Kutesmart sews up tech-based biz model in traditional industry

Garment manufacturing is usually thought to be the prototypical low-wage industry. Companies in the industry move to wherever the labor is cheapest.

Qingdao Kutesmart Co in East China's Shandong province is proving that by using the right technology and a smart business model, it's possible to be highly competitive in a traditional industry, even as wages rise.

The "smile curve", proposed in the early 1990s by Stan Shih, the founder of Acer Inc in Taiwan, says that most of the profits from a product are captured by designers, brand owners or retail channels, not by the manufacturers. By contrast, Zhang Daili, chairman and founder of Kutesmart, argues that by using direct contacts with customers and efficient production processes, manufacturers can get most of the profits.