July 19, 2007 -- It's the decision that has international retailers sweating like no other: how quickly and how deep to go into China? Even for a company that has swept up back home, entering the world's most competitive retail market is no small matter.

The biggest cities, like Shanghai and Beijing, are a safe bet - with an already wealthy population. The gamble lies in the center of the country: should a company dive in quickly, to be among the first to build up a retail network, and reap the rewards when the population's spending power eventually soars? Or is a wait-and-see approach better, holding back expansion until there are actually customers to fill up the stores?

Optimists say that the gamble will pay off. It is, they say, only a matter of time until people in cities all over China will have the money to spend on goods that they would have never thought of buying a generation ago. Naysayers suggest that just as incomes rise, so too does the cost of living. And the moment that people get a little money a security, they don't rush to the local supermarket, they put a deposit on a house.

Our lead story this week is a column by Chris Horton that looks at the prospects of Kunming as a market for foreign goods. People in Kunming have more disposable income than ever before, and that money can be spent in an ever increasing variety of retails outlets. The big international brands opening up in Kunming will be hoping that the middle classes splash out on luxuries rather than keep the money by buying houses.