China, Wal-Mart and Derek Lam

I recently interviewed the New York designer Derek Lam who has recently signed a 3-year contract to work as the creative director for Tod's women's line. Growing up in San Francisco, Lam says his young parents were always interested in fashion. His grandparents ran a wedding dress factory and his father worked importing Chinese textiles. Lam recently tried to use some of those textiles in his own collection. He found it logistically impossible. The regions where people still have the know how to do such fine handiwork are so isolated that deliveries took ages and changes were practically impossible. All of the people his father dealt with are, he said, "now suppliers to Wal-Mart."

The Wall Street Journal published an article yesterday saying that because Wal-Mart's clothing sales have been so weak, they've cut orders and Chinese factories are scrambling to replace them with orders from other retailers.

There are no such problems in the Tod's world. The factory in the Marche region of Italy is housed in a concrete and glass temple designed by CEO Diego Della Valle's wife and filled with furniture commissioned by designer Ron Arad as well as art works by a range of international talents. ("They install them on the weekends and holidays so the workers have a surprise when they come back," said my guide.) It features a host of perks like canteen, outlet store and kindergarten. The workers produce shoes for all the Group brands -- Hogan, Fay and Roger Vivier in addition to Tod's -- and will now also produce the Derek Lam accessories under a license agreement. Even with a state-of-the-art facility, the great demand means some of the work still has to be farmed out to other producers.

Lam's version of Tod's driving shoe

Looking at the Tod Group's first quarter figures, I was surprised to see that more than half of the Group sales are still in Italy. The US is only 8.3 percent and Asia 15 percent. I'm wondering if part of the appeal of Lam isn't the Asian name and the American connections. Lam says he's always surprised when visiting Asia to be asked "what it is like to be one of the few successful Asian designers." "I think of myself of American," he said. "But whenever I see Vera Wang at a party, she pulls me aside and says 'it is you and me'."

The question of how and when a home-grown Chinese luxury brand will emerge remains. Unlike Italy, which has survived the post-war years by turning its artesian history into a thriving business, China plunged forward into mass manufacturing to meet US needs. I wonder if and when Lam's father's friends will regret the decision.