Entery Strategy of H&M

It was an event that had been on the lips of Shanghai's fashion conscious for months. On April 12, the first H&M store in mainland China finally opened its doors.

The Swedish retailer took its first steps into the ever-more-competitive Chinese fashion market with a bang, flying in pop star Kylie Minogue to launch her own line of swimwear and open the store on Huaihai Lu. With over 1,300 stores in 24 countries, H&M is no stranger to foreign markets but, until now, it had limited its China business to sourcing.

"We think China is a very interesting market with a huge potential for growth. There is a high level of fashion awareness and there is a high level of spending power," said Nils Vinge, head of investor relations at H&M. "We will try to offer the same business proposition as we do in the rest of the world, fashion and quality at the best possible price."

Top-end luxury fashion brands have had a difficult time squeezing profits out of China's still relatively small pool of customers, but mid-level fashion retailers - like Spain's Zara - have found a lucrative market.

"There are enough people that are in a position to afford this stuff and they're in jobs where they need to wear fairly smart clothes," said Paul French, director of market research firm Access Asia.

"It's to do with the emergence of the office lady. We saw them first in Japan, then Korea, and now we're seeing it here. It's a natural development of a more sophisticated market."

Unlike many retailers, who change their collections on a seasonal basis, stores like H&M replace their stock every six to 12 weeks. This "fast fashion" is effective in maintaining customer interest because each time they visit the store it has a different feel.

"One of the things about fast fashion is that you buy something, you wear it a couple of times and maybe it gets damaged in the wash, but you don't care because it's cheap," said French.

Fan Yang, a retail analyst with market researchers...