American apparel retailer Banana Republic plans to expand into China, making Hong Kong its entry point.

Banana Republic will open a store in Hong Kong next year and gradually expand into the mainland after that.

Banana Republic, which was acquired by Gap in 1983, concentrates its operations in the US and Canada. It has had a presence in Singapore for several years and recently entered Tokyo.

“To China, obviously it is a latecomer, and now apparently a decision has been made that China cannot be ignored,” said a source.

Redmond Yeung, Gap’s president for greater China, said the company is working on ways to launch Banana Republic in China, however, he declined to give time frame.

One of the challenges that will face Banana Republic in China is finding prime locations. Retail rents in prime spots in Hong Kong and Shanghai, for example, have risen rapidly in recent years. In Hong Kong alone, rental rents have skyrocketed to US$3864 per square foot per annum, making it the world’s most expensive destination for retailers.

GB