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Sixty percent of the world's luxury brands will have their products made in China by 2009, according to a report by the World Luxury Association.

This will be largely driven by the booming demand for luxury products by consumers in the Asia-Pacific region, particularly China. The demand for such products in China is increasing by 15 percent annually, according to Ouyang Kun, representative of the association in China.

"Some luxury brands claim all of their products are made at home, but 60 percent of them are actually made in China," he said.

Foreign manufacturers started to shift part of their production line to China in 2004 and products made in China with foreign labels have flooded the domestic market since 2005, according to Ouyang.

The demand for luxury products from China has surpassed the manufacturing capacity of the European makers by nearly 60 percent, he said. As a result, they have had to shift their production to China, where labor costs are relatively low and a saving on transportation costs.

The production bases are mostly in Zhejiang and Guangdong provinces, home to many domestic fashion brands and clothing manufacturers.

But the products made in China are mainly sold in China and Japan, rather than the global market, Ouyang said.

A spokeswoman of the French fashion brand Louis Vuitton, Zhuang Jie, denied the company has products made in China. A Beijing Business Today report quoted Zhuang as saying the company does not have a production base here and has never considered setting up one.

Faye Yang at Italian fashion brand Furla, said the company had considered making products in China, but it is still at the testing stage.

But most luxury goods makers have already set their eyes on China as other markets become saturated, Ouyang said.

A spokesman from Lotto, an Italian sports manufacturer, said: "I expect sales of Lotto in China to reach 5 percent of the world's total within the next two years."

(China Daily March 31, 2007)