Trend spotting

But like any battleground, lower-tier cities contain hazards.

Secondary, or "second-line" foreign luxury brands - like Armani's Emporio Armani and Prada's Miu Miu - have a harder time finding a niche, analysts say. Consumers think they're either too high-end or not high-end enough.

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"The vast majority of middle-class consumers in tier-two and -three cities are very value-focused, and many of them will prefer good quality Chinese brands to high-quality but pricey foreign ones," says Wang Jiajun, an analyst at China Market Research Group in Shanghai.

When it comes to clothing and accessories, he says, these consumers usually go for domestic fast-fashion brands like Lilanz and Septwolves.

On the other hand, the rich, who are still new to luxury, will "seek large logos and widely recognized brands such as Louis Vuitton, Gucci and Chanel", Wang says.

They are also more likely to shop in top-tier cities, according to Wang, since they feel these places offer more choices, and at the same time, they can check out what big-city people are buying.

Another catch is that trends in lower-tier cities can be a lot different from those in major cities. Here, Chinese brands appear to have an edge.

"Domestic brands have been quicker to catch on to fashion trends in secondary cities and even become trendsetters there," Wang says. "Foreign brands have tended to import global fashions that don't always suit local tastes."

A brand's success in secondary cities is also affected by its reputation, which is essentially created in the mega cities of Beijing and Shanghai.

Success indicators, particularly in the luxury segment, are much more complex than just sales levels, says Angelito Tan, founding partner at Robert, Tan &Gao (RTG) Consulting, a luxury consultancy with offices in Shanghai and Beijing.

One of these indicators, Tan says, is brand perception, which is built through a trickle-down approach.

"Initial presence in first-tier cities is essential for brand credibility and harnessing brand desire among trendsetters, which is later spread to second- and third-tier-city consumers," Tan says.

Ittierre is keenly aware of this, that's why the company is biding its time re-entering shops in the Chinese capital.

Due to product licensing and retail space issues, it had to close down its stores in the all-important Beijing market in 2009. But in spring, it will be back at Parkview Green, a premier mall in Beijing's central business district.

"Yes, there is opportunity in second- and third-tier cities, but Beijing remains for us the most important city in China," Elaine Yin, chief operating officer of Ittierre's subsidiary in the Asia Pacific, says. "We want to make sure we set the right example for the rest of China."

Meanwhile, 35-year-old Gao Xiuli is just glad she doesn't have to travel abroad anymore to buy her favorite Galliano clothes.

The resident of Kunming, Yunnan province, discovered the brand on a trip to Italy three years ago. Now, Gao calls herself a "loyal customer" of its 2-year-old shop in the southwestern city's Shuncheng Mall.

Contact the writer at tiffany@chinadaily.com.cn

Guo Anfei in Kunming and Yu Ran in Wenzhou contributed reporting.