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Shamianas, anyone? What the developing countries need is more Sudha Pennathurs and fewer socialist planning economists.

Published by Forbes on 1987-10-05

A LITTLE OVER two years ago, having just turned 40, Sudha Messerly Pennathur decided that she wanted more from life than making money in blue jeans. Born in India, living in San Francisco, she was making $ 150,000 a year as manager of the women's merchandise division of Levi Strauss. But how much higher could she go in this $ 3 billion company? And how much scope was there in the jeans business?

So Pennathur changed her life. She describes her new business this way: "I translate very elaborate ethnic designs into the very bold and contemporary looks that the Western world is looking for."

Pennathur sold one of her two California homes and plowed the $ 250,000 proceeds into her nascent business. She had already established an excellent network in the U.S. retail world. After tapping that network to assess her potential market, she flew to India to find artisans capable of producing her interpretations of what American consumers wanted.

Not for her those cute novelty items created by tribal weavers or silversmiths that are displayed in boutiques. Pennathur wanted to match American consumers' tastes with the skills of India's deep reserves of inexpensive artisan labor.

Within months Pennathur booked orders for jewelry and scarves worth $ 350,000, and she hasn't looked back. Sales of her corporation, House of Pennathur, will be $ 1.5 million for 1987 -- not a huge business, but already enough to finance growth and more than match her old salary -- all on profit margins that run as high as 60% and with low overhead.

Pennathur's handcrafted Indian-made jewelry, scarves, handbags, artifacts and home furnishings are featured in such fashionable stores as Saks Fifth Avenue and Neiman-Marcus. Some of the 600 items that Pennathur turns out are exhibited and sold at the Metropolitan Museum of Art in New York, the Los Angeles County Art Museum, the Smithsonian in Washington, D.C. and the M. H. de Young Museum in San Francisco.

Pennathur -- like Ralph Lauren -- has no formal training in design. Explains she, "It's how creative you are in marketing that is much more important than how creative you are in design." Or, make what people want, not what you want to give them.

"Sudha is a creative wizard," says Richard Marcus, chairman and chief executive officer of Neiman-Marcus. "She is able to take traditional products, give them her special twist and adapt them appropriately for the world's biggest market: America. She is her own buyer and puts together her own collection." Neiman-Marcus recently opened yet another display of her brand, "Designs by Sudha," in all three of its Chicago stores.

Pennathur understands the importance of theater in what she does. She has prodded India's lethargic bureaucracy into sending master craftsmen to the U.S. to give live demonstrations of their skills at the department stores where Pennathur's goods are displayed. This costs Pennathur nothing (the Indian government pays airfare, and the stores pick up local expenses), but the events generate a great deal of attention.

A Marxist would look at Pennathur and denounce her as a clever merchant capitalist ripping off Indian peasants. Which is why development economists in droves are throwing out Das Kapital and returning to The Wealth of Nations. The money she pays these underemployed artisans does more to raise their standard of living and enhance their self-respect than all the programs ever devised by New Delhi bureaucrats and politicians. Pennathur pays her artisans on a contract basis. She claims they can earn between $ 500 and $ 1,000 a month -- a formidable income in India, where $ 100 a moth is considered a fairly good salary, particularly in rural areas.

Look at what's happening here. The Indian craftsmen have what amounts to a foreign exchange override on Pennathur's success. Less tangibly, but more important, linkages -- knowledge, contacts, information -- are being established between a developing country's producers and a developed economy's consumers. Were it not for Pennathur, how would the craftsmen of Jaipur know what appeals to the women of Park Avenue and Russian Hill?

England's venerable development economist Lord Bauer has noticed something similar in his investigations of the origin of cash crops in former British colonies -- rubber in Malaysia, for example, and cocoa in Ghana. The planting of these crops was the result of 19th-century English businessmen looking for profit, not for some national planning board. Had the contacts between these colonies and the industrial countries been allowed to develop, who knows how much more developed the developing world might now be?

Pennathur -- no economist -- understands all this. That is why she prefers dealing directly with artisans themselves, bypassing established Indian jewelers and handicraft suppliers, who not only add their markups, but also are largely ignorant of Western tastes. Language is no problem: She speaks a half-dozen Indian languages fluently.

Are there no cultural barriers, no inhibiting traditions? Of course there are. "At first I encountered resistance from many artisans," she says. "They were simply unfamiliar with meeting Western-style deadlines, or they couldn't understand why I chose a color that wasn't used traditionally. Often, Indian artisans think that the more detail on a piece of jewelry, the more beautiful the product. And so the piece is sometimes overdone -- and unsalable in the West. I always say to my artisans, 'Trust my judgment.' We haven't gone wrong yet."

Pennathur came up with a new design for a traditional Indian meenakari necklace, consisting of enamel work done on silver and an overlay of 24-karat gold. A grizzled old artisan in a Rajasthan village in western India insisted that the garnets and cubic zirconian stones be set in an enamel of traditional green, turquoise and beige. Pennathur countered that a necklace with so many colors would look too busy for American tastes and that, in any case, many American women didn't like green in their jewelry because it made their pale skin look yellow. Pennathur wanted the enamel work done entirely in maroon. The artisans gave in, and more than 500 of those meenakari necklaces have since been sold at $ 250 each. The artisans are now both richer and more cosmopolitan.

Pennathur is obviously making a good living. So are the artisans. Pennathur travels relentlessly from her plush San Francisco home to the remote hamlets of India, Morocco, Mexico, South America and the Far East. She looks for Third World materials, patterns and products that can be taken back to her Indian artisans and turned into U.S. imports. She has integrated intricately inlaid designs from Moroccan leather chairs into American-style dining room furniture. Lapis, black onyx and pink quartz from China, Taiwan and Hong Kong have found their way into pendants and large brooches made out of beaten silver in Bombay. The colorful geometric pattern of shamianas, or wedding tents, were adapted for dainty handbags, big beach bags, bedspreads and tablecloths. And so on.

It is reassuring to note that work like Pennathur's has not gone unnoticed by development agencies. One of the more recent entrants into the artisan-export business is Honduras, whose artisans now sell more than $ 150,000 in earthenware, terra-cotta planters and mahogany and corn-husk goods to U.S. specialty stores. Credit for this goes to a Farmington, Conn. organization called Air to Artisans Inc. Clare Brett Smith, president of the ten-year-old nonprofit company, says that it received a $ 500,000 grant from the U.S. Agency for International Development to develop artisan industry in geopolitically strategic Honduras. Aid to Artisans ensures that 71% of the wholesale revenues from sales in the U.S. goes back to the Honduran artisans. The organization is currently working with artisans in Indonesia, Somalia and Belize to create specific items to meet the requirements of the American consumer.

"The key thing," says Sudha Pennathur, "is to keep our fingers and ears on the pulse of the marketplace." Important for her. Bread and butter to the developing world's masses.

Pranay Gupte,
Senior Writer and Global-Affairs Columnist

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