Unlike consumers in big urban areas like Beijing and Shanghai, residents of China's smaller cities tend to be less exposed to global brands and less aware of where they come from.

"One of the reasons for our success in China is that with growing recognition for Uniqlo as a high-quality brand, we are targeting middle-income consumers in China and provide identical product mixes at Uniqlo China and Japan," the company said in a statement emailed to Reuters.

Investment from Japan ebbs amid uncertainty

Fast-fashion brands expand into 2nd and 3rd-tier cities

The company does not disclose sales figure by region, but the statement said it had seen "almost no impact" from the dispute between Japan and China.

Other Japanese consumer and car companies were hit hard by a boycott that began after the 2012 protests. Most Japanese retail firms, such as Sony Corp and Panasonic Corp, do not disclose sales figures for China, but some executives say sales have yet to fully recover.

Some Japanese automakers saw sales fall by around half. Nissan Motor Co Ltd, the automaker most exposed to the world's largest car market, also cut its earnings forecast by 20 percent for the year ended March 2013.

For many Chinese, the saving grace of Japanese products is their quality. China's consumer goods sector has been beset with safety scandals ranging from tainted milk to fake parts, while Japanese manufacturing standards are seen as superior.

The geopolitics, however, continue to pull sales down.

"I don't boycott Japanese products intentionally because their products are good. You can't deny this," said Chen Huizhe, a 51-year-old engineer at a steel company from the eastern city of Hangzhou. "But if two products are equally good, then I prefer the non-Japanese one."