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[FASHION] Augustine Tse's Cashmere House & China

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  • madchinaman
    Flaunting Its Fibers Cashmere House, owner of the Tse label, is helping China evolve from a supplier of the downy raw material to a producer of haute couture
    Message 1 of 1 , Jun 20, 2006
      Flaunting Its Fibers
      Cashmere House, owner of the Tse label, is helping China evolve from
      a supplier of the downy raw material to a producer of haute couture
      By Evelyn Iritani, Times Staff Writer

      Augustine Tse is on a roll.

      His new designer, Tess Giberson, is getting rave reviews. Sales of
      his cashmere jogging suits and hand-knit sweaters topped $100
      million last year. And Tse Cashmere got a prominent mention in
      writer-director Nicole Holofcener's female-buddy movie "Friends With

      But Tse (pronounced "say") isn't satisfied. For centuries, China has
      provided the bulk of the precious cashmere fiber used by storied
      brands such as Scotland's Pringle and Italy's Loro Piana to produce
      the uber-expensive garments coveted by royalty and Hollywood elite.
      Now, he said, it is time for China to assume its rightful place as
      heir to the global cashmere throne.

      "Over the next 20 years, the designer labels in Europe will continue
      to prosper but the production in Europe will be very, very minimal,"
      said Tse, whose Chinese-made garments are carried at upscale stores
      such as Henri Bendel and Fred Segal. "The made-in-France or made-in-
      Italy label will be gone."

      It took decades for Japanese and South Korean automakers and
      electronics firms to win over America's pickiest consumers. China is
      hoping to accelerate that timeline, helped along by globe-trotting
      entrepreneurs who bring a sense of patriotism to their achievements.

      But perceptions die hard, particularly in the status-conscious world
      of luxury commerce. Michelle Dalton Tyree, a former Women's Wear
      Daily editor who bought her first Tse sweater more than a decade
      ago, said the shift of the luxury cashmere trade to China was
      a "dirty little secret" that most designers and their customers
      preferred not to discuss.

      "I hate to say it, but they don't really want to know that," said
      Dalton Tyree, whose newly opened La Brea boutique, Iconology, will
      carry several pieces from Tse's fall collection.

      Tse's climb from mass to class provides a window into China's
      transformation from a poor, isolated country to a manufacturing

      For centuries, China and neighboring Mongolia, which produce nearly
      three-quarters of the world's cashmere, sold almost all their raw
      fiber to Europe and the United States. Western mills developed the
      equipment to process the fragile fibers and the Europeans created
      the premier cashmere brands.

      "China made everyone very, very rich," said Tse, 58, the chief
      executive of Cashmere House Inc., owner of the Tse Cashmere label.

      Kashmir goats thrive in the harsh climate of Xinjiang province, a
      sparsely populated mountainous region of northwestern China. The
      hardy goats produce a layer of the downy cashmere as insulation
      underneath their coarse outer fur, and the fragile fibers are
      collected by combing the animal. It takes four years for one goat to
      produce enough cashmere to make a sweater.

      Because of its scarcity, the highest-quality white cashmere costs
      about six times as much as the best wool.

      Under the Communists, officials in Beijing controlled the raw
      cashmere trade, and most of it was sold to foreigners. In the late
      1970s, after China began moving toward a market economy, Tse said,
      Xinjiang provincial officials approached Tang Hsiang Chien, one of
      Hong Kong's most powerful industrialists, about becoming a partner
      in a cashmere factory.

      China's leaders were anxious to create jobs in Xinjiang, home to
      more than a dozen ethnic groups and a Muslim separatist movement.
      The late Deng Xiaoping, who spearheaded China's reforms, gave the
      green light to the project, which became the country's first foreign
      joint venture.

      The Chinese government promised Tang his factory would get a steady
      supply of high-quality raw cashmere and some of the coveted quota it
      needed to export garments to the United States and Europe. In
      return, Tse said, Tang's company agreed to improve the quality of
      Chinese cashmere so it could compete with European and American

      Tse, who worked in one of Tang's Hong Kong companies, was given the
      daunting task of building the factory in Urumqi, Xinjiang's capital.
      The factory site was a swampland, and building materials had to be
      brought in from Beijing, a nearly four-day train ride. Most of the
      prospective employees were nomadic tribespeople who had never worked
      in a factory.

      The biggest hurdle was acquiring the know-how and equipment to
      produce the cashmere. Tse traveled more than half a dozen times to
      Europe, but the mills there refused to join the project, fearful of
      doing business with a Communist country and arming a potential
      competitor. Tse finally found a Japanese cashmere company, Toyo
      Boshi Kogyo Co., willing to provide technology and training.

