The wide customer plaudits give more incentives to those cut-price garment makers. European fashion chain C&A, which has been operating seven stores in Shanghai and Beijing since 2007, underscores its expansion plan. "(We will) roll out C&A's retail format to some provincial capitals in China before the spring of 2009," said its communication officer.

Enchanted by China's young people, the budget brands, however, gives a punch on small local boutiques.

Unlike foreign outlets, which often have crowds of shoppers, Zhou Youqing's fashion house in Xinle Road, next to the sleek Middle Huaihai Road, is quite unruffled. This 40-sq-m unnamed boutique, has been going through lean times since H&M moved into the neighborhood in 2007. "We have been operating here for almost seven years, but saw customer flows decreasing during the first few months after H&M opened its gate, in particular at weekends. The monthly sales revenue had about a one-digit percent drop," Zhou said.

Then she decided to fight back by cutting prices and beefing up the clothes cycle. "We make smaller-size apparels with Korean and Japanese styles, which meet oriental women's needs with slimmer figures, and differentiate our store from the European clothes giants. And our prices have been trimmed down by up to a few hundred yuan." Zhou's strategies worked and is now seeing climbing customer flows. "But the profit progress was minor, as customers are now tightening the purse strings when it comes to fashion."

(China Daily July 10, 2008)