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NEW YORK China is in fashion for top U.S. designers as they look to tap the world's fastest-growing luxury goods market amid a slow economic recovery at home, but critics say they have lagged their European rivals in seeing the Asian giant's potential.
Among Chinese consumers the top five brands for the past two years were all European -- Louis Vuitton, Chanel, Gucci, Dior and Armani -- according to Bain and Co, which estimates China's luxury good sales grew by up to 30 percent in 2011.
"American designers are slow to recognize the Asian market because they have such a big home market," said David Wolfe, creative director of trend forecasting firm The Doneger Group. He was speaking ahead of New York Fashion Week, which started on Thursday.
But that home market has struggled with economic uncertainty and while the U.S. luxury goods market -- still the largest in the world ahead of Japan and China -- improved last year, Bain and Co predicts it grew at about a third of China's rate.
"Given the world economy and the way things are trending and the opportunities over there, it would be foolish for an American designer to ignore the Chinese market," said James Mischka, one half of design duo Badgley Mischka.
"It's an established market that we're ... trying to crack," he said. Badgley Mischka plans to greatly expand in China in the next five years by opening dozens of stores.
China will account for 20 percent of the global luxury market by 2015, with spending in the country nearly tripling to $27 billion by that year from around $10 billion in 2009, according to consulting firm McKinsey & Co.
"A lot of American brands are coming in later, a lot of American brands are not in China yet," said Veronica Chou, president of Iconix China, which has so far brought seven of its U.S. brands, including Badgley Mischka, to China.
"The American consumer market is so big, and brands are so happy here, their balance sheets are so good. If they go to China it's a huge investment, it takes a lot of time," she said.
U.S. designer Donna Karan opened her first store in China in 2006 and now has 40 throughout the country with comparable store growth of up to 30 percent year on year, said Paul Kotrba, vice president of international sales and business development.
He said the Chinese customer had "become a considerable growth engine for our brand."
Karan said that without taking away from the spirit of her clothes, she adjusts them in terms of size, color and design to meet the needs of the Asian consumer.
"Interestingly, the more fashion forward parts of our collections speak especially well to our Chinese customers," said Karan, who in September had several Chinese actresses attend her New York Fashion Week show.
Designer Michael Kors' 30-year old company, which recently listed on the New York Stock Exchange, has just a handful of stores in China and six months ago appointed a greater China chief executive in a sign it plans to expand its presence.
Kors said that Chinese consumers were shifting from designer logo or statement pieces -- items that made clear what label they were wearing -- to more understated, yet indulgent pieces.
"Luxury clients worldwide now have more in common than not ... they want fashion that is as well-made, chic and wearable in Shanghai as they are in Paris or New York," said Kors, also a judge on reality competition "Project Runway."
Experts expect a strong Chinese presence of media and buyers at New York Fashion Week where some 90 designers are showing their fall 2012 collections.
But some changes have to be made to cater to the Chinese market, said Patricia Pao, of Pao Principle consulting firm, such as including more red in a collection as it is considered a lucky color in China.
"Chinese need smaller sizes geared for their body type. One of the reasons why the Versace collection for H&M was not successful in China is because it didn't fit the Chinese woman," Pao said. "Chinese women like more embellished clothing which makes it very challenging for minimalist brands such as Prada."
China is now home to the second most billionaires in the world, behind the United States, according to Forbes. A booming housing market has helped drive explosive growth in China's economy in recent years, but Beijing has tried to cool prices in hopes of avoiding a devastating bubble and bust.
"I don't know any brands that are not discussing the dynamic growth of luxury consumption in that part of the world," said Alison Loehnis, managing director of luxury online retailer Net-a-Porter.
Ralph Lauren said on Wednesday it was going to focus on opening higher end stores in China. Chief Operating Officer Roger Farah called China's emerging middle class "the world's most important luxury customers."
Robert Burke, of Robert Burke Associates luxury consultants, said that the top European labels had invested heavily to achieve their popularity in China and that top U.S. designers would need to follow suit.
"Big works in China. Big sells. Big retail stores, big events, a big splash, it works there," Burke said.
"That being said there is an interest from a younger Chinese consumer for designers like Philip Lim, Jason Wu and Thakoon. We are seeing a younger customer having a real interest in emerging designers," Burke said.
Jason Wu, best known for creating U.S. first lady Michelle Obama's inaugural ball gown, sells his collections to luxury Chinese department store chain Lane Crawford.
"It's a really amazing market," he said. "I'm definitely increasing my international presence and China is definitely an important part of that."
(Additional reporting by Phil Wahba; Editing by Vicki Allen)
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