BEIJING: Overseas luxury brands remain pre-eminent in China, and are likely to retain such a position for the near-term at least, industry experts believe.

Powerland, the handbag manufacturer, Shanghai Tang and LaVie, the apparel groups, and Chow Tai Fook, active in the jewellery sector, are among the leading indigenous challenger brands at present.

"Analysts from China that I've talked to have been in agreement that the next generation of growth will be a new wave of local brands," Paul Swinand, a Morningstar retail analyst, told the Financial Times.

"There'll be a sense of national pride or even local pride regionally - just like in the US there are brands that play better in California than in New York".

More broadly, he argued multinational operators may have an advantage based on their superior know-how and established store networks, but the gap should close going forward.

"It looks like Louis Vuitton, Hermès and Coach are growing strongly, but that's from the foothold they already have," said Swinand.

"The exciting part is people we don't know already - those that have five stores but will have 100."

Overall, the landscape is somewhat similar to the US technology industry before the dotcom bubble, meaning many contenders have appeared rapidly.

"The trick is to find the Google," said Swinand.

Anthony Bolton, a fund manager for Fidelity China Special Situations, also asserted the popularity of foreign offerings constitutes a cornerstone of shopper habits.

"I have been searching to find the Chinese luxury brands of tomorrow, but so far with little success," he said. "That said, I'm sure they will emerge at some point in the future."

Peter Kirkham, who heads JP Morgan's Global Consumer Trends Fund, suggested second-tier companies just below the premium level are currently making the most progress.

Want Want, which makes rice crackers, dairy drinks and other beverages, is one example of this, as is Vinda, the household paper firm.

Liming Shoes, the footwear specialist, is also strengthening equity for its products, and sits behind only Nike and Adidas on this measure, while charging prices around 75% of those recorded by its international rivals.

"The vast majority of all luxury goods sold remain Western brands," Kirkham said. "It takes years and years to build a brand. Realistically, I don't see the emergence of any strong local brands any time soon."

Prada, the Italian fashion house, listed on the Hong Kong stock exchange last week, and hopes this approach could serve it well in breaking into China.

"I am positive the Greater China market will be an interesting market for luxury good brands," Patrizio Bertelli, Prada's CEO, said. "The first signs are very good."

Insights provider the China Market Research Group estimated luxury spending should reach $15.6bn in the world's most populous nation this year, up 20% on an annual basis, and boosting players like Prada.

"Girls always tell us when they want to buy a bag, it's got to be a Louis Vuitton or Gucci first," Shaun Rein, the company's managing director, said.

"Prada's going to do well but it's not going to take the [category by] storm."

Coach, the US handbag and accessories manufacturer, is planning a similar exercise to Prada, listing secondary shares in Hong Kong, more to boost its local standing than securing finances.

"This listing, if approved, will raise awareness of the Coach brand among investors and consumers in the China market as well as throughout Asia," said Lew Frankfort, Coach's chairman/CEO.

Data sourced from Financial Times, Associated Press; additional content by Warc staff