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Hong Kong Clothing Industry

Overview
Textile quotas have been removed amongst WTO participants at the first day of 2005 according with the Agreement on Textiles and Clothing (ATC). However, resistance to quota elimination unfold within the US and EU. Subsequently, China reached agreements with the EU and the USA in June and November 2005 respectively. The China-US agreement, powerful from January 2006, governs the exports of a complete of 21 corporations involving 34 classes of Chinese textiles and clothing products to the United States at some stage in 2006-2008. The China-EU agreement, powerful from June 2005, covers 10 classes of Chinese textiles and apparel exports to the EU at some point of 2005-2007 women’s clothing websites.
On the opposite hand, the mainland and Hong Kong agreed in October 2005 to in addition liberalise the mainland market for Hong Kong companies beneath the third section of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA III). Along with different products of Hong Kong foundation, the mainland agreed to provide all merchandise of Hong Kong foundation, including garb items, tariff-free treatment beginning from 1 January 2006. According to the stipulated approaches, products which have no current CEPA policies of foundation, will enjoy tariff-unfastened remedy upon applications by nearby manufacturers and upon the CEPA rule of origins being agreed and met.
Hong Kong clothing businesses are reputable for ODM and OEM production. They are able to deliver first-class apparel articles in quick lead time, as foreign importers and retailers request clothing suppliers to tighten up supply chain control to make certain the ordered merchandise attaining the store ground at the right time. Increasingly, Hong Kong clothing businesses, the installed ones in particular, have proven enthusiasm for brand promotion.
Hong Kong’s general exports of garb rose 12 months-on-yr by way of 9% in the first eleven months of 2005. While Hong Kong’s re-exports of garb rose with the aid of 20%, home exports fell by means of 14%. In the first 11 months of 2005, Hong Kong’s garb exports to the United States and EU rose via eleven% and 18% respectively. While Hong Kong’s apparel exports to Japan levelled off, those to the Chinese mainland declined by way of eleven%.
Industry Features
The garb enterprise is a major production area of Hong Kong. Its gross output is one of the highest among all manufacturing sectors, amounting to HK$35.9 billion in 2003. It is the most important production organization in Hong Kong, with 1,673 institutions hiring 28,752 people as of June 2005. It is also the leading earner in terms of home exports, taking on forty% of the entire within the first 11 months of 2005.
Hong Kong’s geographic boundary has never constrained the development of the forward-searching garb enterprise. The majority of garb producers have set up offshore production facilities in an try to lessen operation expenses. Relocation of production facilities offshore has but ended in a regular decline inside the quantity of clothing manufacturers in Hong Kong.
Hong Kong isn’t only a main production centre but also a hub for clothing sourcing globally. Companies doing garment exchange in Hong Kong are experienced in fabrics procurement, sales and advertising and marketing, excellent manipulate, logistic arrangements, apparel designs and global and countrywide regulations and regulations. The professionalism that they command and the combined services offered are not easily matched someplace else. With a total of 15,a hundred ninety establishments hiring ninety five,889 people, they shape the largest group involved in import-export alternate in Hong Kong.
Performance of Hong Kong’s Exports of Clothing
Hong Kong’s general exports of garb rose year-on-12 months through 9% in the first 11 months of 2005. While Hong Kong’s re-exports of apparel rose by 20%, home exports fell by way of 14%. The contrasting overall performance of Hong Kong’s re-exports and home exports was basically ascribed to the growing relocation of garment manufacturing to the Chinese mainland, as a result of the elimination of quotas under WTO’s Agreement on Textiles and Clothing (ATC). But the declining trend of domestic exports has been reversed relatively in latest months, because of the re-imposition of quantitative restraints on mainland-made textiles and apparel by america and EU.
Retail income in the US held company in the first eleven months of 2005, rising through nearly 6% from the identical duration in the previous year. In the primary 11 months of 2005, Hong Kong’s garb exports to the US rose 12 months-on-year by way of 11%.
In the first eleven months of 2005, Hong Kong’s overall clothing exports to the EU surged year-on-12 months through 18%. Clothing exports to main EU markets like France, Germany and Italy recorded growth quotes in extra of 20%.
On the alternative hand, Hong Kong’s garb exports to Japan levelled off in the first eleven months of 2005 in part due to the fashion of direct cargo. On the again of the rising profits however, Japanese consumers generally tend to resume their spending spree on top class clothing gadgets. Meanwhile, Hong Kong’s garb exports to the Chinese mainland dropped through 11% in the first eleven months of 2005, in comparison with the identical length remaining 12 months.
