Second tier city Chongqing is the fastest growing urban center in the world. Hewlett-Packard and Cisco are among many foreign companies to have bases in Chongqing.

China is a country that extends far beyond the capitals of Beijing and Shanghai. For many brands there are untapped possibilities in the Tier 2 and 3 cities which are equally hungry for new products and foreign influence. Benefits to brands exploring these markets are lower costs (start-up, real estate, staff…) and less competition. It is becoming increasingly difficult to make a splash in the saturated capital markets.

Taking the opportunity to build a following from China’s roots in “smaller” cities (many of which have a population of well over a million!) could give a brand a boost when it later does enter Tier1 markets. Establishing a relationship with the masses outside these spotlight cities could develop a strong cultural brand connection and dialogue that would allow for more effective positioning and a stronger message.

Companies like Estee Lauder are taking this to heart, as they are currently launching in only tier second and third cities. Estee Lauder currently has business in 58 Chinese cities, which is 20 more than last year and by adding in e-commerce, the company’s reach extends to almost 350 lower tier cities cities.

Thenetworkone recently attended Ad Age and Thoughtful China’s Event in Shanghai in September 2012 on building brands in China’s lower tier cities. Check out the highlights video from Thoughtful China at: