SHANGHAI--To much of the world outside of China, Shanghai is more an idea and a fantasy than an actual physical city with its 20 million souls. In Chanel's Paris-Shanghai Métiers d'Art Collection and an accompanying film that made its debut in Shanghai Thursday night, Karl Lagerfeld explores exclusively and unapologetically the imagined and the exotic.

"It is about the idea of China, not the reality," Lagerfeld told WWD on his first trip to Shanghai. "It has the spirit of, and is inspired by, but is unrelated to China. It is not authentic like a Peking Opera or something."

That disclaimer of any connection to actual China and Shanghai allowed Lagerfeld creative and interpretive freedom with the film and the collection. "Coco Chanel never came to China, so they imagine the trip she never made, a fantasy of her coming to Shanghai in the Thirties and Forties and during the Cultural Revolution," said Lagerfeld. "Shanghai has a very special reputation, very different from other Chinese cities."

The show featured 71 looks and took place on a custom-built barge with a glass front facing out onto Pudong's famous futuristic skyscrapers. The boat remained stationary during the show, which began with a screening of the film "It is a great idea to do it on a boat, with Shanghai in the background. It is quite unreal in a way," said Lagerfeld.

Click here to see looks from the Paris-Shanghai Métiers d'Art Collection>>

Celebrities gracing the red carpet and boarding dock included Vanessa Paradis, Anna Mouglalis, Steven Klein, Carine Roitfeld, Zhou Xun, and Chinese artists Yi Zhou and Yang Fudong.

Bruno Pavlovsky, Chanel's president of fashion activities, said that Chanel will sell the collection at its boutiques around the world come May.

"[The collection] does draw on Chinese craftsmanship," said Lagerfeld, "but it doesn't. It is my idea of what it is Chinese craftsmanship, not what it actually is."

The designer dished out a few zingers at his pre-show press conference here such as: "If you are against luxury, then you are for unemployment. The luxury industry employs millions of people."

The Métiers show coincides conveniently with the opening of Chanel's new Shanghai flagship at the Peninsula on the Bund, which opened its doors last week. The new boutique is Chanel's second in Shanghai and fifth in Mainland China.

Lagerfeld lamented that he had few impressions of the nonfantasy Shanghai. "I haven't left the hotel since I arrived in Shanghai, not that there is much of it left over," Lagerfeld said, referring to Shanghai's vanishing heritage architecture. His perch in the Hyatt on the North Bund is surrounded by huge swatches of the almost empty blocks where the old Hongkou district has been recently cleared to make room for high rises.

Busily fine-tuning the models and looks while chatting with the press in a collection of Hyatt ballrooms, Lagerfeld seemed calmly enthusiastic about his debut in Shanghai. He wore his signature gloves in studded gray leather and a wide red tie adorned with a silver and blue brooch atop a white collared shirt with pink and red stripes, topped with a black jacket. "I have been to Beijing and Hong Kong, but this is my first trip to Shanghai," he said. "I needed a work-related reason to come, so I invented one with this collection."

In the film, Coco Chanel dreams about visiting Sixties China and tries on a Mao suit, musing that she may make a collection inspired by it. Chanel then traverses through Thirties Shanghai, popping into a gambling den where she meets the future Duchess of Windsor, played by Amanda Harlech. The film also features Baptiste Giabiconi, Freja Beha, Brad Kroenig, and Sébastien Jondeau.

In a potentially controversial move, Europeans in yellow face play some of the Chinese characters. Lagerfeld defended this as a reference to old films. "It is an homage to Europeans trying to look Chinese," he explained. "Like in 'The Good Earth', the people in the movie liked the idea that they had to look like Chinese. Or like actors in 'Madame Butterfly'. People around the world like to dress up as different nationalities."