Asian crisis has mixed impact on L.A....

After monitoring the dramatic economic slide in Asia, Max Azria, chief executive of fast-growing apparel firm BCBG, decided to alter his overseas strategy.

He plans to open more retail stores in the region.

With the U.S. dollar surging in value against most Asian currencies, Azria says he is enjoying unprecedented leverage in negotiating with landlords for prime retail space in Asian cities.

"In the past we have had lots of difficulties with landlords," said Azria, who operates a dozen stores in Japan and is looking to launch BCBG boutiques in Malaysia, Hong Kong and Indonesia in 1998. "Now, the landlords are more open to making deals."

Economists have been warning that the currency devaluations and financial-system breakdowns that have swept across Asia are likely to slow economic growth here in California. The sting could be especially sharp among companies that depend on exports to Asia, as well as on local restaurants, hotels and retailers that rely on Asian tourists.

But as Azria's experience demonstrates, commerce between Los Angeles and the Far East flows in a multitude of directions. As a result, the Asian downturn is something of a mixed bag.

While many L.A.-area businesses are bracing for tough times ahead, others are shrugging off the crisis as a temporary blip in the business cycle.

Still others are seeking ways to capitalize on the financial volatility overseas.

"Exporters are going to have problems, but over the near term there is a great advantage for importers," said David Wong, senior vice president at Pacific Bank in downtown L.A. and a specialist in financing small and medium-sized traders. "Most of my portfolio is searching for opportunities and taking advantage of the Asian flu."

For the most part, that means capitalizing on the strong U.S. dollar to purchase supplies from overseas vendors at deep discounts, Wong said he has received a number of requests from clients seeking higher lines of credit to do just that.

The Korean won was trading at a rate of about 1,400 per U.S. dollar last week - a loss of more than 40 percent in value from a year ago. With the Thai baht and the Malaysian ringgit experiencing similar if slightly less dramatic drops, many L.A. importers are licking their chops in anticipation of the deals to come.

"A bad situation is always good for some people," commented Azria, who imports about 40 percent of his fabric from Asia and already has seen a 10 percent to 20 percent drop in prices on some Korean-made textiles.

The Asian slowdown "is likely to be something we benefit from," added Gary H. Schoenfeld, president and chief executive of Vans Inc., a footwear and clothing company in Santa Fe Springs.

More than 70 percent of Vans' shoes are manufactured in Korea. The devaluation of the won, Schoenfeld said, will bolster the bottom line.

In the meantime, Vans' Korean suppliers continue to operate. "So far we haven't experienced any interruption," Schoenfeld said.

Schoenfeld does expect a drop in demand for Vans' products among Asian consumers. But such sales represent just 15 percent of the company's $160 million in annual revenues. Increased demand in U.S., Latin American and European markets - as well as lower manufacturing costs should offset any Asian pain, he said.

But for L.A. businesses that have grown heavily dependent upon Asian consumers, the region's fiscal crisis has been a severe blow indeed.

"Everything in Southeast Asia has come to a complete halt," said Stephen T. Wise, president of California Furniture Exports, a 5-year-old Studio City firm that helps U.S. furniture makers tap into Asian markets. "Korea is nonexistent. Japan is in the doldrums. It leaves us with one country - China."

Wise recently returned from a two-week trip to northern China and is convinced there is enough business there to keep his firm afloat until the situation elsewhere in Asia stabilizes.

Nonetheless, Wise admitted, "it's going to be a long couple of years."

Other firms that export goods or services to Asia expressed similar sentiments.

Burbank-based Iwerks Entertainment Inc., which designs high-tech, location-based entertainment systems and giant-screen movie theaters, has relied on growth in Asia for as much as 40 percent of its sales.

Now, some 30 percent of the company's business is on hold, said Bill Battison, an Iwerks executive vice president.

"We're scrambling in the rest of the world," to offset the Asian drop-off, Battison said.

Iwerks is far from the only local firm looking to diversify its business base.

The giant engineering and consulting firm Parsons Corp., for example, currently has about 30 projects underway in Asia - from small-scale environmental reports to massive infrastructure projects.

That volume is likely to decrease over the next couple of years, said Senior Vice President Ralph DiSibio. "Projects will either be cancelled or strong out over a longer period of time," he said.

Parsons' two largest Asian projects - a $300 million subway system in Bangkok and a $500 million refinery in Korea, both government projects - remain on track, he said. In fact, the firm recently renegotiated its contracts with both the Korean and Thai governments to ensure its billings will not be affected by currency fluctuations.

Meanwhile, Parsons is redeploying its business development teams to dram up new contracts in Latin America and the Middle East. The firm also will be more aggressive in chasing business in the U.S. domestic market - which accounts for 70 percent of Parsons' revenues.

Many L.A. companies with longstanding lies to Asia say they are feeling little impact as a result of the turmoil overseas. That's because most of their Asian suppliers have migrated northward into China, which has been relatively unaffected by the region's crisis.

The devaluation of the won "helps keep our costs down a little," said Jin-Chul Jhung, president of Royal Imex Inc., a City of Commerce firm that imports $12 million worth of wigs, hairpieces and other hair products from Korea, China and Indonesia each year for distribution throughout North America.

But Jhung said he expects to see little impact from the Asian downturn - largely because the vast majority of his goods come from China.

"In the last five to seven years, China has dominated the low-cost manufacturing market," said Charles Woo, chief executive of Megatoys, one of L.A.'s largest family-owned toy companies. Manufacturers once based in Southeast Asian countries have migrated north to China to capture lower labor costs, he said.

Now, however, goods made in Indonesia or Thailand might become more competitive - a fact that could create a buyer's market for importers. "I will have to look carefully; I might find new suppliers," Woo said.