LONDON (Reuters) - Luxury Western brands selling designer handbags and handmade suits to China’s newly-rich, may find their local distributors want a bigger role or even ownership given the $10 billion market is booming.

Takeover activity is expected to pick up next year, say analysts, and is likely to involve emerging market investors, particularly the Chinese.

Design and fashion houses rich in heritage, but which have fallen on hard times, look to be top picks. The 2008 recession, saw the luxury sector fall into its worst ever slump with global sales sliding by eight percent in 2009.

“For sure there are many players and new groups, banks and private equity funds from China that are interested to scout for old brands to develop or turnaround in the Asian markets,” Bain & Co. partner Claudia Arpizio told Reuters.

Following in the footsteps of Chinese firms YGM Trading, Mensun Ltd and Li & Fung, which now own, or have been in talks with distressed brands in the past, conglomerates and distributors are likely to feature among interested parties. YGM Trading, which bought French house Guy Laroche in 2004 and is the Asian licensee for British brand Aquascutum, told Reuters it was on the look out for deals.

“We are still trying to add brands to our portfolio through house brands, licensee brands, distributors and acquisitions. We’re still expanding, it’s an ongoing process,” its CEO Shirley Chan said.