Sixteen years ago, when Yoon Huk Kim set up shop in a corner of the Los Angeles fashion district downtown and started selling inexpensive women’s knits and skirts, he was one of about 200 Korean wholesalers in the area.

Today, there are about 1,000 Korean wholesalers in the Los Angeles fashion district, most of whose narrow storefronts sell trendy women’s clothing produced in their factories nearby.

Indeed, the Korean-owned portion of the 80-block fashion district is a booming submarket doing about $5 billion in annual sales, according to the Korean Apparel Manufacturers Associations. That little-known section represents about a quarter of the entire Los Angeles fashion industry, which some believe has overtaken New York as the nation’s top fashion manufacturing hub.

What’s more, the Korean apparel industry has been faring better than most other L.A. fashion manufacturers losing work to China, because it has managed to keep more of its jobs here. In fact, new wholesale centers are popping up around the Korean apparel industry to accommodate hundreds of new stores.

The Korean wholesale section has managed to thrive mainly because the stores do business differently than the mainstream fashion district nearby.

At show rooms in the non-Korean fashion district, in and near the 1.8 million-square-foot California Market Center (which is owned by Korean-born developer David Lee), customers tend to put in orders for mostly high-end designer-brand clothing. Then they wait for the apparel to be assembled and delivered.

But the clientele of the Korean manufacturers tend to be owners of independent boutiques and retail chains who are attracted to the cash-and-carry aspect. They buy pre-designed samples that typically are stacked up in the back room. That way, a buyer can walk out with a black plastic bag stuffed with, say, 10 orders of a dress she spotted only a few minutes before.

Moreover, the Korean manufacturers display samples that change styles every two weeks, instead of the 10-week cycle that dominates the mainstream fashion industry another plus for the buyers of boutiques, who want to be up on the very latest in fashion.

Being latest in fashion has not always been a strong suit for Korean wholesalers. In 1991, when Kim first opened his store to sell to swap mart buyers, his only focus was to keep the prices as low as possible.

“Now, we’re more about staying competitive with the latest designs,” said Kim, whose clientele has expanded to mostly South American buyers who make weekly trips to the downtown garment district.

Of course, that quick fashion turnover causes fierce competition between local Korean business owners. Only days after a popular frock hits one storefront, the same or a very similar design may pop up in multiple windows, all vying to be purchased by the same customers.

Low prices are another attraction. The Korean merchants may sell a dress for $2.50 provided the buyer takes multiple copies. The mainstream wholesale locations in the fashion district, such as the New Mart and the California Mart, typically sell dresses for several times that amount. Of course, they also tend to sell much higher-priced exclusive apparel as well.

Constant expansion

The generally thriving Korean manufacturing industry is an anomaly because apparel manufacturing employment has seen decline.

As of September, there were 57,900 workers in apparel manufacturing in the county compared to 60,100 a year ago, according to the Los Angeles Economic Development Corp. The number of workers in the wholesale apparel industry in Los Angeles has decreased to 18,800 this year from 19,200 a year ago.

The Korean submarket is not broken out separately, but it’s clear there’s a building boom there. Around the San Pedro Mart, which has a high concentration of Korean entrepreneurs, at least five large-scale construction projects are going up including a 650,000-square foot commercial condominium project at the corner of San Pedro and 14th Place called the Los Angeles Fashion Center or L.A. Face. It will include 196 wholesale showrooms, and about 80 percent of the units have been sold, predominantly to Korean American business owners.

“The area is full and there is constant expansion,” said Bobby Hines, an international trade specialist downtown with the U.S. Department of Commerce who works closely with the Korean apparel industry in Los Angeles.

The Korean section of the fashion district, roughly 24 blocks, is one of the areas of downtown known for foot traffic, where merchandisers dart in and out of stores with clipboards in hand.

Nearly all of the wholesalers in the district have their own manufacturing factories scattered from downtown to Vernon, City of Commerce, and even Orange County. An additional 1,000 just operate factories without accompanying showrooms.

