Hong Kong Clothing Industry

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Textile quotas were eliminated among WTO participants at the primary day of 2005 in accordance with the Agreement on Textiles and hip hop t-shirts(ATC). However, resistance to quota removal spread inside 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 total of 21 agencies involving 34 classes of Chinese textiles and apparel products to america at some stage in 2006-2008. The China-EU agreement, effective from June 2005, covers 10 classes of Chinese textiles and apparel exports to the EU for the duration of 2005-2007.

On the alternative hand, the mainland and Hong Kong agreed in October 2005 to similarly liberalise the mainland market for Hong Kong agencies below the 0.33 section of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA III). Along with different merchandise of Hong Kong foundation, the mainland agreed to present all products of Hong Kong origin, such as clothing items, tariff-loose treatment beginning from 1 January 2006. According to the stipulated strategies, merchandise which haven’t any present CEPA regulations of beginning, will revel in tariff-loose treatment upon programs with the aid of local producers and upon the CEPA rule of origins being agreed and met.

Hong Kong clothing businesses are official for ODM and OEM manufacturing. They are capable of supply pleasant apparel articles in short lead time, as foreign importers and stores request apparel providers to tighten up deliver chain management to make certain the ordered merchandise achieving the shop floor at the proper time. Increasingly, Hong Kong garb groups, the mounted ones specifically, have shown enthusiasm for emblem promoting.

Hong Kong’s total exports of apparel rose yr-on-12 months by means of nine% inside the first eleven months of 2005. While Hong Kong’s re-exports of apparel rose with the aid of 20%, home exports fell by means of 14%. In the primary eleven months of 2005, Hong Kong’s apparel exports to america and EU rose via 11% and 18% respectively. While Hong Kong’s garb exports to Japan levelled off, those to the Chinese mainland declined via eleven%.

Industry Features

The apparel industry is a primary manufacturing quarter of Hong Kong. Its gross output is one of the maximum among all manufacturing sectors, amounting to HK$35.9 billion in 2003. It is the most important manufacturing corporation in Hong Kong, with 1,673 establishments hiring 28,752 employees as of June 2005. It is likewise the leading earner in phrases of home exports, taking up forty% of the full in the first eleven months of 2005.

Hong Kong’s geographic boundary has in no way confined the development of the ahead-looking apparel enterprise. The majority of clothing manufacturers have set up offshore manufacturing centers in an try to reduce operation fees. Relocation of manufacturing facilities offshore has but ended in a steady decline within the quantity of clothing manufacturers in Hong Kong.

Hong Kong is not only a leading production centre but additionally a hub for garb sourcing globally. Companies doing garment exchange in Hong Kong are experienced in fabrics procurement, income and advertising and marketing, quality manage, logistic arrangements, apparel designs and international and national rules and rules. The professionalism that they command and the mixed services supplied are not effortlessly matched some other place. With a complete of 15,190 institutions hiring ninety five,889 workers, they shape the biggest institution worried in import-export change in Hong Kong.

Performance of Hong Kong’s Exports of Clothing

Hong Kong’s total exports of garb rose year-on-year by nine% inside the first 11 months of 2005. While Hong Kong’s re-exports of garb rose through 20%, domestic exports fell by way of 14%. The contrasting overall performance of Hong Kong’s re-exports and domestic exports become basically ascribed to the growing relocation of garment manufacturing to the Chinese mainland, as a result of the elimination of quotas below WTO’s Agreement on Textiles and Clothing (ATC). But the declining trend of home exports has been reversed quite in latest months, because of the re-imposition of quantitative restraints on mainland-made textiles and apparel by the USA and EU.

Retail sales within the US held company within the first 11 months of 2005, rising by means of nearly 6% from the equal duration inside the preceding year. In the first eleven months of 2005, Hong Kong’s garb exports to the United States rose 12 months-on-year via 11%.

In the first eleven months of 2005, Hong Kong’s overall garb exports to the EU surged 12 months-on-yr by means of 18%. Clothing exports to main EU markets like France, Germany and Italy recorded boom quotes in excess of 20%.

On the other hand, Hong Kong’s apparel exports to Japan levelled off in the first eleven months of 2005 partly due to the fashion of direct cargo. On the again of the rising earnings however, Japanese purchasers generally tend to renew their spending spree on top rate clothing objects. Meanwhile, Hong Kong’s garb exports to the Chinese mainland dropped with the aid of 11% within the first 11 months of 2005, compared with the equal duration final 12 months.

