Two prominent Silicon Valley venture capital firms are betting an e-commerce model that has worked in the West for high-end consumers will work in China for that country’s vast and growing middle class.

DCM and Sequoia Capital have invested $20 million in Vipshop, a Chinese site that focuses on “flash sales” of brand names like Adidas, Pepsi, even “Harry Potter”-related items, the firms announced today. The site sells the items for a limited time, at a discount, then moves on to other sales.

It’s a model similar to that of Gilt Groupe in America or Vente Privee in France, except that the two Western companies focus on luxury merchandise like Prada, and high-end customers.

Vipshop, says DCM Ganeral Partner Tom Blaisdell, focuses instead on solid mass-market brands and aims at China’s 120-million-strong and growing middle class. In fact, he told Portfolio.com in an interview in advance of today's announcement, e-commerce models like Vipshop in China are of huge interest to DCM, as it focuses investment beyond Silicon Valley on not only China but Japan as well.

Blaisdell said because of the rapid growth of China, it’s almost easier to get an e-commerce model off the ground than a brick-and-mortar chain of stores—it’s cheaper, has the potential of reaching more people, and China simply doesn’t have the infrastructure of Western countries. Think of it in similar terms as telecommunications, where many developing nations have skipped landlines altogether and gone straight to reliance on mobile communications.

Then there are the numbers that entice the western VCs. First, China is experiencing a 9 percent growth rate. Second, huge numbers of people are moving into the middle class. And third, the e-commerce market in China is expected to grow to $136 billion by 2015, he said.

“E-commerce is going to take a larger share of the pie in China than it does even in the U.S.,” Blaisdell said. “You can see commerce in general skipping the brick and mortar and going straight to the e-commerce market.”

He added that Vipshop was an especially attractive opportunity because it was playing a role in introducing established Western brands into the massive Chinese market hungry for such goods.

The opportunity for venture capitalists is likely to be in investing in homegrown Chinese companies like Vipshop, rather than in Western companies with an itch to do business over the Internet in China. That’s because the model may be similar to those of Western companies, but the Chinese companies understand their own market.

So in search, for example, Baidu.com, not Google, dominates the market; the largest online bookseller is DangDang.com not Amazon.com. “Our business is all about finding things that are similar but making sure that you adapt,” Blaisdell said. “There haven’t been any transplant winners.”

Vipshop is a classic case in point. The company was founded in 2008. Arthur Hong had been active in exporting electronic accessories to Europe, and the French speaker saw the opportunity in flash sales by learning of France’s Vente Privee.

Vipshop's management bootstrapped the operation from 2008 until now. The new investment from DCM and Sequoia Capital is the first venture capital infusion for the company.

“Vipshop has established itself as a credible online retailer with some of the largest global brand distributors, and we are taking the Chinese e-commerce market in a new direction,” said Hong in a release. “With Vipshop, the growing Chinese middle-class can confidently purchase top of the line goods at a reasonable price, and retail brands are assured their products are sold through a safe and secure online channel. The funding from DCM and Sequoia…will provide us with the capital and global expertise to further accelerate our growth.”

Silicon Valley venture shops like DCM and Sequoia, which long have developed a presence in Asia, are poised to make investments in opportunities such as Vipshop. Both DCM and Seqoia have funds designated in the Renmimbi, China’s currency, though the Vipshop investments come from the firms’ dollar-designated funds. Sequoia has set up a partnership based in China, while DCM has focused on investments in both China and Japan, along with, of course, the United States.

“E-commerce in China is growing at an explosive rate and is catching up with more mature markets such as those in the U.S.,” Neil Shen, Sequoia Capital China's founding managing partner, said. “Because of Vipshop’s market leadership and experienced talent already residing in-house, we see a huge and exciting opportunity to build a great company.”

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Kent Bernhard Jr. is News Editor of Portfolio.com