Nor is it surprising that the world's luxury-goods companies see the emergence of China as the ultimate opportunity for the next millenium.

Baccarat Inc., the American unit of the French luxury-goods company, is using direct marketing to test an entry into the jewelry business.

During the five years she lived in Italy, she also worked as a design consultant for luxury-goods companies in Europe.

"This is a difficult situation for all luxury-goods companies that rely on tourists for at least some of their income."

That is because most Italian luxury-goods companies farm out production to small, specialist workshops scattered throughout the countryside.

And luxury-goods companies are trading at around 34 times 2002 earnings and 27 times 2003.

It's not surprising that luxury-goods companies like Baccarat and Tiffany & Company have weighed in.

And the international luxury-goods companies have responded.

"We will see the same story repeated when other luxury-goods companies report in the coming weeks."

The trouble is, trademark law protects luxury-goods companies against the importation of counterfeit goods, not unauthorized distribution of products made themselves.