(FORTUNE Magazine) – In 20 years as CEO of Sara Lee, John Bryan has built annual revenues to $15.5 billion by going global and diversifying -- Hanes, Playtex, and Coach leatherware count among his acquired brands. He spoke at Chicago headquarters with Patricia Sellers.

Q What's your philosophy?

A Decentralized management is our point of difference. Why do you think big businesses are imploding all over America? They cannot match the creativity that can come out of individual, highly motivated small businesses. We operate about 100 discrete profit centers, each with a chief officer and a management team.

Q That worked in the Eighties, when Sara Lee delivered better returns to shareholders than any other Fortune 100 company. What went wrong last year, when profits rose 3.5%, excluding your restructuring charge? A The coincidence of a recession in Europe and a mistake. We acquired three businesses, in England, France, and Spain. We violated our principle of using local management. We sent some management in from the United States -- half a dozen people -- and the businesses got into trouble.

Q So much for decentralization!

A There's a problem in big and successful companies. The people in them want to take charge. You have to fight that all the time.

Q One Wall Streeter describes you as a once visionary imperialist reeling from indigestion, having gobbled up more than $4 billion in European assets in five years.

A Europe represents enormous opportunity because there's still more money there than in other markets. But the real growth is coming from the 80% of the world's population that is hungry for consumer goods and starting to have the wherewithal. South America, China, India, Africa. For the first time in history, the undeveloped world is growing faster than the developed world.

Q What market worries you?

A China's difficulties are starting to get some attention now. It's difficult to find managers and to work with partners. The Chinese don't respect brands any + more than they respect other intellectual properties. They'll take your brand and start making it somewhere, just like they copy your CD.

Q Did you get burned in Mexico?

A We have sizable in-market businesses in Mexico -- $400 million, very profitable. We had a policy of hedging earnings in Mexico, so this year there's no material impact.

Q As a prominent supporter of the President, what's your take on the GOP ascendancy?

A The Republican Congress is there because the American people continue to be very frustrated. They were frustrated when they elected Bill Clinton. It's ironical that this is happening when they are as prosperous as they are, and they don't have a central threat -- a depression, the bugaboo of Russia. The fear today comes from the fear of crime, in part related to a fear of the growing ethnicity of America. They're voting in large measure to get rid of these fears.

Q What about the U.S. economy?

A I don't think the economy here is vulnerable. I believe that the last recession was induced purely by speculation going on too long in the Eighties. Also, the economy today is driven about 80% by service industries and doesn't have a cyclical nature.

Q You sound too upbeat for someone whose critical trend -- women in the work force -- has reversed recently.

A We have almost half the hosiery market, so the fact that women are working at home to a greater extent is not a positive for us. Also, you see people dressing down. But after declining about 6% annually for five years, the market is now down less than 1%.

Q Pantyhose are horrible to wear.

A That's why we're spending more on R&D and introducing more new products thanever. Most have some sort of shaping aspect to them. We've concluded that we have to give the consumer reason to buy hosiery. We have an ad in Times Square for our new Smooth Illusions hosiery: "Liposuction without surgery." You need to wear it.