The two new stores will be located in Bailian Zhonghuan Commerce Plaza in Putuo district and Shanghai Wanda Shopping Mall in Yangpu district, both of which are major shopping malls.

Mainlanders make up more than 40 per cent of Sasa's customer base for its 52 stores in Hong Kong and Macao.

Compared with Sasa stores in Hong Kong and Macao, whose sales account for 80 per cent of earnings, products in mainland stores are 5 to 20 per cent higher in price due to import tariffs, which pushes away price-sensitive customers.

"As customers become mature, they know there is something we cannot change here," she said. "We want to provide more value-added services and more exclusive brands and products to attract them."

The mainland market is enticing for cosmetics' retailers. The market size has been growing by double digits annually, and is expected to reach 80 billion yuan (US$10.26 billion) by 2010.

Sephora, the French beauty retailer, opened its first store in Shanghai last April. Now, Sephora has nine stores in China. It said it will expand its outlet networks in China with a speed of at least one store per month from this September.

Sasa has obtained product registration approval from relevant institutions in China for sales of about 550 exclusive products, and is involved in applying for another 200 exclusive products.

"We hope the sales of exclusive products occupy 30 per cent of the total here, the same as other regions," Leung said.

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