Buenos Aires, the so-called Paris of South America, beckoned. Ms. Knauer, now 25 years old, arrived in 2004 with one suitcase, $45,000 in the bank, and a conversational knowledge of Spanish. She explored the city streets for inspiration, and it didn't take long to find her muse: Argentine leather.

Within months, she launched Qara Argentina, a luxury leather-accessories company that makes hand-crafted calfskin wallets, messenger bags and other leather trimmings, targeting what she deems an underserved market: 25- to 40-year-old urban men.

While starting a business on familiar terrain would have been easier, Ms. Knauer knew that with the devaluation of the Argentine peso in 2002, her budget could be stretched much further there. But she also knew there would be challenges.

For an entrepreneur establishing a business in a foreign country -- or even setting up an overseas unit -- it's easy to make a mistake if you assume what would work well at home would work in another country. "Everything reverts back to the cultural divide," Ms. Knauer says, "which is also what makes it interesting." In Argentina, "you can't come here as an American and expect to do business as an American," she says. "You have to observe and immerse yourself and study the Argentine way of doing business and more or less mimic it."

Thousands of miles from family and friends, Ms. Knauer has had to quickly master an unfamiliar business tango without a partner, as well as craft an authentic Argentine persona for her company so that she'd receive the same treatment from suppliers as an indigenous operation would.

She was a quick study. She immediately contacted a lawyer, whom she found through friends back home, and incorporated in both countries. Her lawyer also helped her find an "on-paper-only" Argentine partner. The arrangement cost money, but having such a partner made it much easier to incorporate in Argentina.

There were other challenges as well. Ms. Knauer initially used well-known leather manufacturers, but they had trouble translating her ideas into goods that met her standards. In one instance, she says, "they had run out of the leather I had asked for so they gave me this messenger bag in metallic gold leather. It didn't occur to them that I was expecting what I asked for. So I looked at the numbers and realized it made more sense to open my own production facility."

By August, seven months after Qara's creation, she had rented a 1,200-square-foot space in the heart of Buenos Aires for $365 a month, bought second-hand machines and found artisans through advertising in the local paper.

But when she discovered that several leather tanneries she visited were inflating their prices to her, she says, "I realized . . . what I needed to do was hire more Argentines to go as my cultural brokers. There were linguistic subtleties that an American would just miss, as well as cultural issues," she explains.

She now has seven employees -- a manager, two assistant designers, two artisans and a part-time leather cutter -- all of whom are Argentine except a fellow American expatriate who handles public relations. She plans to hire two more artisans and buy more sewing machines to double weekly production to a total of about 3,000 bags this year. Although marketing didn't begin in earnest until late last year, Ms. Knauer says Qara should be profitable by the end of this year, the company's second.

But hanging on to her artisans, who were used to working a single task on an assembly line, hasn't been easy. "You have to retrain them," Ms. Knauer says, "They are used to working for quantity instead of quality and I am asking for the opposite." She says she pays them more to make them stay. "If they stayed," she adds, "they would realize what I required of them was more attractive than going back to a factory and working in an assembly line. I think they take a lot more pride in their work now."

Qara's goods retail anywhere from $60 for a calfskin credit-card holder and $65 for an iBook laptop cover, to $286 for a leather messenger bag and $650 for a weekend bag, Ms. Knauer says. While Qara's line is currently available through its Web site, as well as a boutique, Foley + Corinna, in Manhattan, she needs department-store shelves to bring her brand to the next level. On a recent visit to New York, she met with a big department store as well as a few major fashion magazines and trade publications. "It's really important to be on shelves," she says. "People really like touching and smelling leather, which they can't do online."

Qara's items are also available in Buenos Aires hotel boutiques, and she plans to open a store in the city's fashion district, within the next six months.

While Ms. Knauer has other plans for expansion -- including a women's line -- she's close to exhausting her initial investment. She's now seeking angel investors, which would allow her to establish a New York office, as well as hire a sales executive. She'd also use the funds to buy more leather in bulk to lock in costs and help ward off the effects of Argentine inflation.