BAGUALING, China - This past spring, China's biggest lingerie manufacturer, Top Form Inc., set up an unusual kind of laboratory.
Situated in a four-story facility here, near the southern border town of Shenzhen, the lab has equipment that includes molds resembling oversized bullets. Surrounded by these molds, workers struggle to unlock the mysteries underlying such phenomena as the seamless brassiere and the shape-retaining bra cup.
"We spend a lot of time on how to make a better bra," says Willie Fung, chief executive of Top Form, which makes 61 million bras a year under well-known labels such as Victoria's Secret, Playtex and Maidenform.
The continued global opposition to the tide of cheap Chinese garments is intensifying efforts by Top Form and other manufacturers to move away from being mere low-cost producers. That pressure increased once again Tuesday as the U.S. and China announced an accord to limit the growth on a broad range of textiles - including bras - flooding the U.S. The accord follows a similar agreement with the European Union signed in June.
With these restraints, China's manufacturers fear a Darwinian struggle in which they are constantly undercutting each other on prices. That's why many like Top Form are investing heavily in designing and even marketing premium products. It's a shift that has taken on added urgency because under the pact with Europe - and likely with the U.S. (details have yet to be worked out) - Chinese companies making higher-priced items get preferential treatment from Beijing in determining the volume of their exports. During the past few years, China's biggest bra makers have invested in bra-research centers, bra towns (where most of the businesses are exclusively devoted to bras), and have even generated enough demand for the creation of a degree course in bra studies, started this year at Hong Kong's Polytechnic University. China has substantially increased investment in the textile sector in recent years, importing $3.5 billion of textile equipment last year, a 275 percent jump over 1998.
It's all part of a plan to evade the current roadblocks facing the industry. The world's clothing industry has been in upheaval this year after Chinese exports surged to the U.S. and Europe following the lifting of global import quotas in January. To retaliate, the U.S. imposed curbs, which are unpredictable and disruptive to business; these will now be replaced by a more stable system of growth limits averaging between 10 percent and 17 percent on Chinese textile exports until 2008 under the deal announced Tuesday in London.
Chinese bra makers are better prepared for the restrictions than other textile manufacturers, many which have been taken aback by the strength of the backlash against Chinese textiles. Chinese bras were one of the first clothing items to face free-market access - and the first to taste restraints.
"We knew trouble was coming," says Stephen Lo, chief operating officer at Ace Style Intimate, which makes brassieres for labels such as Calvin Klein and Debenhams, the large United Kingdom department-store chain. "The signs were there."
Since 2002, imports of Chinese-made bras have been hit with U.S. safeguard quotas twice - the latest in August. Despite such quotas, imposed to protect domestic makers - U.S. imports of Chinese bras have almost doubled as manufacturers rushed to build up market share, especially taking advantage of a period earlier in the year before the quotas were imposed to ramp up production. Chinese bras made up 41 percent of the total bra imports during the first eight months of this year.
Thanks to several years of double-digit growth, China's bra makers had plenty in the war chest to lavish on research and innovation, which they say will make their products more attractive and help them weather the trade restraints better.
David Morris, a university professor who teaches brassiere studies at United Kingdom's De Montfort University, says it is clear that China's bra makers aren't just relying on cost advantages anymore. Some of these Chinese bra makers are "the top end of seamless construction - we couldn't duplicate it," he says.
Case in point: Top Form, which exports the bulk of its 61 million bras to the U.S. During the past decade, Top Form has evolved from primarily making cut-and-sew brassieres - simple designs easily put together by China's nimble and low-cost seamstresses. Now, its bra production is a process more akin to car assembly: fusing together the many components needed to make a bra, eliminating much of the need for hand-sewing, or using high temperatures to mold sheets of synthetic fibers into wafer-thin shells.
The popularity of seamless molded bras, which can be smoothly worn under T-shirts, has soared in recent years and has helped nudge Top Form's average selling price per bra to $3.10 from $2.99 in 2002.
Productivity also has improved, since it takes about five minutes to make a seamless bra, compared with about 15 minutes for an average cut-and-sew bra, says Top Form's head of research, Kenneth Wong. To continue making improvements, Top Form's lab in southern China is developing cheap machinery to laminate material, a process that seamlessly sticks the layers of foam and outer lining that go into making bra cups. The company is also developing homemade versions of expensive machinery.
Before the bra lab in Bagualing, Top Form had various units scattered over its factories developing ideas and techniques. Only a fifth of Top Form's 2,300 styles produced yearly are the company's original ideas. With the research and development functions set up, the company aims to produce 30 percent or more of its own ideas. Coming up with hits is like "shooting in the dark," Mr. Fung says.
Some of those accepted by Top Form's customers still flop. Four years ago, the company pitched VF Corp., based in Greensboro, N.C., with a bra with reversible, changeable cups - "two bras for the price of one," - says Mr. Wong. But the product was too uncomfortable to wear, and there were no repeat orders past the initial 100,000 units produced, he says.
Top Form also experimented with bras that help provide extra cleavage through sealed packets filled with air (too prone to leaks and punctures) or oil pads (too expensive and heavy). Now, the company is trying a filling made from a thin variant of fiberfill, the material normally used to line winter parkas.
Despite trade woes and domestic pressures, Top Form last month posted a 17 percent growth in annual net profit to about $24 million. Times ahead may be hard, "but we're prepared," Mr. Fung says. "We can ride out this storm."
