By  on October 3, 2006

China hasn't exactly developed an open-door policy, but entry into its vast consumer market is getting easier.

Already the center of the apparel manufacturing world, China is poised to become a power player at the retail level as the market warms to outside brands and merchants. This spring, Credit Suisse First Boston predicted consumer spending in China would reach $3.7 trillion in 2014, an increase of more than 425 percent over a decade.

"The opportunity is substantial, but in many ways it is still like the wild, wild west, and you have to understand the terrain, you've got to understand the dangers there," said Paul Charron, chairman and chief executive officer of Liz Claiborne Inc.

The chance to tap into the gigantic consumer base of 1.3 billion people has attracted retailers running the gamut from Wal-Mart to Fendi, even if challenges still abound. Annual inspections are required before multinational retailers can open any stores, for example. These inspections are carried out by provincial and municipal governments, which increase the chances of local protectionism. Other difficulties, according to Charron, range from an "inscrutable government" to weak protections of intellectual property rights, laws that are not regularly enforced and a culturally diverse consumer base.

Then there is the sheer vastness of China. Shipping goods across the country, which has an underdeveloped infrastructure and difficult terrain, can prove daunting.

But while Charron, like others, is content to let the opportunity ripen, he isn't sitting still when it comes to the world's largest potential consumer market. Liz Claiborne has deployed Fritz Winans as managing director of Asia development, and purchased Mac & Jac, a better-priced brand that has about 40 stores in China through a joint venture. These moves will help Claiborne, also home to brands such as Juicy Couture and Ellen Tracy, gather intelligence on the market.

"I cannot imagine that we would enter China without a local partner," said Charron. "You can be killed there even if you do those marketing and product things right. You can be killed there if you fail to understand the legal nuances or the governmental regulatory nuances."

Last month, Claiborne's Juicy Couture brand signed an agreement with the Lane Crawford Joyce Group for exclusive distribution rights in China, Taiwan, Hong Kong, Macau, Singapore, Thailand, Malaysia and Indonesia. During the first four years of the contract, 24 Juicy Couture freestanding stores are planned to open, along with 23 in-store shops, with the majority of the presence focused in greater China, including the mainland and Hong Kong, as well as Taiwan.

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