Shang Xia is looking for strong growth in China, a country where Hermes has lagged behind its competitors but which it sees as a principal market.

"The idea is to bring the Hermes philosophy to China, to create a Chinese Hermes," Chief Executive Patrick Thomas told Agence France Presse.

In December 2009, Parisian fashion house Chanel set up a shop in Shanghai where potential customers could get a behind-the-scenes view of the creative process in putting its collections together.

The word Chanel was given a Chinese pictogram that was embroidered on the company's latest collection to give it a distinctive Chinese flavor.

"Chinese elements in the design, package and service of luxury brands are in essence a sign to show they attach great importance to their Chinese customers, but will not bring a substantial jump in sales," says Pei Liang, secretary-general at China Chain Store and Franchise Association (CCFA).

"What Chinese consumers favor is the uniqueness and different culture brought by these European brands," Pei says.

However, Pei says he believes that as choice expands for Chinese consumers they will be more particular when purchasing luxury goods.

"Some people around me are very familiar with luxury brands of bags, clothes, shoes and watches, but know little about those of household, tableware and musical instruments, which can bring them pleasure rather than just show off their spending power," Zhou Yun, a 28-year-old public relations officer, says.

The luxury goods industry is experiencing an experimental phase in China and is discovering that although there is great potential in the market, it is not a top priority among Chinese consumers.

Swiss firm AFG's luxury brand Warendorf kitchens, designed by French designer Philippe Starck, made its debut in Beijing this summer.

"Adding new and versatile elements to the kitchen is the central point to respond to peoples' changing demand for kitchens and provide them with a unique household experience," says Starck.

Warendorf doesn't come cheap. The average Warendorf kitchen is priced at 600,000 yuan, according to Ken Li, assistant manager of the kitchen division at AFG.

Even sports are not immune to the lure of fashion. Beijing Yanlong imported six Ferghana horses from Central Asia to develop the horse trading market in China. Horse racing, a time-honored sport in Western countries, is still in its infancy in China.

However, Zhang Zihan, general manager of Beijing Yanlong, is optimistic about the potential for horse racing in China. "Potential buyers from Shanxi and Guangdong provinces have already shown their interest. Each horse will be priced at more than 5 million yuan during auction," says Zhang.

As an increasing number of wealthy people in China turn to specialist hobbies, horse breeding and horse racing are becoming more popular, following on the heels of yachting, racing cars and golf. It costs about 100,000 yuan a year to care for a Ferghana horse, including feed, medical care and training.

Currently there are 20 private horse ranches around Beijing. Chu Wen, owner of Beijing Yihe Stud, started his ranch in the 1990s. After he made a fortune in the property business, he put money into the ranch in Beijing's Yanqing district.

With an investment of more than 15 million yuan, Yihe Stud covers an area of 16.7 hectares and includes standard stables, tracks and also a swimming pool for horses.

"Experiencing a luxury lifestyle involving noble sports will become more common when China's rich people don't only focus on outward dressing to show off their personal fortune and prestige," Pei of CCFA says.

"I consider this a very likely consequence, because what is considered luxury and fashionable changes frequently for many reasons, especially as 'exclusive' products become more widely purchased and societal values evolve," says Mike Bastin, a professor of brand management at China Agriculture University.

"But the new rich group is still the mainstream of China's luxury goods consumers, so it will take some time for them to change their style of consuming," Pei adds.

According to a recent report from Capgemini and Merrill Lynch Wealth Management, China contributed more than 40 percent of sales in the global luxury market and China has 477,000 individuals with investable assets of $1 million or more.

This year's Hurun Report on top brands reveals that French and Italian luxury brands continue to dominate the Chinese market.

Also predictable is the finding that Louis Vuitton, Chanel and Gucci remained the "most desirable" luxury brands in China this year.

"Interestingly the very richest people in the West try very hard to keep their wealth a secret and shun conspicuous consumption. Perhaps the richest Chinese may follow suit," Bastin says.

According to Pei, the newly rich in the West also buy the big names in the luxury goods industry. But he adds the caveat: "There won't be so many people infatuated with luxury brands over the next 10 to 15 years. What rich people are most interested in is something that can provide them with spiritual affluence."