Will a new class of globe-trotting Chinese businessmen clamor for imported pin-striped suits made in America?

Joseph Abboud Manufacturing Co. thinks so.

In a move that turns the typical globalization story on its head, the company is set to disclose today that it will be manufacturing tailored suits, sports coats, and dress pants at its New Bedford plant for export to China. The company says it will open 15 stand-alone stores and shops within high-end retailers in China this fall, and another 15 next year.

While some casual sportswear makers like American Apparel have taken advantage of shifts in exchange rates to ship clothing to China, as have European designers like Giorgio Armani, the Joseph Abboud plan is believed to be the first instance of "made in America" labels destined for designer menswear in Shanghai and Beijing stores catering to upscale Chinese consumers.

"China now has more millionaires than America has," said Marty Staff, president and chief executive of JA Apparel Corp., the New York operating company for Joseph Abboud. "China has a burgeoning middle class. These are people who need to dress properly, travel internationally, and embrace the Joseph Abboud brand."

While the number of garments shipped from New Bedford over the weekend is small - 500 suits, 500 sports jackets, and 900 pairs of trousers of all kinds, in a broad mix of "opening inventory" - company officials see the initial delivery as simply a way of testing the waters. By 2012, they expect to have 100 retail locations across China.
"We'll get feedback from our customers in Beijing that they like black suits or pleated pants or double-breasted jackets, and we'll use our factory in New Bedford to replenish in two weeks," Staff said.

Joseph Abboud's gambit is an example of how companies in Massachusetts and elsewhere in the United States are capitalizing on the growing wealth in developing countries that is creating new classes of consumers, said Paul S. Grogan, president and chief executive of the Boston Foundation, a civic group that's sponsoring a forum tomorrow on the revival of manufacturing in Massachusetts.

"This tells you the declining dollar is creating opportunities for a state like Massachusetts, where exporting is important," Grogan said. "That's the silver lining in the economic travails we're experiencing."

The falling value of the dollar, which makes it cheaper for US producers to sell abroad, is only one of several factors behind Joseph Abboud's export-to-China strategy, company officials said.

Another dynamic is a US law giving manufacturers relief from tariffs on fabrics imported from other countries, including China, that are used as raw materials in Joseph Abboud menswear. Efficiency improvements at the New Bedford plant that enable it to rapidly adapt to changing tastes and handle a "cut to order business" for smaller and odd-size orders - something not currently available from Asian producers - also come into play.

The plant's 550 employees are proud of their ability to export to China at a time when most apparel sold in the United States is imported from Asian countries, said Anthony R. Sapienza, chief operating officer for Joseph Abboud Manufacturing in New Bedford.

"This is a small business now, but we expect significant growth going forward," Sapienza said. "To compete globally against much lower labor costs, you have to have a niche and you have to be good at it."

While the China business will represent only a small fraction of Joseph Abboud's production run of about 1,100 garments a day, the company insisted the business will be more than a symbolic move intended to establish the brand in China.
"We don't do anything to lose money," Staff said. "This is definitely not a loss leader."
July 14, 2008

Robert Weisman can be reached at weisman@globe.com

© Copyright 2008 The New York Times Company



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