Product-smart, Hong Kong’s exports of woven put on rose through 12% in the first 11 months of 2005. While woven put on for girls/ladies grew by way of thirteen%, those for men/boys recorded a boom of eight% from the identical length within the preceding yr. Knitted wear grew via 2%, with ladies/women and guys/boys rising by way of 1% and 6% respectively. While apparel accessories declined by means of three%, other clothing articles, for his or her component, elevated by using 13%.

Sales Channels

Hong Kong’s clothing manufacturers have forged robust relationships with their clients. They are capable of recognize and cater for the alternatives of very large patron bases. Exporters additionally have accurate know-how of worldwide and national guidelines and policies governing garb exports, together with rules of origin, quota restrictions, tariff quotes and documentation necessities. Cut, make and trim (CMT) arrangements are commonplace despite the fact that many Hong Kong manufacturers have moved to higher value-delivered sports which includes layout and brand improvement, quality manipulate, logistics and fabric sourcing.

A few nicely-installed nearby producers have entered into the retailing commercial enterprise, either domestically or in remote places markets. Many of them have retail networks in most important towns round the arena including Beijing, London, New York, San Francisco, Shanghai, Singapore, Sydney, Taipei and Tokyo. Some famous production retailers encompass Baleno, Bossini, Crocodile, Episode, Esprit, G-2000, Giordano, JEANSWEST, Moiselle and U-2.

As a worldwide sourcing hub in Asia, Hong Kong attracts some of global trading homes and important shops. Buyers sourcing from Hong Kong include American and European department shops (e.G. Macy’s, JCPenney, Federated, Karstadt Quelle, C & A), cut price stores (e.G., Sears, Target and Carrefour), specialty chains (e.G., The Gap, The Limited) and mail order homes (e.G. Otto and Great Universal Stores). Many global top rate dressmaker labels — which includes Calvin Klein, Donna Karen, Ralph Lauren, Tommy Hilfiger and Yves Saint Laurent — supply clothes in Hong Kong through their shopping for workplaces or different intermediaries.

Hong Kong’s style designers have been gaining worldwide reputation for their professional know-how, sensitivity to current trends and capacity to combination commercialism with innovation. Medium to luxurious fashion apparel bearing Hong Kong fashion designer labels is being sold/have been sold in famend department
stores foreign places along with Bloomingdale’s, C & A, Harrod’s, Isetan, Macy’s, Marui, Mitsukoshi, Nieman Marcus and Seibu.

Trade fairs and exhibitions stay not unusual locations for buyers and suppliers of garb to congregate. To establish connections and explore marketplace opportunities, Hong Kong manufacturers and buyers have involved themselves actively in global indicates led through the Hong Kong Trade Development Council (TDC), consisting of the ones in Beijing, Chengdu, Dalian, Dubai, Dusseldorf, Hong Kong, Moscow, Mumbai, Paris and Tokyo. ‘Hong Kong Fashion Week’ is organised twice a year and attracts international providers and shoppers to participate inside the exhibition. Organised via TDC, ‘World Boutique, Hong Kong’ is the primary unbiased event in Hong Kong devoted to selling designers’ collection and types from round the sector.

Industry Trends

Changes in retail landscape: In america and EU, massive-scale shops are undergoing drastic restructuring and consolidation, mainly, the developing prominence of hypermarkets along with Wal-Mart. To toughen competitiveness, Sears and Kmart have merged to shape the 0.33 largest retail institution in the US.

Growing significance of personal labels: Private labels, in essence, have end up an increasingly more powerful marketing device among garment stores. In order to distinguish in addition to upgrade the picture in their merchandise, fundamental outlets have began to position a more potent emphasis on their very own labels. According to Cotton Incorporated, private labels accounted for 45% of general US garb sales in 2003, up from 39% in 2001. In a few person garb categories, inclusive of skirts, private labels accounted for as excessive as seventy six% of the total sales. It is likewise estimated that 45% of merchandise bought in the EU are sold underneath non-public labels. Renowned outlets inclusive of H&M, Marks & Spencer, Orsay, Palmers, Pimkie, Springfield and Kookai have owned their private labels. As customers preference to have private labels on everyday clothes like denims, accessories and T-shirts, the doors are also open to the supply of those garb objects to private label proprietors.

Growing interest in China’s domestic marketplace: The rapid expansion of mainland’s economy has attracted first-rate hobby of Hong Kong apparel businesses to explore its apparel market. A TDC survey on mainland’s garment consumers suggests that Hong Kong brands are ranked primary through the respondents within the mid-range segment. While global brands are most favored within the high-quit phase, mainland brands dominate the low-end. In addition, the equal survey unearths out that inside the eyes of mainland purchasers, Hong Kong organizations are very sturdy in informal put on, as they are typically of correct design and nice. In essence, many mainland consumers have developed a more potent recognition of Hong Kong manufacturers thru tour to and buying in Hong Kong. Therefore, Hong Kong’s casual wear has correctly projected a fine photograph to mainland customers.