The retail area packed with buildings painted orange, blue and green is anchored by the San Pedro Mart, which was built by Korean manufacturers tired of being harassed by landlords who insisted on collecting what’s called “key money,” or a flat sum paid just to move in. For most wholesalers, this illegal practice amounted to a $100,000 cash payment every time the lease was renewed, said Hailey Huh, executive director of the Korean Apparel Manufacturers Association.

Unfortunately, she said, many Korean landlords who bought sections of San Pedro Mart still hold to the practice of collecting the money under the table.

Most of the wholesale stores have factories nearby, like Finesse Apparel Inc.

The company president Jung Han operates both the factory on Stanford Avenue and the wholesale showroom in San Pedro Mart. Han, who operated about a dozen retailers before entering the manufacturing business 12 years ago, said what he calls the “temperament of the Korean people” jives well with his line of business.

“We generally have fast hands and adapt really quickly to changing situations. Our production line has to be reassembled every time a new design goes out and once it does, within days, 20 other wholesalers are selling the same style,” Han said. “It’s competitive and physically taxing. Being immigrants, we were also more willing to take risks and do the kind of dirty work others may have been afraid to take on.”

One of the district’s most successful retailers is Forever 21, a $1 billion company, which has been in the news because of numerous lawsuits filed against it for alleged copyright violations. (See sidebar.)

Humble beginnings

The Korean section originated near Santee Alley in the late 1970s from a handful of rag jobbers. They bought left-over textiles and fashioned them into simple dresses and sold them to swap marts.

Huh said the area took off mainly because of South Korea’s thriving textile industry and the tight network of Korean-owned sewing factories, manufacturers and retailers. She said that in the mid-1980s, manufacturers would regularly load a plane with textiles in Seoul and fly them to Los Angeles where they were assembled.

At that time, about 2,000 local trim and sewing factories that contracted with perhaps a couple dozen manufacturers were operated by Koreans as were hundreds of retailers.

“What resulted is an ecosystem that allowed for a huge growth spurt in the industry. The entire production line from textile, trim, sewing to fabric printers they are all owned by Koreans,” said Huh of the Korean manufacturers association.

By the late 1980s, the number of Korean-owned manufacturers swelled from a couple dozen to a couple hundred, thanks to the arrival of Korean manufacturers from South America, where they had long operated textile mills and wholesale shops. Many brought South American customers with them. As a result, the district today has a Korean-South American vibe to it.

Kim, the owner of Ire Fashion in San Pedro Mart, grew up working in his father’s clothing mill in Sao Paolo, Brazil. He worked as a sewing contractor in New York’s garment district before opening his first manufacturing business on Maple Avenue in 1991.

“That was a very profitable time,” said Kim, whose customers are mostly store owners from Brazil and Venezuela. “But now, most of my customers go straight to China because they know it’s cheaper there.”

China threat

In fact, the Korean manufacturers, like most other manufacturers, are seeing an increasing number of buyers seeking lower prices flying over them and going to China. That has forced the Korean manufacturers to source out some of the work to China in order to bring down their own prices.

Kim, for example, used to produce all the clothes he sells from his factory, but not anymore. About 30 percent of the wholesale goods sold in the Korean apparel district now come from China.

Moreover, stringent labor laws and random sweeps of sewing factories by the state’s Labor Commission have created another challenge for Korean manufacturers. One law gives the right of seamsters in a sewing factory to demand overdue wages not only from the factory owner, but also the manufacturers who put the finishing touches on the garb.

However, the one thing that may help the Korean district is the speedy creation of fashionable items one of the aspects that helped it grow in the first place.

Jack Kyser, chief economist at the L.A. Economic Development Corp., said he is optimistic about the Korean apparel district. The nature of the industry, which demands quick turnaround and specialized production, may keep more manufacturing from heading off shore, he said.