US casual clothing retailer Gap Inc first mooted its plans to expand in China, the world's fastest-growing economy, last October - but it is only now, eight months down the line, that more details of this major milestone in the company's global growth have been revealed.

In what is being hailed as its most significant overseas expansion in more than a decade, Gap will open four namesake stores later this year - two each in Shanghai and Beijing - as well as a website to sell its clothes to Chinese consumers.

Significantly, the move is seen as the stepping stone to a long-term, multi-channel strategy that will involve more stores in major regions, including Hong Kong.

Like many companies who head into new markets, Gap is trying to regain market share, expand its reach and offset investor concerns after two years of cost-cutting and a multi-year sales slump across its Gap, Old Navy and Banana Republic chains.

Its international business accounted for just 11% or $367m of its $3.33bn in total sales in the three months to 1 May, according to results posted last month - offering huge potential to build new revenues away from its domestic market.

The San Francisco based firm is also hoping to tap into the recent momentum generated by a return to top line growth seen across its domestic stores. Same-store sales in the first quarter were up 4%, with a rise of 2% at Gap North America, a gain of 5% at Banana Republic North America, and a 7% sales surge at its largest unit, Old Navy North America.

"The right time"
For chairman and CEO Glenn Murphy, it's also a case of simply being "the right time" to move into China.

"The Europeans are represented very strongly through Zara and H&M, the Japanese are represented through Uniqlo, but there's no real significant American presence in terms of branding, product and aesthetics in China," he said in October. "We feel it's a good time for us."

The company, which has spent "a lot of time listening to Chinese consumers and learning more about their shopping preferences," according to Murphy, hopes its "casual American" style of jeans, khakis and T-shirts will be lapped up by China's millions of new middle class shoppers.

The Chinese stores will sell the full range of Gap adult, GapKids and babyGap products, including the 1969 Premium Jeans.

"It will be denim, denim and denim," John Ermatinger, Gap Inc's president of its Asia region, told the Reuters Consumer and Retail Summit in New York yesterday (23 June). "It's the ubiquitous product that's worn in China by everyone. Our goal is to be the denim destination in China - hands down."

While Chinese shoppers buy luxury brands as status symbols, they are also motivated by desire for high quality and value for money - with many choosing to spend their increasing wealth and disposable income on western brands.

No stranger to overseas markets
The US' largest specialty retailer is, of course, no stranger to overseas markets, with its casual clothing already available in around 3,100 stores in over 25 countries, including the US, UK, Canada, France, Japan and Ireland.

It also has recently expanded through franchise deals in other parts of Asia, the Middle East, Europe and Latin America, and is planning online shopping sites in Canada and the UK this year.

An experienced team has been assembled to try to mitigate the difficulties of entering a market that most industry experts see as "challenging."

Many western retailers fail to realise, for example, that there is no such thing as "one Chinese market," but instead spans from the new, educated middle classes in the coastal areas to those living in the more rural internal provinces. Body shapes and climates are also different from the north to south of the country.

Gap's China operation will he led by Redmond Yeung as president, and Lorenzo Moretti as managing director - both of who have previously helped top retailers such as Best Buy, Tesco and Marks & Spencer to realise their regional plans.

After studying the market at length, Gap executives have decided to own and operate their own stores, rather than relying on a partnership.