Product-sensible, Hong Kong’s exports of woven put on rose with the aid of 12% in the first eleven months of 2005. While woven wear for women/ladies grew by means of 13%, the ones for men/boys recorded a boom of eight% from the equal length within the previous yr. Knitted put on grew through 2%, with ladies/ladies and men/boys rising via 1% and 6% respectively. While clothing add-ons declined by way of three%, other garb articles, for his or her component, accelerated by way of 13%.
Sales Channels
Hong Kong’s apparel producers have cast sturdy relationships with their customers. They are able to apprehend and cater for the options of very broad customer bases. Exporters additionally have accurate information of global and national policies and guidelines governing garb exports, inclusive of regulations of foundation, quota restrictions, tariff rates and documentation requirements. Cut, make and trim (CMT) arrangements are commonplace despite the fact that many Hong Kong producers have moved to higher value-added sports such as layout and brand improvement, exceptional control, logistics and material sourcing.
A few well-mounted nearby producers have entered into the retailing commercial enterprise, either regionally or in distant places markets. Many of them have retail networks in primary towns round the sector together with Beijing, London, New York, San Francisco, Shanghai, Singapore, Sydney, Taipei and Tokyo. Some well-known manufacturing outlets consist of Baleno, Bossini, Crocodile, Episode, Esprit, G-2000, Giordano, JEANSWEST, Moiselle and U-2.
As a international sourcing hub in Asia, Hong Kong draws a number of worldwide trading homes and predominant outlets. Buyers sourcing from Hong Kong encompass American and European department stores (e.G. Macy’s, JCPenney, Federated, Karstadt Quelle, C & A), bargain stores (e.G., Sears, Target and Carrefour), uniqueness chains (e.G., The Gap, The Limited) and mail order houses (e.G. Otto and Great Universal Stores). Many worldwide top class clothier labels — together with Calvin Klein, Donna Karen, Ralph Lauren, Tommy Hilfiger and Yves Saint Laurent — source garments in Hong Kong through their buying workplaces or other intermediaries.
Hong Kong’s style designers have been gaining worldwide recognition for their professional understanding, sensitivity to cutting-edge traits and potential to mixture commercialism with innovation. Medium to luxurious fashion apparel bearing Hong Kong dressmaker labels is being sold/had been sold in renowned department
stores overseas which includes Bloomingdale’s, C & A, Harrod’s, Isetan, Macy’s, Marui, Mitsukoshi, Nieman Marcus and Seibu.
Trade festivals and exhibitions remain commonplace locations for customers and providers of clothing to congregate. To set up connections and discover market possibilities, Hong Kong manufacturers and buyers have involved themselves actively in global shows led by means of the Hong Kong Trade Development Council (TDC), along with those in Beijing, Chengdu, Dalian, Dubai, Dusseldorf, Hong Kong, Moscow, Mumbai, Paris and Tokyo. ‘Hong Kong Fashion Week’ is organised twice a 12 months and draws international providers and buyers to take part in the exhibition. Organised through TDC, ‘World Boutique, Hong Kong’ is the primary impartial event in Hong Kong committed to promoting designers’ series and brands from around the sector.
Industry Trends
Changes in retail panorama: In the USA and EU, massive-scale retailers are undergoing drastic restructuring and consolidation, especially, the developing prominence of hypermarkets consisting of Wal-Mart. To support competitiveness, Sears and Kmart have merged to form the 1/3 largest retail institution within the US.
Growing significance of private labels: Private labels, in essence, have come to be an an increasing number of effective marketing device amongst garment shops. In order to differentiate as well as upgrade the photo in their merchandise, primary shops have started out to put a stronger emphasis on their own labels. According to Cotton Incorporated, non-public labels accounted for 45% of general US clothing sales in 2003, up from 39% in 2001. In some adult apparel classes, together with skirts, private labels accounted for as excessive as seventy six% of the overall sales. It is also predicted that 45% of products bought in the EU are sold underneath private labels. Renowned outlets together with H&M, Marks & Spencer, Orsay, Palmers, Pimkie, Springfield and Kookai have owned their non-public labels. As purchasers preference to have personal labels on regular garments like denims, add-ons and T-shirts, the doors also are open to the supply of these apparel objects to non-public label owners.
Growing interest in China’s domestic marketplace: The fast expansion of mainland’s economy has attracted terrific interest of Hong Kong apparel corporations to discover its clothing market. A TDC survey on mainland’s garment customers suggests that Hong Kong manufacturers are ranked number one by using the respondents in the mid-variety section. While global manufacturers are most desired inside the excessive-cease segment, mainland brands dominate the low-give up. In addition, the equal survey finds out that inside the eyes of mainland purchasers, Hong Kong businesses are very strong in casual put on, as they may be normally of excellent layout and pleasant. In essence, many mainland purchasers have evolved a more potent focus of Hong Kong brands through tour to and purchasing in Hong Kong. Therefore, Hong Kong’s informal put on has efficaciously projected a tremendous photo to mainland clients.
