FLOGGING fashion is like selling fish, as Amancio Ortega, the founder of Inditex, likes to say. Fresh fish, like a freshly cut jacket in the latest colour, sells quickly and at a high price. Yesterday's catch must be discounted and may not sell at all. This simple insight has made Inditex one of the world's two biggest clothes makers. The other, H&M Hennes & Mauritz of Sweden, is about the same size. From its base near the Spanish fishing port of La Coruña, Inditex's main brand, Zara, has conquered Europe. The Inditex model, celebrated in many a case study, goes like this. Other fashion firms have their clothes made in China. This is cheap, but managing a long supply chain is hard. By the time a boat has sailed halfway round the world, hemlines may have risen an inch and its cargo will be as popular as geriatric haddock. Inditex, by contrast, sources just over half of its products from Spain, Portugal and Morocco. This costs more. But because its supply chain is short, Inditex can react quickly to new trends. Instead of betting on tomorrow's hot look, Zara can wait to see what customers are actually buying - and make that. While others are stuck with unwanted stock, Inditex sells at full prices. Sales have quadrupled to €13.8 billion ($19.1 billion) since the firm's initial public offering in 2001. Inditex's operating profits are high and have been more stable over time than its peers. The firm now faces two challenges. Can it go global? And will its "fast-fashion" model be copied, or bettered, by others? For now, Inditex is dependent on Europe: 70% of its sales in 2011 were there. Sales in Spain, which accounted for 25% of revenue, have stalled. Europe is stagnant and ageing. Inditex needs new markets. Pablo Isla, who took over as chairman from Mr Ortega last summer, has big plans. "Going into China is like beginning again in Europe for us," he says. Announcing its annual results on March 21st, Inditex said it opened 179 new stores in Asia in 2011, 156 of them in China. A global brand needs a prominent shop window. On March 15th Inditex opened a huge outlet on Fifth Avenue in Manhattan, having bought the store for $324m last year. Even after adjusting for inflation, that is more than the Louisiana Purchase of 1803, in which America bought all or part of 15 states. The aim is not merely to sell to New Yorkers, but to convince shoppers everywhere that Zara is hip. Inditex's formula has not worked everywhere. Zara has struggled in America, for instance. It sells trendy cuts and slim fits. Outside the biggest cities, Americans have long preferred classic, roomier clothes (though this may be changing). Chinese office ladies like Zara's slim fits more, says Fraser Ramzan of Nomura, a bank. Iria Campos, a Zara designer, says Chinese women choose pastels to flatter their pale skin rather than the stronger colours Europeans prefer; but otherwise they have surprisingly similar tastes. Still, China will not be easy. Zara's clothes are far pricier than local rivals," whereas in Europe they are relatively cheap. And because of the distance from La Coruña, Zara must charge more in absolute terms as well. So it has to convince Chinese shoppers that it is luxurious enough to justify the price tag. Its Chinese stores are packed, but its success is more fragile in China than in Europe, says Luca Solca of CA Cheuvreux Research in Paris. It must watch the quality of its products. And expect hurdles. Last year China's consumer watchdog attacked Zara for poor quality. The firm denies that it was singled out for political reasons. But the Chinese government typically targets foreign firms first. Last week McDonald's and Carrefour were pilloried for minor lapses. At some point, Inditex may have to adapt its business model for Asia. As its Chinese sales grow, it will make sense to have both logistics and design in China, says Mr Solca. Last year rumours flew that Inditex might buy Giordano, a Hong Kong-based version of Gap, an American clothes chain. Both companies denied it. Inditex currently has a dozen or so designers in Shanghai and around 250 at home in La Coruña. That will surely change. Creatively, Europe is "rather dead," says José Luis Pavia Cervera, a former executive at Inditex who now works for C&A, a mid-market retailer. In the future, China will set the trends, he reckons. Several of Inditex's rivals are struggling. In February the Benetton family moved to de-list their fashion group to revamp its business model. Benetton went international in the 1980s but overexpanded and lost direction. Its shocking ads (the Pope kissing an imam, etc) no longer thrill. America's Gap, another retailer with global ambitions, is ailing. Both brands have lost market share to Inditex and H&M. The genius of Mr Ortega's model, says a former Inditex executive, is that it picks up on every season's trends and is never associated with any one style, which could fall out of fashion. Alone among its peers, it does not advertise. Instead, it relies on chic locations and shop-window displays. Rivals, however, argue that Zara is in fact associated with something: a gilded age of throwaway fashion. Now that tight belts are in, women may hesitate to buy a top and wear it only twice. Inditex is trying to develop new brands. Bershka, the most successful, was launched in 1998 and has sales of €1.3 billion. But the firm remains dependent on Zara, which generated 65% of sales in 2011. Kings of La Coruña The change at the top appears to have gone smoothly. Mr Isla was Mr Ortega's deputy and hand-picked successor. The 75-year-old Mr Ortega remains powerful, however: he still owns 59% of Inditex. He started work in a clothing shop in La Coruña at 13, and has always directed the design, manufacturing and selling side of the business, while delegating other parts, such as finance and IT. The firm has developed a "schism" between the product side and finance, according to "Zara and Her Sisters," a recent book by Enrique Badía. Mr Isla's background is different. A lawyer, he was chairman of Altadis, a tobacco group, before joining Inditex in 2005. Even now that he is the boss, says a former colleague, Mr Isla "has little to do with the product side of the business." Mr Ortega is still in charge of that, apparently. Insiders praise Mr Isla. He has curbed costs. During 2010-11 the firm rolled out a global online-commerce platform for Zara. Were it not for Mr Isla, Inditex would probably not have broken with its bricks-and- mortar tradition so boldly. The company does not release figures, but the online store is said to be thriving. Nevertheless, insiders worry about the day Mr Ortega really retires. Inditex will need a new muse, some say. Mr Isla retorts that product teams make product decisions, and that Mr Ortega's handover of the chairmanship represented "the complete professionalisation of the company." Why has no one copied Inditex's business model? One executive at Gap is said to have answered: "I would love to organise our business like Inditex, but I would have to knock the company down and rebuild it from scratch." The gulf between Inditex and its rivals is bound to shrink, however. Isabel Cavill of Planet Retail, a consultancy, notes that retailers such as Gap and George, a brand owned by Britain's Asda, are seeking to move production away from Asia and closer to home. As Benetton addresses its problems, it will adopt elements of Inditex's model, such as the way it frequently updates its collections, says an executive close to the company. Plenty of competitors are poaching the Spanish firm's people to learn its secrets. "My main task at C&A is to replicate Inditex's obsessive focus on its products and its shops," says Mr Pavia, who has hired people from Inditex to help him. Nothing lasts forever in the world of fashion. Fortunes, like hemlines, can go down as well as up.