It is midday in Beijing’s bustling financial district, an area that converted its ­hutongs (squat brick homes with courtyards) into glass skyscrapers in just four years. The streets are jammed with cars, and the pavements full of pedestrians. That makes walking into Seasons Place – Beijing’s latest luxury mall – a weird contrast. Despite its alluring design – a white exterior, marble floors and skylight ceiling reminiscent of a new airport – the mall is nearly empty.

Eugene Tang, the manager of the five-month-old mall, sits near a customer-less coffee kiosk in front of a Calvin Klein shop, ruminating. He is under pressure from the owners, tenants – that include Louis Vuitton, Chloé, and Agnès B – and would-be shoppers. “People are intimidated,” Tang says. “They complain that it’s too expensive.”

By the press accounts, Seasons Place should be a success. Articles discuss China’s double-digit growth and report on luxury stores opening around China. Analysts proclaim that China, the world’s third largest market, will overtake Japan as the number one consumer of luxury goods by 2015. “It’s something like 10 Japans,” says Radha Chadha, managing director of Chadha Strategy Consulting.

But beyond all this breathy gushing, dozens of shiny, new luxury malls remain empty all over China. Luxury brands won’t release sales figures, but analysts and sources within say that few luxury retailers are making profits. Even so, top retailers drool over the potential in consumers such as 21-year-old Gong Ting. A follower of fashion – she loves Gucci, disdains pirated goods, and lives with her parents, which allows her to spend half of her income on luxury goods. The only catch – her income is €188 a month. Gazing around Shin Kong Place, a new luxury mall with two-storey outposts of Salvatore Ferragamo and Prada, she says, “This is a little too fancy for me.” According to the National Bureau of Statistics, the per capita disposable income of China’s urban households in 2006, which discounts China’s vast rural poor, was just €1,108 – the price of a basic Gucci handbag. It also doesn’t help that the Chinese are notoriously cost conscious, with an aggregate savings rate around 40 per cent, one of the highest in the world, says Conway Lee, a retail consultant for Ernst & Young. “They want to save for a rainy day, because of a lack of social insurance” from the government.

Even Chadha qualifies her exuberance, adding that the projections that China will overtake Japan are based on the optimistic assumption that China will grow at the same double-digit pace for the next seven years. Projections for China often include Hong Kong and Taiwan, both more developed markets than the mainland.

The Chinese who buy luxury goods – about 10 to 15 million, according to Ernst & Young figures from 2005 – often buy them overseas. “They’re going to Hong Kong, Singapore and London,” where luxury brands have wider selections and fewer taxes, says Paul French, chief Asia analyst for Access Asia. Angelica Cheung, the editorial director of Chinese Vogue, admits that she buys little in China. “I travel a lot and so I shop elsewhere,” she says. “But the mega-rich don’t care. They don’t ask how much. It’s all about a certain class of people.”

The class that Cheung refers to is small. Merrill Lynch estimates that there are 345,000 US-dollar millionaires in China. Because their client base is an exclusive group, retailers such as Louis Vuitton and Giorgio Armani often call them when new goods arrive and arrange private appointments, sometimes off-site. As a result, stores often end up being depopulated of their only potential shoppers. “They’re just showrooms,” says one employee of Shanghai’s Three on the Bund.

Despite the tough market, LVMH is one empire that has made profits in China, analysts say. The success of Louis Vuitton has come from aggressive advertising and early market entry, says Alex Kauffman, a consultant for What If. Widespread counterfeiting of the brand has built recognition. “My housekeeper has a LV bag, albeit a fake,” Kauffman states. The counterfeiting hasn’t dampened desire either, Kauffman observes, “Women like to show off their receipts.”

Early players such as Ermenegildo Zegna and Dunhill are believed to be profitable because they understand what Chadha calls the “eccentricities” of the Chinese market, explaining that business and government “gifts” – used to grease the wheels on a project – often include expensive men’s items. Womenswear brand Ports 1961 has been in China since 1992. Ian Hylton, senior vice president, says, “What works in Italy or New York doesn’t necessarily work in China.” Late-coming retailers are profiting the least. But with the oversaturated Japanese market, and the US falling into recession, China is a beacon of hope. Developers are using incentives to encourage top ­retailers to set up shops – six months of free rent, prime space, and the covering of renovation costs – says Paul Husband, a Hong Kong-based luxury retail consultant.

French, of Access Asia, is pessimistic. “I keep hearing, ‘In 10 years China will be the new Japan.’ But that was 10 years ago. I haven’t seen [China follow] in the fast food or drinks market. If China follows Japan then why don’t they practise Shinto Buddhism and wear kimonos?” Japan also has a more sophisticated and evolved media landscape that has helped turn consumers into luxury goods experts – this is all but absent for the moment in China. Back at the coffee kiosk, Tang sees a trickle of office workers file in. As if issuing a plea to them, he begins, “I’m not asking you to buy. Just enjoy the environment. Absorb this new concept. I’m here to tell you what a quality life is.” His voice trails off as he gazes across the largely empty mall echoing with muzak.

Lane Crawford, the Hong Kong-based luxury department store, faced setbacks when it entered China in 2004. It opened stores in several cities only to close them in three years. Now the retailer has a store in Seasons Place which is five times bigger than its failed Shanghai venture, and features 600 brands – half of which are new to Beijing.

The retailer is “so ahead of the market”, says Paul French, analyst for Access Asia. Other analysts point to the refusal to employ its Chinese name, Lian Kafo. “Lane Crawford is too hard to say,” says one source. The store – featuring art installations, glass walls, and chrome tree branches – is generating a buzz among the elite. On one afternoon, half a dozen shoppers were spotted browsing the latest Jimmy Choo collection. Later, a salesperson trails after a woman in a fur coat, perusing Chloé handbags.

While the store boasts a wide range, attempts by one shopper to purchase Stella McCartney shoes are unsuccessful because of a lack of sizes. “We only carry one size of each,” the salesperson apologises.