Cashmere by the carload
By STAFF David Kirkpatrick, Michael Rogers, Patricia Sellers, H. John Steinbreder, and Eleanor SJohnson Tracy

(FORTUNE Magazine) – Like politics, business can make strange bedfellows. Take these: the Chinese government, Japan's most successful fashion designer, and a Puerto Rican factory. They are the elements that Richard Millman, a Washington, D.C., entrepreneur, has assembled into an unusual fashion venture. So unusual that it could, the partners expect, consume as much as 25% of the world supply of cashmere. Here's how it is supposed to work. Japanese couturier Hanae Mori designs knitted garments. China, virtually the world's only source of quality cashmere wool, spins the yarn. Factories in Puerto Rico manufacture the clothes, men's and women's sweaters at first. Stores in the U.S. and Japan sell them. And Millman's company, Transworld Group Ltd., gets the biggest share of the profits. As you might expect, the deal has something for everyone. China is helping with the financing and guaranteeing a cashmere supply for 20 years. As part owner of the Puerto Rican plant, it will earn far more hard currency than it could by selling only cashmere fiber. Mori, whose private Tokyo company claims $300 million in annual revenues, should cut a wider swath in the U.S. market, where her presence up to now has been in expensive ready-to-wear clothes and haute couture -- as haute as $20,000 dresses. Puerto Rico will gain 300 to 400 jobs when the plant reaches full production. Richard Copaken, an adviser to the island's government who helped put the deal together, thinks the venture may lure more Japanese companies. Japanese businessmen are forced to pay attention to Mori, he says. First, she is the leading female member of their tight business elite; second, many of their wives wear her clothes.