ALEPPO, Syria—Months before the uprising against President Bashar al-Assad in March 2011, Aleppo entrepreneur Abdul-Latif Kudsi opened a state-of-the-art denim factory in his native city in partnership with an Italian businessman.

They sunk the equivalent of $5 million into the venture and production was exclusively for leading European designers, says the 69-year-old Mr. Kudsi, a member of a prominent Aleppan family that counts Ottoman pashas in its lineage.

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