Forget cheap - the thing that attracts many companies to China these days - it's Chinese chic that Italian fashion house Missoni aims to capture.

"Our major markets are the United States and Japan. China will be next," says marketing director Vittorio Missoni. The distinctive design knitwear company is currently marking its 50th anniversary with a retrospective show in Peru.

"I prefer to look at China as an opportunity to create a new market instead of just a place to go to make cheaper things," he adds. "China is a market we have to nurture."

Missoni, son of the founders of the fashion house famous for its exuberantly coloured couture knits in bold stripes and zig zags, buys cashmere yarn from China and has carpets hand cut there for the company's home products line.

"China isn't a threat to us because we don't compete with these kinds of products," Vittorio says. Low labour costs have made Chinese clothing exports ultra cheap, which prompted Peru, for example, to retaliate temporarily last year by jacking up duties to protect its own industry. Family-owned Missoni, which employs 250 people near Milan, will not follow in the footsteps of other Italian companies that have relocated some of their operations to China or Eastern Europe to keep production costs down, he says. Missoni, while a private company, is considered a bellwether for Italian textile companies.

Founded in 1953 by newlyweds Ottavio (also known as Tai) and Rosita, Missoni sometimes has shirts made in Turkey or Romania, jeans in Tunisia or Algeria and couture embroidery work done in India. The core business, however, stays at home. "The label, 'Made in Italy', is important to us," says Vittorio. "For me, it means quality."

With the dollar's recent dive against the euro, the company finds it is "selling more, but getting less at the end". But Christmas sales, especially of accessories, were generally "fine" and "really great" in Italy, says Vittorio. Profits in 2004 should grow 10 to 15 per cent, with sales 15 to 20 per cent higher in Russia, Brazil, Lebanon and in the Middle East. But the weak dollar, Vittorio says, is something he expects to have to contend with for another year.

Missoni first began by making knitted jogging suits. The company's clothing line shot to fame in the late 1960s after a somewhat controversial fashion show in Florence.

(HK Edition 12/17/2004 page20)