In the past, cities like Beijing and Shanghai were seen as the ultimate destinations for aspiring clothing brand entrepreneurs. These first-tier cities offered a vibrant marketplace where both domestic top brands and international fashion giants thrived. However, the competition was intense, and the market had become saturated, making it increasingly difficult for new players to establish themselves.
For many domestic brands with limited resources, trying to break into these major cities often felt more like a vanity project than a realistic business strategy. As a result, many companies shifted their focus to second- and third-tier cities, where the market was less crowded and the potential for growth was greater.
Take Seven Wolves, for example. The brand started by expanding into smaller cities long before they became popular. According to Zhou Shaoxiong, chairman of Fujian Septwolves Industrial Co., Ltd., the company initially focused on wholesale and gradually built its national presence after 1998. Today, Seven Wolves is one of China’s leading men’s fashion brands.
This trend has led several top domestic brands, including Seven Wolves and Metersbonwe, to redirect their attention toward second- and third-tier cities. These areas are now considered ideal for expansion, offering lower costs and untapped consumer demand.
According to data from the 2008–2009 interim report, the number of stores in East China dropped significantly, from 2,685 to 1,289, while North China saw a reduction of 449 outlets. Meanwhile, West China experienced a sharp increase in retail locations. This shift clearly indicates that brands are moving away from over-saturated first-tier cities and investing more in second- and third-tier markets.
Huang Gui, vice president of Bosideng, explained that expanding into second-tier cities helps strengthen the sales network and boost performance. Additionally, with the return of labor from coastal areas, these regions can help drive rural market demand.
Despite declining sales revenue, Bosideng managed to maintain its gross profit margin due to reduced distribution costs. After the financial crisis, the company became even more committed to entering second- and third-tier cities.
The clothing industry has also seen a growing brand vacuum in second- and third-tier cities, creating opportunities for visionary domestic brands. Companies like Seven Wolves, Summa, and Cards have successfully captured this market, demonstrating strong growth and brand recognition.
Today, large department stores are no longer the dominant form of retail. Many domestic brands are opening specialty stores in various cities. For local companies with limited resources, opening a store in a high-traffic area of a second-tier city is more feasible than in a first-tier city.
These stores not only help increase sales and brand awareness but also allow companies to conduct more effective marketing campaigns and highlight their brand identity.
Local brands have also learned from international giants, adopting strategies such as outsourcing production and logistics, while focusing on design and marketing. In recent years, many companies have moved away from relying solely on advertising and instead focused on brand positioning and style development.
For instance, some brands target young consumers, while others focus on casual or business-oriented styles. By aligning their branding more precisely, companies have created a broader and more diverse market.
One key advantage of local apparel brands is their deep understanding of the local market and Chinese culture. Red Bean, for example, pioneered the concept of promoting a mainstream lifestyle in China, emphasizing simplicity and modesty without sacrificing quality. Thrift is deeply rooted in Chinese tradition, and Red Bean effectively integrated this philosophy into its brand image.
Through careful research and positioning, Red Bean defined the mainstream Chinese lifestyle as “harmonious morality, optimism, ambition, and thrift.†It successfully balanced frugality with luxury while embedding authentic Chinese cultural elements into its brand identity.
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