      Xinjiang Tianshan Wooltex Stock Co., which contained one spinning
      mill and two knitting factories, opened in 1981 with 1,200
      employees. Tse started by producing sweaters for local shops and the
      government-run Friendship Stores that sold to foreigners.

      It took more than a year of transpacific trips before Tse landed his
      first order from a New York retailer. But by the mid-1980s, he said,
      Xinjiang Tianshan was the largest supplier of low-priced, private-
      label cashmere sweaters to U.S. retailers.

      Over the next decade, the Chinese domestic cashmere industry
      exploded and foreigners such as Jeffrey Liebert found it nearly
      impossible to get their hands on raw cashmere. Most of the Chinese
      firms had government backing, giving them access to cheap land and
      utilities and low-priced loans.

      "We just couldn't run around with suitcases full of cash and buy
      like they could," said Liebert, who worked for Forte Cashmere Co.,
      one of the leading cashmere processors in the U.S.

      Richard Forte, then the third-generation owner of Boston-based
      Forte, said he "saw the rungs beneath me disappearing." He switched
      gears and began helping Chinese cashmere producers sell to the U.S.
      In 1997, he sold his firm to a British company.

      The world was flooded with low-cost cashmere, much of it poor
      quality or containing wool or other fibers. Many U.S. and European
      processors closed their doors or shut down their mills and began
      importing from Asia. Warren Corp., based in Stafford Springs, Conn.,
      is the only surviving cashmere producer in the U.S. It was purchased
      by Loro Piana in 1988. In 2005, China and Hong Kong accounted for
      80% of U.S. cashmere knit imports, up from 66% a decade earlier,
      according to the Cashmere and Camel Hair Manufacturers Institute.

      To survive, Tse needed to pull out of the pack. In the mid-1980s, he
      moved to Los Angeles and set up Cashmere House, in partnership with
      two of Tang's children, Mai and Sandys. His goal was to create a
      Chinese brand that could compete in the luxury market.

      The world of haute couture was not a natural fit for Tse, who
      confesses to being more comfortable with assembly lines than fashion

      "I'm just a dumb manufacturer," said the Hong Kong native, who
      graduated with a mechanical engineering degree and has spent more
      than three decades in the textile and apparel business.

      But Christina Peng, one of Tse Cashmere's original designers, said
      Tse gave her the mandate to do the "unthinkable" with cashmere, a
      luxury fiber associated with stodgy "blue blood" garments. The
      company's first big hit was a soft hooded sweater, or "hoodie," that
      flew off the shelf. Pull-on pants followed naturally, along with
      bathrobes, baby clothes and even a cashmere bikini.

      Tse opened mini-boutiques inside upscale stores such as Bergdorf
      Goodman and Saks Fifth Avenue and eventually opened five free-
      standing stores in the U.S. He also hired some of the fashion
      world's hottest names — including Narciso Rodriguez and Richard
      Chai — to give his line a unique look. Before joining Tse, Giberson
      worked for Calvin Klein.

      By redefining cashmere as a garment that could be worn to a party or
      the grocery store, Tse Cashmere caught the attention of wealthy
      party girls and Hollywood celebrities. Madonna bought Tse clothes
      for her baby. Steven Spielberg stocked up on cashmere jogging suits
      for his friends. Holofcener received several Tse sweaters as gifts,
      including a favorite hoodie.

      Although 65% to 70% of Tse's sales are in the U.S., the company's
      biggest growth is coming from Europe and Asia. His TseSay brand, a
      lower-priced line aimed at women in their 20s and 30s, has been a
      hit in South Korea and Japan. "Chuppies," or Chinese yuppies, are
      the next hot market.

      Tse still manufactures some garments in Italy, such as a superfine
      wool twin set that retails for $890. The Italian factory is the only
      one in the world still using a specialized hosiery machine that can
      knit that product. But he produces most of his cashmere in China.
      That allows him to keep prices low, particularly on labor-intensive
      garments such as his double-faced cashmere coats with hand-sewn
      seams. A Tse double-faced men's cashmere jacket costs $2,200, half
      the price of a comparable garment from Italy.

      Selling cashmere turned out to be the easy part. Selling China is
      proving to be a lot harder. But Tse, who prefers the anonymity of
      Newport Beach to a tony address in Manhattan, has reluctantly agreed
      to become a more visible advocate for China's cashmere industry. He
      also plans to teach his staff about his brand's Chinese origins, so
      they can tell customers how cashmere gets from the mountains of
      Xinjiang to the store shelf.

      "China has spent a lot of effort so they will be perceived as a
      major player in the world," he said. "China doesn't want to be just
      another subcontractor."
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