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In the 1980s and '90s, an unassuming Thai boutique called Greyhound did respectable business in Bangkok's Siam Center shopping mall, selling reasonably priced clothes that melded international urban chic with local tastes. For its co-owner and designer, an advertising executive named Bhanu Inkawat, the shop was little more than a weekend hobby. But in 2003, with Thailand starting to become more fashion conscious, Bhanu saw an opportunity: he quit his day job and poured his energy into Greyhound. Today, Bhanu, 50, presides over a growing style empire with 12 designers, 14 clothing stores and seven cafés in Bangkok, franchises in Taipei and Manila, and outlets in dozens of cities including New York and Tokyo. "We've still got a long way to go," Bhanu says. "But we're starting to find our niche."

The same can be said of Thailand's fledgling fashion industry. No longer a cheap haven for the manufacture of apparel invented elsewhere, the country has lately been generating fashion designers like China churns out brand-name knockoffs. "I can count about 30 new designers on the market in just the last year or so," says Anna Limpichart, a fashion-show organizer responsible for next month's Bangkok Fashion Week, an annual runway showcase for local designers. Even seen-it-all international cognoscenti are taking notice. After attending last year's Bangkok Fashion Week, Paris-based fashion critic Diane Pernet said she was stuck by the "amazing enthusiasm" of Thai designers. "You don't see anything like that in Paris or Milan," says Pernet.

What you increasingly see in Paris and Milan department stores and boutiques, though, are clothes from Thailand. The Senada Theory brand, by designer Chanita Preechawitayakul, is sold in more than 100 shops worldwide, and sales have been growing at an average of 30% annually for the past several years. Greyhound, too, is widening its footprint: overseas sales increased twofold in 2005 and a new franchise store in Australia is planned for this year. Department stores around the world, including Isetan in Tokyo, Barneys in New York and Harrods in London, also stock Thai-designed clothes.

The fashion scene in Bangkok can be traced to two converging forces, one grassroots and the other government-driven. Rising incomes and increasing exposure to international trends have built up a critical mass of Thai consumers with a taste for fashion and money to spend, creating demand for domestic designs that suit Thailand's climate and social scene without breaking the bank. Meanwhile, Thailand's Ministry of Industry—in an effort to shift the country's garment industry, which generated $3.25 billion in exports last year, higher up the value chain—has been nurturing the local designers, spending $45 million since 2003 to promote Bangkok as a fashion hub, sponsoring fashion shows, trade fairs and magazines, and helping to establish the Bangkok International Fashion Academy at Chulalongkorn University. Thanks in part to this support, fashion design has gone from a marginal occupation to a legitimate career choice, and most major universities have opened fashion-design departments, which were unheard of until recently. Last year, a Graduate Fashion Week was held to give exposure to young designers who might otherwise go unnoticed.

One of the beneficiaries of Thailand's new fashion consciousness is Disaya Prakobsantisukh, a lingerie designer who opened her first Bangkok shop in 2004 while still a fashion student in London. Disaya, 27, sells her Boudoir brand in five spots around Bangkok. She describes her creations—which also include lingerie-inspired ready-to-wear clothes—as "very femme ... sexy and childish at the same time." Even though they're locally made, they're not cheap: a hand-knitted, torn-chiffon dress sells for $550. But that doesn't seem to be hurting her business—this year's plans include tripling the size of her flagship store and opening two new branches in Bangkok. "Everything is moving so fast," she says. "It's a good time to be a Thai designer."

There's still no obvious Thai look. Some designers target Bangkok teenagers, others Paris socialites; some are foreign-educated, others are self-taught. But there are certain shared qualities: an attention to detail, a preference for handmade materials and designs, and a taste for natural textiles and light fabrics made from silk and cotton. Much of what distinguishes Thai fashion, in fact, is in the details—made possible because of the country's vast supply of skilled craftspeople, whose traditional styles get incorporated into utterly contemporary final products.

The inclination towards intricacy and handwork is especially pronounced among Thai designers selling their wares overseas. Senada designer Chanita mines traditional crafts for inspiration, borrowing elements from vintage wallpaper, temple paintings, battle murals, and antique textiles. But she insists that the objective is never to look Thai—it's to be stylish. "We don't want our clothes to look eth-nic," she says. Greyhound's Bhanu takes a similar approach. The spring-summer collection from Grey, the company's international line, features a range of handcrafted components: embroidery and silver ornaments from northern hill tribes are paired with hand-dyed fabrics and southern Thai fishermen's pants to achieve a look that's eclectic without being cloyingly traditional. "There's a poetry, taking things that are ancient, and making them modern," says Pernet, the Paris fashion critic, of the Grey collection. "It's kind of street but also elegant at the same time."

Getting raves from Europe, though, has proved easier than selling clothes to ordinary Thai consumers. "Fashion still isn't a big part of Thai culture," says Chaichon Savantrat, whose Good Mixer label has more foreign buyers than Thai, despite being sold mostly in Bangkok. But Senada's Chanita says that 60% of her business is now local, and that number has been growing for the past several years. Greyhound's Bhanu, for his part, has launched more affordable domestic sub-brands. "The marketplace has a lot of potential," says Bhanu. "It's up to the brands to make it happen." It may be happening already.

• Ilya Garger | Bangkok
• Paris, Milan, Tokyo ... Bangkok? Thai designers are putting their country on the fashion map