CEPA
On 18 October 2005, the mainland and Hong Kong agreed to similarly liberalise the mainland market for Hong Kong agencies underneath the 0.33 segment of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA III). Along with different products of Hong Kong origin, the mainland agreed to offer all merchandise of Hong Kong origin, such as apparel objects, tariff-unfastened remedy starting from 1 January 2006. According to the stipulated strategies, products which have no present CEPA guidelines of beginning, will revel in tariff-unfastened remedy upon packages with the aid of local producers and upon the CEPA rule of origins being agreed and met. But non-Hong Kong made apparel merchandise will stay challenge to tariff fees of 10-25% when getting into the mainland.
The promulgated regulations of foundation for clothing items to benefit from CEPA’s tariff choice are essentially similar to the prevailing policies governing Hong Kong’s exports of those merchandise. Generally talking, the fundamental manufacturing system of cut-and-sewn garment is stitching of components into clothes. If linking and/or stitching is/are required, such process/approaches should additionally be done in Hong Kong. For piece-knitted garment, if it is product of yarn, the major process is knitting of yarn into knit-to-form panel.
If the piece-knitted garment is product of knit-to-shape-panels, the principal process is linking of knit-to-shape panels into garment. If sewing is needed, it have to additionally be performed in Hong Kong.
Trade Measures Affecting Exports of Clothing
According to the ATC, textile quotas were removed among WTO contributors at the primary day of 2005. However, resistance to quota removal spread in the US and EU. Particularly within the US, China-precise safeguards on 10 categories of garb gadgets from China had been invoked. Against this background, China reached agreements with the EU and the US in June and November 2005 respectively.
The China-US settlement, effective from January 2006, governs the exports of a total of 21 companies involving 34 categories of Chinese textiles and garb merchandise to the US during 2006-2008. It lets in an annual growth of 10-15% in 2006, 12.5-sixteen% in 2007 and 15-17% in 2008. The China-EU agreement, effective from June 2005, gives for an annual boom of eight-12.5% in 10 classes of Chinese textiles and garb exports to the EU throughout 2005-2007. In addition, both EU and US agreed to exercising restraint in invoking China-particular safeguard against Chinese textiles and apparel that are not covered within the agreements.
Product Trends
Formal Dressing: While informal wear accounts for the majority of apparel income, a popular fashion toward stricter corporate dress codes has brought about a growing call for for formal dressing, specially fits. According to a survey by means of Cotton Incorporated in overdue 2004/early 2005, 38.5% of respondents accept as true with that humans dressed too casually at paintings. This is a 6.5 percent point boom over the equal yr-in the past.
Teenager: One of the foremost riding forces of clothing marketplace appears to be the young adults within the coming years. The range of teenagers inside the US expects to increase from 31.6 million in 2001 to 34.1 million in 2010. A recent survey by way of Teenage Research Unlimited determined that young adults are saving cash through price shopping. While JCPenney is their preferred branch shop, Target and Wal-mart are their favorite hypermarkets. In addition, Old Navy is their selections amongst distinctiveness clothing shops.
Silver Market: Ageing populace becomes a not unusual phenomenon in lots of evolved international locations in Europe in addition to Japan and america. Elderly human beings represent a primary market section known as ‘silver marketplace’. Supported by way of savings, social security blessings and pensions, many aged humans have instead robust spending strength. It is envisioned that the age group of 65 year and above accounted for approximately 21% of Japan’s intake expenditure in 2000. A survey conducted by way of the Japanese government also indicates that people who are 60 years antique and above own nearly 3 instances the financial assets of those within the 40-50 age organization. In the United States, those aged at or above sixty five amounted to 18.1 million in 2001, and the wide variety is predicted to swell to 26 million in 2015.
Plus-size Market: The plus-length market has been a place of increase for decades, and the trend is anticipated to preserve inside the coming destiny. It is estimated that 65 million girls inside the US put on size 14 or above. This group represents one-half of of the USA girl populace. It is mentioned that some renowned manufacturers have already replied to the fashion by way of presenting products of larger size; those organizations include Liz Claiborne, Ralph Lauren and Tommy Hilfiger.
Easy-care Clothes: Clothes manufactured from stain-resistant and wrinkle-free fabrics are well obtained in the market. It is predicted that approximately 1 / 4 of garb is now made from smooth-care fabrics, and its reputation is predicted to retain in the following couple of years. While fundamental garb manufacturers like Dockers and Liz Claiborne have already marketed drastically clean-care clothes, fundamental hypermarkets, like Wal-Mart, additionally offer more products of such best.
Source: Hong Kong Trade Development Council
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