However Dalouis is not ready to rest on its laurels just yet. Like many others, it is looking to branch out into other clothing lines that promise bigger payoffs.

The company is building a huge sweater factory on its front lawn to cash in on a more expensive part of the garment industry that offers a 15-30 percent profit margin, compared to 5-10 percent for ties.

"It's like a trend, fewer and fewer people are wearing neckties these days," Zhang says.

"For example, several years ago the Japanese government ordered its civil servants to cut their use of air conditioners to save energy, so they started ditching their ties to beat the heat.

"Now many companies here have started making sweaters, or investing in residential property, or oil and coal, or high-tech electronic products. They say there's not enough profit in ties so they don't want to rely on them anymore."

A brief look at how quickly costs have risen helps explain why. Cotton has shot up 50 percent since August, while silk is up 30 percent over the same period, Zhang says. A ton of silk that sold for 208,000 yuan in December 2009 already costs 390,000 yuan.

"Raw material prices have basically jumped 80 percent in 12 months," Zhou says.

Then there is the threat of a dwindling workforce. An average factory worker in Shengzhou earns 1,800 yuan a month, up from 1,500 yuan 12 months ago. Yet when China Daily walked around the Dalouis factory last week, it was half empty.

Zhang says many migrant workers had already left for their hometowns to celebrate the Chinese New Year holiday, which doesn't begin until February. He said the company loses about 20 percent of its staff each year, and is lucky if it can replace half of them.

In a bid to stop the rot, industry leaders made two key changes last year with the support of the local government. The first saw 10 companies throw in their lot to build two specialized logistics companies - a savvy move for a city that has no direct train links to Shanghai and no airport.

The second saw officials venturing to other parts of the country such as Sichuan and Yunnan provinces to find and develop new silkworm farms. The next stage involves them integrating these vertically into Shengzhou's industrial chain.

"Our manufacturing skill is world class and our level of design is slowly closing the gap with the Italians," muses Zhou. "Our share of the market is just going to keep growing."

Tang Zhihao contributed to this story.