HONG KONG - The rising popularity of luxury goods in Asia may be most visible in large cities but retailers are targeting future growth in smaller and long-ignored urban centers.

Growth in minor cities is not at the expense of the traditional bases, however, as the number of high net worth individuals (HNWI) with money to splurge on a Rolex watch, Tiffany necklace, Armani suit or an impressive Bentley car rises.

HNWIs are people with $1 million in investable assets. Their total wealth has climbed by more than 14 percent since 2007 despite the financial crisis in 2008. In Asia-Pacific, their ranks swelled by 9.7 percent in 2010.

A study by Capgemini and Merrill Lynch Wealth Management last year found 3.3 million of them in Asia, more than in Europe and almost as many as the 3.4 million in North America. In China alone, there are 535,000 US dollar millionaires, putting China in fourth place behind the United States, Japan and Germany. As a group, Asia-Pacific's richest people already have more money than Europe's.

Chinese shoppers scout for bargains at Bicester Village Shopping Center, a designer outlet full of stores offering high-end brands like Gucci and Prada, in the southeast of England. Provided to China Daily

Japan is home to the largest group of rich people in the region, with 1.7 million HNWIs, three times as many as second-place China and nine times more than third-place Australia. But the combined share of rich people of all three dropped from 77 to 74 percent between 2008 and 2010.

A surprisingly large number of Asia's HNWIs can be found in smaller third- and fourth-tier cities in the Chinese mainland. Compared with the US, where a third-tier city has a population of a few hundred thousand, in China any place with less than 1 million people is little more than a village. So a third-tier Chinese city, often with several million people, is a worthwhile market for retailers.

A study in 2010 by KPMG, the audit, tax and advisory services firm, found 15,200 yuan millionaires in Henan province, 22,100 in the city of Nanjing and 13,500 in Chengdu. Chongqing has 9,700; Tianjin, 14,500, and Xiamen, with an adult population of 1.78 million, has 11,500. Shenyang has 7,660; Harbin, 5,790; Qingdao, 11,100; Suzhou, 15,600; Fuzhou, 10,200, and an unusually rich Hangzhou, 47,300 out of an adult population of 2.1 million.

These are a lot of people with money to spend and luxury brands are chasing them.

Cartier, the popular jewelry brand, is expanding aggressively in China. It is branching out beyond the top cities and into smaller but increasingly affluent cities. The company already has more than 30 stores across 18 cities.

Since 2007, Tiffany has also shifted its expansion focus to smaller cities, although most of its stores are in top tier cities. Montblanc, the penmaker and luxury goods brand, has 420-plus stores worldwide and almost one-fifth of them are in China.

"Based on our findings, it seems that only long-established clients in China can take full advantage of growing sales in third- and fourth-tier cities," said Jean-Michel Dumont, chairman of communications agency Ruder Finn Asia. "Newer brands still have to invest in raising brand profile and sales in first- and second-tier cities before investing in (smaller) cities. However, luxury brands with a longer presence in China are already strongly investing there."

The same thing may be happening in other large countries such as India and Indonesia, where growth in smaller cities may complement the already visible uptick in luxury good sales in major metropolises. Other places like Singapore, Hong Kong and Taiwan - not to mention Japan and South Korea - are already well-established markets that continue to grow.

In the years ahead, led by China sales, luxury brands expect much of their growth to come from Asia where most economies are growing much faster than those in the West. A combined population that is about 10 times larger than the US' also presents great opportunities for growth over the next couple of decades.

Prada had an initial public offering (IPO) in Hong Kong in June 2011 and announced in December that sales in Asia had jumped 45 percent in the third quarter.

Last month, Hong Kong jeweler Chow Tai Fook completed an IPO and Chairman Henry Cheng noted that they had "no intention, at least for 10 years, to open any points of sale other than in China, Hong Kong and Macao."