The commerce ministry says sales in the first half of this year are expected to grow 12.5 per cent and in the longer term, the State Information Centre forecasts sales to exceed 20 trillion yuan.

Such prospects are alluring, when compared with the single-digit rate in the world's biggest economy, the United States.

'We would describe development [of the retail industry] as stable since the market was fully opened,' said vice-secretary general of the China Commerce Association for General Merchandise Fan Yanru in Beijing.

The competition is becoming increasing cut-throat. Last year, more than 1,000 new retailers were approved to set up operations across the country, of which more than half were foreign-invested. To date, there are 1,027 foreign retailers in the mainland market, compared with just 314 in 2004.

The increased presence of foreign players has hit the hypermarket sector hardest, with Carrefour and Wal-Mart having introduced superior expertise and finances.

Wang Tian, chairman of Better Life Chain Store and a National People's Congress deputy, is urging the government to introduce rules to protect domestic interests, particularly in the hypermarket sector.

'Foreigners' superior position is obvious ... they have secured a huge share of the market,' he said. 'The opportunities for home-grown operators are slim. If the government doesn't introduce measures, it will be total collapse.'

Because of the expanding foreign presence, mainland retailers say they have been forced to mature rapidly even though the mindsets of many managers remain in the era of planned economy.

'It's really a problem of their consciousness' of the need for being market-oriented, Ms Fan said. 'A big number of retailers and malls haven't reached acceptable standards.'

Ironically, it is human resources that count in the industry where service is instrumental to doing well. Analysts fear a lack of talented staff would pose the greatest challenge to the sector's sustainable expansion.

Managing a retail operation is all about competent staff who are capable of staying ahead of rapidly changing consumer behaviour.

Technology and foreign interests are facilitating the speedy spread of these new management concepts and ideas.

To survive, mainland retailers, even the state-owned giants, have been forced to renovate, reorganise their shareholding structures and reposition their branding strategies. Some, like the Shanghai Friendship Store, have specialised in Chinese goods and antiques appealing to the foreign visitor.

So far, scores, including the likes of Beijing Wangfujing Department Store (Group), Lianhua Supermarket Holdings and Hangzhou-based Golden Eagle, have raised funds through public listings in the mainland and Hong Kong and the list is increasing. Their stocks have risen between 25 per cent and 77 per cent this year.

Facing times of 'survival of the fittest' state giants have launched aggressive expansion drives through acquisitions. Beijing Wangfujing Department Store bought a 25 per cent stake in 7- Eleven (Beijing), while Shanghai Bailian, the country's biggest retail group, is the result of pooling the assets of Shanghai No1 Department Store and Lianhua Supermarket.

Industry players say a retailer needs to achieve annual sales of at least three billion yuan before it can retain a substantial hold in the market.

Smaller players such as the neighbourhood stalls, face a bleak future. According to official figures, market share of these operations plunged from a healthy 22.6 per cent in 2003.

The declining interest in small shops with basic services and goods comes as a result of higher expectations and demands of increasingly affluent urban consumers.

Department stores such as Wangfujing fare better because of the variety they offer and their stronger financial backing, although these state-owned entities are grappling with a changing market environment of increasing specialty shops, many more domestic and foreign brands and a mobile middle-class. Nevertheless, both domestic and foreign retailers are persisting optimistically as they open more shops, extending their presence from first-tier to second-tier cities, review their sales strategies and repositioning.

These moves are inspired by some dazzling demographics - 100 cities with populations of more than one million and 150 million urban families with annual incomes of more than US$10,000 within the next nine years to name just two.

Also alluring are the 2008 Olympic Games in Beijing and the 2010 World Expo in Shanghai.

Eventually, when the programme to build the New Socialist Countryside begins to pay off, the retailer's goal to sell a pair of jeans to all 1.3 billion mainlanders may yet emerge.