Advice to retailers looking for new markets? Go East. To the Far East.

"Wealth is being created in China at a rate exceeding anywhere else," asserts Howard Davidowitz, chairman of retail consultancy and investment banking firm Davidowitz & Associates, Inc. "Asia is where the growth is going to be the next 10 to 20 years."

China, along with India, are growing markets that cannot be ignored, says Shalendra D. Sharma, Ph.D, professor of Politics at the University of San Francisco and author of China and India in the Age of Globalization. "These markets are the future and essential to the growth of any business."

" Now, in both China and India, foreign is seen as modern, trendy and acceptable." - Shalendra D. Sharma, Ph.D, University of San Francisco

Consumers in China continue to shop at a widening range of stores, according to the Cotton Council International (CCI) & Cotton Incorporated Global Lifestyle Monitor survey. Nearly all of the channels shopped saw marginal increases. Significant increases were seen in the percentage of those shopping at department stores (65%, up from 58% in 2008), along with a sharp increase in use of the Internet for clothes shopping (37% up from 22% in '08), particularly among younger consumers.

With a robust retail economy, Chinese consumers appear to value the selection and variety (29%) of clothing items more than their prices (24%), according to the Global Monitor survey. With many shoppers ready to spend more on clothing in the upcoming year ($275 in the past three months versus $247 for the same period in 2008), the focus among the Chinese is on having a variety of options when shopping.

China was recently named the top market for retail development – ahead of Kuwait and India, respectively – in consulting firm A.T. Kearney's ninth annual global study of areas ripe for expansion.

As a result, brands and retailers are actively building their flagship stores in first-tier cities, and expanding their presence in second- and third-tier cities, says Winnie Yang, director of research and production for the China Decision Makers Consultancy, host of the 5th Annual China Luxury Summit, which was held June 24 and 25 in Macau. This year's event included speakers from The Gucci Group, La Perla, and Salvatore Ferragamo.

"Statistics show that around 53% of all point-of-sale locations for luxury goods, which are not limited to fashion brands, have opened in just the past three years in China," Yang says. "Many super-premium brands, like Armani, Hermes, MaxMara, Chanel, Chloé, Dior, Valentino, YSL, Bottega Veneta, Dolce & Gabbana, and Prada are mainly focused on the top three cities of Beijing, Shanghai and Guangzhou and other tier one cities. Whereas premium priced brands, such as Burburry, Zegna, Dunhill, Ferragamo and Hugo Boss, have expanded a considerable sales network in tier two and lower cities."

Sharma says the mindset has changed, to the point where consumerism is not evil – and wearing foreign, brand-name apparel is a symbol of one's success and openness.

"Earlier in China, having access to foreign goods, and wearing brand names was seen as a symbol of 'capitalistic decadence' and worse. In both China and India – foreign is now seen as modern, trendy and acceptable," Sharma says. Davidowitz explains the concept of a communist society where money now speaks volumes. "They're technically a communist country, but they have a very aggressive entrepreneurial capitalistic system," Davidowitz notes. "They have thousands of entrepreneurs. They go to the finest American universities. And they have creativity in all areas: buildings, cars, jet planes. This is not the old China."

Davidowitz points out that although 80% of the country is still rural countryside, marked equally by spectacular rice paddies and abject poverty, China has 1.4 billion people.

"There stands an amazing difference," Davidowitz says. "They have some of the biggest banks. They hold a trillion dollars of our debt -- they have all the money. A lot of people who create all this money are making billions and billions of dollars. They're getting all the fashion magazines, traveling to Paris, and all over the world, and wearing $5,000 suits from Armani. More people in China have luxury on their minds because it's more possible to get rich in China."

Chinese consumers may be increasingly familiar with foreign brands, but they are only beginning to connect shopping as a positive experience. Today, nearly two-thirds (65%) say they like or love shopping for clothes, according to Global Monitor data, compared to 61% in 2008.

Yang says Calvin Klein and Coach are the two most well-received American designer brands in China. The Wall Street Journal recently reported Coach's sales in China are now at least a year ahead of schedule, predicted to reach $250 million in fiscal 2012. And Women's Wear Daily reported Calvin Klein, Inc. plans to increase its number of CK Calvin Klein stores from 67 in 2009 to 151 by the end of 2012, with 60 units to stand in China.

"Early entry does seem to provide some benefits in earning quick profits and in creating loyalty, though it is not necessarily the only path to success," Yang says, adding that 3.1 Phillip Lim, Diane Von Furstenberg and Vera Wang are also distinctive names in the top three cities. "For brands not yet in China or with smaller footprints in the country, late starts may put them at a disadvantage, but there's still room for growth, though stakes will be higher, and it will be a bit more challenging."

Room for growth also lies in the fact that a high percentage of Chinese consumers (72%) say they prefer to change clothes for different activities, according to Global Monitor data. In the U.S., just 29% of consumers prefer to do so, with about 71% preferring to wear one comfortable outfit all day, according to Cotton Incorporated's Lifestyle Monitor™ Survey.

Sharma says with their new purchasing power, consumers are continuing to buy foreign brand names. "Consumers… see it as a symbol of success and cosmopolitanism."