Addicted to Japan : Vuitton has tied its fate to the world's riskiest rich nation.(Louis Vuitton S.A.)(Brief Article)(Statistical Data Included)

On a hot night in August, Japanese movie star Ryoko Yonekura breezed through a wall of fans and a spray of paparazzi flashes into the splashiest party Tokyo had seen in years: the opening of the new Louis Vuitton store in Omotesando. Outside, the crowd howled and shrieked with excitement--not over the celebrities, but over the leather products that filled what Vuitton executives claim is the world's largest luxury fashion boutique. Japanese fans of the French luggage company began lining up days early. Some 1,400 customers camped out in the street for an early opportunity to pay $700 for a knapsack or $1,500 and up for a suitcase stamped with the company's trademark initials. Opening day sales: $1.04 million.

Vuitton is famous as the largest and most successful luxury-goods company in the world. Less well known is how closely its fate is tied to Japan. Other luxury brands are popular, but Vuitton controls nearly 10 percent of the Japanese market--outselling the next biggest name (Cartier) five to one. Of Vuitton's $3 billion in global yearly sales, as much as 88 percent goes to Japanese customers, including those traveling abroad, according to a recent study from Morgan Stanley Dean Witter in London. That's far more than, for example, Gucci (48 percent) or Hermes (38 percent). With Japan teetering toward a banking crisis after a decade of economic stagnation, the dangers seem obvious. Yet so far the country's troubles have not dented Vuitton sales. In 2001 Vuitton's 44 boutiques in Japan earned a record $897 million in sales, an 18 percent increase from the previous year, even as deflation gripped the country. "Economists have been saying that Japan is a risk for 10 years," says Yves Carcelle, president of the LVMH Fashion Group. "You have to distinguish between the Japanese people and the banks. The Japanese have money. The Japanese banking system does not. We've been asking ourselves the same question for a long time: will it collapse? And year after year, I watch the Japanese continue to consume more and more [Vuitton products]."

Why Vuitton in Japan? One in three women and one in six men own a Vuitton product, and many teenage girls told market researchers they want Vuitton because "everyone has it." In other independent surveys, Japanese cited Vuitton for its "durability," and its signature pattern of cherry blossoms and stars mingled with the interlocking LV, a ...