China's appetite for luxury goods: Nibble, not gulp

Ever since last year's Beijing Olympics, pundits have been predicting that China will be the next great consumer economy. However, the successes and failures of companies that have tried to penetrate the Middle Kingdom suggest that China is not yet ready to emerge as a worldwide market leader.

Pace Wildenstein, one of America's most prominent galleries, was among the first super-luxe brands to try a Chinese expansion. On August 8, 2008, shortly before the Olympics opened, the company unveiled a 22,000-square-foot space in the Factory 798 district, the heart of Beijing's art scene. While other Western galleries had opened small venues in the city, Pace's move was regarded as somewhat revolutionary, as it was the first big American art powerhouse to truly commit to China. Hiring local art specialists to run the gallery, Pace quickly assembled a slate of up-and-coming Chinese artists to exhibit alongside Western luminaries like Chuck Close and Cindy Sherman.