A Perfect Fit

China's model shirtmaker

Five years ago, morale was bad and production worse at the tiny Haiyan shirt factory in Zhejiang province, 69 miles from Shanghai. The enterprise was in such dire condition that workers who were ready to retire could not do so because of an empty pension fund. The value of the plant's assets totaled only $10,000, and profits rarely topped $2,300.

Today Haiyan is one of China's fastest-growing garmentmakers, with a labor force of 630, assets of $817,000 and 1983 profits exceeding $242,000. The state-owned factory's success is the result of a...

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