03 October 2009

Buffett Lauds Chinese Suit Maker

Story from the Wall Street Journal

America's foremost capitalist may not have much in common with China's top Communist, but Warren Buffett and Hu Jintao do appear to share the same clothier.

Move over Brioni, the truly rich and powerful are wearing Trands.

The obscure menswear label is produced by Dayang Group, a clothing company founded by Li Guilian, 63 years old, a diminutive farmer-turned-fashion mogul, in northeast China.

Ms. Li's company got a major boost after Mr. Buffett, chairman and chief executive of Berkshire Hathaway Inc., recently appeared in a Dayang promotional video, posted on the company's Web site. He heaped praise on Ms. Li, her company, and the nine Trands suits he proudly owns. Shares of Dayang's Shanghai-listed subsidiary, Dalian Dayang Trands Co., have soared by more than 70% since the video was posted on Sept. 10.

While not known as a fashion plate, Mr. Buffett says his Trands suits transformed his image. "They're comfortable and people tell me they look good," says Mr. Buffett, reached this week at his office. "I went 78 years before I got a compliment on my appearance."

Mr. Buffett, who says he has no ownership stake in Dayang, especially likes that his new suits are wrinkle-resistant. "If I am on a trip and wearing them day after day, they don't wrinkle," he says. He says he gave his old suits to charities.

The video was made at Ms. Li's request to commemorate her company's 30th anniversary this month. In it, Mr. Buffett tells viewers that he has recommended the brand to his business partner at Berkshire Hathaway, Charlie Munger, and to his billionaire buddy and Microsoft Corp. founder, Bill Gates.

Dayang can't openly advertise its affiliation with what it says is another famous customer, China's President Hu Jintao. The company's press officer, Zhi Yong, says Mr. Hu started wearing Trands in late 2005 after coming across one of its stores in Beijing. A photo of Mr. Hu, donning a Trands suit, is featured in the company's official corporate history.

But unlike in the U.S., where leaders' clothing labels are major fashion news, details of the president's private life are off-limits to the Chinese media. Indeed, when a reporter tried to visit the Trands store inside Beijing's Jingxi Hotel, where the president was said to have first spotted the label, she was refused entry.

"This store is not open to the public. We mainly serve Chinese leaders," a person who answered the store's phone said.

China's central government information office declined to comment.

"It's a bit sensitive," says Trands' Mr. Zhi.

The friendship between Ms. Li and Mr. Buffett, unlikely as it seems, developed quite by chance, or, as Ms. Li puts it, thanks to "yuanfen," a Chinese concept of predestined chemistry between people. "It was heart-to-heart, this feeling between us," says Ms. Li, a compact woman with naturally wavy hair who tends to wear dark colors, amber-tinted eyeglasses and a string of pearls.

Two years ago, Mr. Buffett came to Dalian to attend the opening of a new factory for Iscar Metalworking Cos., one of Berkshire Hathaway's recent acquisitions. David Margalit, Dayang's global marketing director, had a friend who was an executive at Iscar. Spotting an opportunity, Mr. Margalit suggested that Mr. Buffett get fitted for a Trands suit while he was in town.

"Five minutes after I got into the hotel room these guys came bursting into the room and before I knew it, the two of them were sticking measuring tape around my thigh. It seemed a little personal to me," Mr. Buffett says. "But they sent them to me and I never had to have an eighth of an inch changed."

Mr. Buffett admits his knowledge of men's clothing isn't equal to his investing prowess. "I'm not enthused about buying clothes. They don't interest me," he says. "But this is a perfect solution. I feel good about these suits. And not just because they are free."

Ms. Li's rags-to-rag-trade tale of riches appeals to Mr. Buffett. Born to a peasant family, Ms. Li grew up in a brick shack with geese in the front yard in the small town of Yangshufang, an hour's drive from the coastal city of Dalian in Liaoning Province. She started tilling the fields at the age of 18 and quickly rose through the ranks of farmers, becoming the Communist Party secretary of her 2,000-member production brigade.

She started Dayang Group in 1979 as a collective township enterprise with a 30,000 yuan ($3,394) loan, setting up an assembly line with 85 employees and several dozen sewing machines contributed from the homes of her neighbors. The factory started out making the kinds of simple items used by rural folk like Ms. Li: tablecloths, aprons and sleeve protectors.

"Our skills were very low, but our goals were very high," says Ms. Li, punctuating the air with her hands, her fingernails decorated with pink rose decals. The company moved on to making simple workers' jackets, slowly introducing more complicated garments and signing up overseas customers along the way.

In 1995, Dayang launched its own flagship brand of Trands menswear. Dayang now employs 15,000 people and turns out 10 million garments a year.

Mr. Buffett quickly took to Ms. Li and her suits. In a letter to Ms. Li dated Nov. 27, 2007, he wrote: "Yesterday I received the two suits from David. They fit perfectly and look magnificent. I've never had any that I like better."

They met again in May this year, after Mr. Buffett invited Ms. Li to attend Berkshire Hathaway's annual shareholders' meeting in Omaha, Neb.

Later, four Berkshire directors were fitted for Trands suits, Mr. Buffett says: Mr. Gates; Mr. Munger; Walter Scott Jr., chairman of Level 3 Communications; and Ronald Olson, of law firm Munger, Tolles & Olson. Ms. Li, who doesn't speak English and likes to squeeze the arms or hands of whomever she's standing next to, says she hadn't expected such warmth from Mr. Buffett. She describes him as a "new friend."

Even after 14 years, Trands isn't particularly well known in China, at least not before Mr. Buffett began promoting it. Its 20 stores are concentrated in second-tier north China cities such as Dalian, Shenyang and Taiyuan, where its suits are expensive by Chinese standards. The cheapest cost around 6,000 yuan ($880), and the most expensive, made from fine cashmere, are upwards of 20,000 yuan.

This week, the Trands promotional video of Mr. Buffett played in an endless loop on a giant screen at the entrance to the 20th annual China International Garment & Textile Fair.

"I now have nine suits all made in China. I threw away the rest of my suits," Mr. Buffett says, every three minutes or so.

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