Sew what? Chinese garment maker puzzled at U.S. flap (China)

DALIAN, China — If author Horatio Alger had spoken Mandarin, he would have loved the rags-to-riches tale of garment maker Li Guilian.

A farmer's daughter who got her start stitching aprons in the countryside, she has built a $300 million company that's listed on the Shanghai Stock Exchange. Now 66, Li employs 10,000 workers sewing fine clothing for some of the world's most famous brands and powerful people.

Dayang is also the manufacturer behind those snappy blue blazers, white slacks and skirts designed by Ralph Lauren for this year's U.S. Olympic team. And that's where the story turns ugly for the hard-charging entrepreneur known by many here as "Chief Li."

In the past few weeks, she has watched the American backlash over those uniforms' made-in-China labels with a mixture of astonishment and dismay.

"I have a simple question," said the bespectacled, raspy-voiced Li in an interview at company headquarters in this industrial seaside city in northeastern China. "Can America really make the suits we make? We have cheaper costs here so you can have cheaper prices in America."

U.S. officials, she said with a wry smile, really ought to get a grip.

"Pay attention to the performances of the U.S. athletes and not their clothes," she said.

The dust-up comes at a time when American unemployment remains stubbornly high, fueling tension over China's massive trade imbalance with the U.S.

While Ralph Lauren and the U.S. Olympic Committee try to stem the public-relations crisis, many Chinese, like Li, are baffled by the controversy. Most garment manufacturing left U.S. shores long ago. Low-cost Chinese goods, they reason, have helped American families stretch their dollars.

Nearly half the clothing in the U.S. today is made in China, while nearly all the rest is manufactured in other countries such as Vietnam and Bangladesh, said Daniel Ikenson, an economist at the Cato Institute in Washington.

China's apparel exports in 2010 were worth $121 billion. Despite rising wages and competition from other developing nations, China's manufacturing infrastructure remains unrivaled, experts say.

"Whether the U.S. could ever do again what China is doing now, it seems highly unlikely in the next decade or two," said Ken Perkins, president of research firm Retail Metrics in Swampscott, Mass. "There are virtually no firms that would be willing to invest in new plants, spinning and weaving infrastructure in the U.S."

It would be hard to compete against companies such as Dayang, whose founder Li is the embodiment of China's economic miracle.

Descended from a long line of farmers, the country woman spotted opportunity 33 years ago as Communist China was beginning to test free-market reforms. She opened an apron- and-tablecloth factory in her home village of Yangshufang, gradually shifting to more complex garments.

Today, the company makes 5 million suits a year — a good portion of them for American brands including Macy's, DKNY and Banana Republic. Li has grown in stature as well. She is one of 3,000 members of the National People's Congress, an elite group of party delegates.

Speaking inside a private, wood-paneled tearoom inside her headquarters this week, Li, looking elegant in pearls and a diamond-encrusted watch, defended her company's success.

"Don't you think we deserve credit?" she asked a reporter. "We've made so many customers happy over the years."

Li said her skilled workers earn $6,300 to $9,500 a year — good by local standards but a fraction of American labor costs. Rows of silent employees, many wearing flip-flops, process 100 suits an hour.

She said her workers could handle the demands because they were eager to work and earn money.

"They can eat bitterness," Li said, using a popular phrase to describe the ability of the Chinese people to endure hardship.