On 18 October 2005, the mainland and Hong Kong agreed to further liberalise the mainland market for Hong Kong groups beneath the 0.33 phase of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA III). Along with different merchandise of Hong Kong beginning, the mainland agreed to present all products of Hong Kong origin, including garb gadgets, tariff-unfastened remedy starting from 1 January 2006. According to the stipulated techniques, merchandise which haven’t any current CEPA policies of foundation, will enjoy tariff-free treatment upon programs by means of nearby 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% while coming into the mainland.

The promulgated rules of beginning for apparel items to benefit from CEPA’s tariff preference are basically just like the existing policies governing Hong Kong’s exports of those merchandise. Generally speakme, the most important production process of cut-and-sewn garment is sewing of components into garments. If linking and/or sewing is/are required, such technique/methods ought to also be achieved in Hong Kong. For piece-knitted garment, if it’s far made of yarn, the fundamental method is knitting of yarn into knit-to-form panel.

If the piece-knitted garment is product of knit-to-form-panels, the important process is linking of knit-to-shape panels into garment. If stitching is needed, it ought to additionally be completed in Hong Kong.

Trade Measures Affecting Exports of Clothing

According to the ATC, textile quotas were eliminated among WTO individuals at the first day of 2005. However, resistance to quota elimination spread in the US and EU. Particularly in the US, China-precise safeguards on 10 categories of clothing objects from China were invoked. Against this history, China reached agreements with the EU and the US in June and November 2005 respectively.

The China-US agreement, powerful from January 2006, governs the exports of a complete of 21 corporations regarding 34 categories of Chinese textiles and clothing merchandise to the USA during 2006-2008. It allows an annual growth of 10-15% in 2006, 12.5-16% in 2007 and 15-17% in 2008. The China-EU agreement, effective from June 2005, offers for an annual growth of eight-12.Five% in 10 categories of Chinese textiles and garb exports to the EU throughout 2005-2007. In addition, each EU and US agreed to exercising restraint in invoking China-unique shield towards Chinese textiles and clothing that are not blanketed within the agreements.

Product Trends

Formal Dressing: While informal wear accounts for the majority of garb sales, a preferred trend in the direction of stricter corporate dress codes has brought about a growing call for for formal dressing, specifically suits. According to a survey through Cotton Incorporated in past due 2004/early 2005, 38.Five% of respondents accept as true with that people dressed too casually at work. This is a 6.5 percent point boom over the same 12 months-in the past.

Teenager: One of the principal driving forces of clothing market seems to be the teens in the coming years. The quantity of teens within the US expects to growth from 31.6 million in 2001 to 34.1 million in 2010. A current survey by means of Teenage Research Unlimited discovered that teens are saving cash through cost shopping. While JCPenney is their favourite department save, Target and Wal-mart are their favorite hypermarkets. In addition, Old Navy is their selections amongst strong point apparel stores.

Silver Market: Ageing populace will become a common phenomenon in lots of evolved countries in Europe as well as Japan and the USA. Elderly human beings represent a chief market phase known as ‘silver market’. Supported by way of savings, social protection benefits and pensions, many old people have as an alternative robust spending strength. It is predicted that the age group of 65 yr and above accounted for about 21% of Japan’s intake expenditure in 2000. A survey performed through the Japanese authorities also indicates that those who are 60 years old and above possess nearly three instances the financial property of these within the forty-50 age organization. In the USA, the ones aged at or above 65 amounted to 18.1 million in 2001, and the number is anticipated to swell to 26 million in 2015.

Plus-size Market: The plus-length market has been an area of increase for many years, and the trend is predicted to retain in the coming future. It is envisioned that sixty five million girls within the US put on length 14 or above. This group represents one-1/2 of the US girl populace. It is pronounced that a few famend brands have already replied to the fashion by supplying merchandise of larger length; these corporations encompass Liz Claiborne, Ralph Lauren and Tommy Hilfiger.

Easy-care Clothes: Clothes fabricated from stain-resistant and wrinkle-unfastened fabrics are properly obtained within the marketplace. It is expected that about a quarter of clothing is now product of clean-care fabrics, and its recognition is predicted to continue inside the next few years. While primary garb manufacturers like Dockers and Liz Claiborne have already marketed substantially clean-care garments, fundamental hypermarkets, like Wal-Mart, additionally offer more merchandise of such quality.

Source: Hong Kong Trade Development Council

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