International apparel retailers are looking to strengthen their presence in lower-tier cities in China amid increasing competition, a report by the Li & Fung Research Centre has found.

Luxury brands including Gucci and Louis Vuitton, which used to expand in tier 1 cities such as Beijing, Shanghai and Shenzhen, are now looking to lower-tier cities like Wuhan, Wuxi, Changsha, Fuzhou and Xiame, according Li & Fung's 2012 China's apparel market report.

In addition, both sportswear retailers Nike and Adidas revealed plans to expand into lower-tier cities because people in these areas and getting wealthier. As a result, these cities are becoming the "major battlefields" for apparel companies.

In 2011, Spanish fashion brand Zara opened 29 new stores in China, while Swedish retailer Hennes & Maurtiz (H&M) opened 29. More than 80% of these were located in tier 2 and 3 cities.

The report also found that Chinese apparel retailers including Youngor, Fuguiniao, Joeone and Septwolves are keen to enter lower-tier cities, while consolidating their foothold in tier 1 cities.

Expert analysis

World Textile and Apparel Trade and Production Trends: China, Hong Kong, Japan, South Korea and Taiwan, September 2012 edition

World Textile and Apparel Trade and Production Trends: China, Hong Kong, Japan, South Korea and Taiwan, September 2012 edition

This latest edition in our flagship series of reports contains statistical data, information and insight into the textile and apparel industries in China, Hong Kong, Japan, South Korea and Taiwan. The...read more