Dolce & Gabbana on Wednesday apologised to Hong Kong citizens for allegedly discriminating against them in favour of wealthy mainland shoppers.

The long-awaited flagship Hong Kong store has been the focus of protests and online rage after reports that a security guard told locals they were not allowed to take photograph, while mainlanders and foreigners were. It is suspected that the security guard could easily blocks Hongkongers but not mainland chinese people as he “did not know how to speak chinese mandarin correctly”.

Locals accused the fashion house of “mainlandism” and started a Facebook page protesting against the store’s abuse of their rights. Dolce & Gabbana has previously rejected the criticism but in a statement stuck on the storefront overnight Tuesday and sent to journalists on Wednesday it said it accepted that it was in the wrong.

“The Dolce & Gabbana policy is to welcome the Hong Kong people and that of the whole world respecting the rights of each individual and of the local laws.” Especially the right to spend money.

Hong Kong residents does not accept the apologies: “We do not accept D&G’s apology statement. It lacks sincerity. Everyone should write to the European Union to complain and demand that D&G be held accountable for racism,” wrote one user, Netizen Eric Lo. Another said: “The statement was released so sneakily — they did not admit their mistakes. It lacks sincerity, please everyone, do not accept their apology.”

A mainland shopper said the row was a storm in a tea cup. “it is well known that they love using social networks complaining. Our Weibo prevents from dealing with company’s internal affairs, which is a good thing”, other said. “I think Hong Kong people are overreacting, but I guess it’s a natural response,” the man told Cable TV outside the Dolce & Gabbana store.

LVMH, a bellwether for the luxury-goods industry, declined to give a full-year profit forecast even though all of its divisions performed better in the first half. Steep declines in LVMH’s champagne and watches businesses brought sales down to €4.14 billion ($6.17 billion), off from €4.16 billion last year. “I don’t think we can say the crisis is over, but we can start to see the light at the end of the tunnel, even though the light is far away,” said LVMH Chief Financial Officer Jean-Jacques Guiony.

Claudia D’Arpizio, a Bain retail consultant based in Milan, said she expects the industry’s heavyweights—a group that’s generally defined to include companies like LVMH, Cartier owner Compagnie Financiere Richemont, and Gucci Group, part of France’s PPR SA—to hold up better than smaller players. Mr. Guiony said LVMH aims to increase its market share this year, spread out over categories from cognac to perfume, bags and jewelry.

The U.S. and Japan have been the toughest markets for LVMH’s star fashion brand, Louis Vuitton. But strong growth in China, where it has 30 stores, buttressed the brand’s sales growth, which topped 10% including the positive impact from currency fluctuations. Vuitton contributes nearly half of LVMH’s operating profit, analysts estimate.

Indeed, a projected 12% increase in 2009 luxury-goods sales in mainland China could partly offset declines elsewhere, Bain projects. Luxury brands across the industry are targeting China with new store openings.

While all the other brands are busying to set up more shops in China, Louis Vuitton Hangzhou store (Hangzhou Tower) was just closed last Friday after a spot check of local industry and commerce authority, reported by Today Morning Express (a local newspaper).

Now in front of the closed LV Hangzhou Boutique

Before LV Hangzhou boutique was closed...

No more display in the windows, non more products in the store. LV logo was carefully covered by a blank paper. Located in the high-end shopping centre of Hangzhou, LV Hangzhou is listed in the best three retail sales in China, including Shanghai & Beijing. A such huge change is unexpected by everyone.

From the side of LV China, Ms. Zhao Xiaojing, director of communications for LV China, explained that the problem was caused by lack of a small piece of leather sample dedicated for each leather goods of LV, which is usually attached to the product as a material mark in China. “As all our leather accessories are produced in France, the mark is not required by regulations there,” Zhao said.

From the other side of AIC Hangzhou, the officer claimed that some of the boutique’s products did not measure up to standards and they seized the disqualified products. He didn’t reveal any further information, saying the details would be released after the case was concluded.

The store is closed for now that is probable because of impossibility of stock transferring in a short time, rather that is under the order of the authority.

From the side of LV’s cher clients, demands of returning and charge back were put forward by several royal clients… And the most important for clients is to keep them informed with detail.