No I don't work for LVMH and no I won't disclose sources - sorry.
I am an International strategic marketing consultant (thirty years) for fortune 50 corporations and previously an advisor to the Foreign Trade Committee for tariffs and imports on Asian imports for the European parliament in Brussels.
The LVMH pricing strategy isn't just about profits. It is also a regulator valve to ease pressure on production. With mass produced products you simply ramp production up and down - no problem - bring in more machines - speed up slow down the machines. With LV the products have a high amount of human labour and you can't ramp SKILLED human labour up and down without impacting quality of workmanship. There is a much higher level of inertia. If you raise prices in the EMEA region to slow demand you take pressure of labour intensive resources that are already stretched meeting demands in other regions. If you try and make people work faster quality suffers (heard about the quality problems in other threads - ring a bell?). You have to use price as a manufacturing valve BUT there is no point raising prices on product lines that are already manufactured and form part of your inventory. That WILL increase profits of course, but the game plan is to slow production on items to be manufactured - not on items that have been manufactured. LV have to raise prices to a point where the product is just affordable to a market size that they can handle. The problem is the psychology of Asians who are insane about having to own Louis Vuitton. They will bankrupt themselves and everyone around them in order to own the brand. A more moderate western frame of mind will simply move to other brands, as you correctly point out. Once that happens a degree of equilibrium will return and demand will grow at a slower controlled pace. In short, Asia has created a multitude of problems (not just counterfeit copies). The other strategy is simply not to supply the Asian markets or at least curtail it. That strategy failed as Asian purchasers simply travelled to Europe to purchase the product by the ton in local markets and then carried it back and resold it. Hence the "you can't purchase more than two of any product line" ruling. Raising prices is the only option - unless of course you learnt something in your economics class that LVMH have missed, in which case I strongly advise you contact them. I have it on good authority that they will pay mega bucks to allow you to showcase a solution.