Inside the Necktie Capital of the World

SHENGZHOU, China, Nov. 18, 2005— -- It may not look like a fashion powerhouse, but the small city of Shengzhou is the necktie capital of the world. Nearly half the world's ties, even popular American brands, are made there.

Julie Yuan is the first lady of neckties. Her company, Maidilang, sells $40 million in ties every year to Asia, Europe and America. Yuan was once a farmer, but now she is a multimillionaire at age 35.

"We started out from nothing," Yuan said. "Now we have so many foreign clients coming here from all over the world."

Shengzhou undercuts the international competition by making quality ties on the cheap. Factory workers are well-trained and experienced, but paid just 75 cents an hour, compared with more than $10 an hour in the United States and Italy.

Another secret is government help, such as free land and cheap loans, but they say their biggest advantage is that they make one thing very well.

"All of the people in the tie business are enthusiastic and devoted to it," said Liu Xiaoping of China's Professional Tie Commision. "Actually, everyone here is an expert."

It is a formula applied across the country. There is Sock Town, which makes 8 billion pairs a year, a cigarette lighter capital and even Underwear City.

So why are ties made in Shengzhou? It is part accident -- starting with one foreign contract 20 years ago -- and part history.

The city of Shengzhou has been producing silk for hundreds of years and sending it to countries such as Italy to be made into ties and scarves. But now, Shengzhou manufactures both the silk and the ties, and gets even more of the profits.

Interestingly, most people in Necktie City don't wear neckties. Xiaoping said they are too busy making them.

ABC News' Jim Sciutto filed this report for "World News Tonight."