing hotel sells goods ranging from a $360 woman's coin purse to a $200,000 made-to-order gold watch. It is the 12th and largest opened by Louis Vuitton in China since its first mainland shop in 1992.

The opening comes amid aggressive expansion by foreign sellers of designer clothes, luxury cars and other goods targeting a Chinese elite that has profited from two decades of economic reform.

"Year after year, you see big increases both in buying power and the number of people who can buy Louis Vuitton products," said Bernard Arnault, chairman of Louis Vuitton's parent company, LVMH Moet Hennessy Louis Vuitton SA.

Yves Carcelle, the chairman and CEO of Louis Vuitton, said the new Beijing shop was expected to be "immediately profitable."

Arnault acknowledged there are "a lot of problems" with China's thriving product piracy industry, but said Louis Vuitton was getting "cooperation from the state" in trying to stamp it out.

Louis Vuitton's shoes and bags are among the items most widely copied in China.

LVMH and other foreign luxury brands recently sued a Beijing shopping mall just one kilometer (a half-mile) from the new Louis Vuitton shop, accusing the mall of letting its tenants sell fakes.

"We have seen considerable progress recently in the dedication of the authorities to have the laws enforced," said Serge Brunschwig, managing director of Louis Vuitton.

"So it is a continuous battle," he said. "But certainly it's truly hopeful that as China develops, they will enforce the laws more and more to protect the intellectual property rights of all brands."

The company refers to the new Beijing outlet, in the mall of the China World Hotel, as a "house," with all of its product lines of luggage, clothing, shoes and jewelry on display. A private upstairs salesroom for VIP customers has its own kitchen.

During a tour Friday for reporters, a French craftsman in a coffee-colored smock worked at a bench in the middle of the shop, sewing leather handles for the company's signature handmade luggate.

Arnault said that despite widespread copying, there was no danger that consumers would confuse the fakes with the real thing.

"Even the best counterfeiting, they are light years away from the real product," he said.

Sales of foreign luxury goods in China are booming despite annual incomes that average just $1,000 per person in its economically booming eastern cities.

Giorgio Armani, Chanel, Givenchy, Bentley, Maserati, Kenzo and other clothing designers and luxury car makers all have boutiques in China.

While Louis Vuitton opened its first mainland Chinese shop in a Beijing hotel in 1992, the company says its ties with China date back to 1907, when explorers who crossed the Gobi Desert on a Paris-to-Beijing trek were equipped with Louis Vuitton trunks.

The company has expanded beyond China's prosperous east coast, with boutiques in the western cities of Xi'an and Chengdu.

The company gave no sales figures, but Louis Vuitton executives said the company's China operations have been profitable since 1992.

Brunschwig said Louis Vuitton plans to open two to three shops a year in China in the near future.

"We are ... committed to invest every time there is an opportunity in this market. We have sent out a team looking at every city in China," he said. "We look at every city as a potential" market.

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