Conspicuous consumption may be out of fashion in the West. But in China, the luxury-goods business is booming, and the rich are becoming more discriminating than ever. No longer satisfied with snapping up the same Louis Vuitton luggage and Fendi baguettes they can find in New York or Paris, Chinese consumers are demanding luxury goods that are tailored especially to them. The French luxury giant Hermès, for instance, recently opened a boutique in Shanghai for its new Chinese brand, Shang Xai. The offerings are in stark contrast to the brand’s colorful trademark silk scarves. There are Ming-style chairs, eggshell porcelain bowls and jewelry inspired by unusual Chinese collectible baubles, such as teapots. The materials used—zitan wood, lacquer, and Mongolian cashmere—are luxurious, and local. Packed with customers since opening, the boutique has generated huge buzz, and other Western brands are taking notice. American and European multinationals from Coca-Cola to Procter & Gamble have been trying for decades to capitalize on the world’s most populous nation, but for many top brands progress has been surprisingly slow. That’s in part because China is still a relatively poor country, with a high savings rate. But also, it’s because many big brands have simply dumped their existing products on the Chinese market, with little thought to tailoring their wares to the audience beyond changing the language on the packaging. “Until quite recently, the attitude has been, ‘Let’s invent in the West and ship to China,’?” says Hubert Hsu, a senior partner at Boston Consulting Group and leader of the firm’s consumer practice in China. “It didn’t work.” But companies are beginning to wise up—and none too soon. Read the whole story in Newsweek.