The luxury retailer will also open 10 outlets of its VJC brand, which targets the youth market, Giancarlo Di Risio, Versace's managing director, said at a briefing in Beijing yesterday. About 40 percent of the Milan-based company's planned investments for next year would be made in China, he said.

China's luxury-goods market is growing as much as 60 percent a year and has been targeted by luxury retailers such as Prada Holding NV, Bulgari SpA and Valentino SpA. Versace, whose clothes are worn by celebrities, including Britney Spears, is expanding in the country to offset lagging sales in Europe, Bloomberg News reported.

"They haven't been very strong here - they've been low profile," said Paul French, the editorial director of Shanghai-based market research firm Access Asia Ltd. "Perhaps this move means they're starting to push in China."

Versace said in July it planned to open 12 stores in the Chinese mainland, Hong Kong and Taiwan by the third quarter to help boost sales. The company had launched five outlets on the Chinese mainland alone as of yesterday, spokeswoman Deirdre McCready said, denying that branch openings were behind schedule.

An ACNielsen poll this year ranked Versace as the world's third-most-desired brand after Giorgio Armani and Gucci. More than a quarter of 21,000 online consumers in 42 countries said they would buy Versace goods if money weren't an issue. Actresses Uma Thurman and Jennifer Lopez wore the company's clothes at the Academy Awards in March.

The challenge for Versace in China, which opened its first store in the country 12 years ago in Beijing, is that its designs may be perceived as too "flashy for Chinese," market researcher French said. "Versace, which is all about exotic colors and extreme designs, may be too much of a risk to wear in China."

Donatella Versace, the company's vice president and creative director, said at yesterday's press briefing that she was confident the company's designs would suit the tastes of rich, modern Chinese.

The closely held clothier has sold unprofitable units, overhauled management and taken control of distribution in Japan to compete more effectively with Gucci Group and Giorgio Armani SpA. Di Risio also has slashed seven licenses to focus on two main apparel collections, sped up deliveries and boosted sales of higher-margin leather accessories.

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