Overview
Textile quotas were being eradicated among WTO customers at the first day of 2005 in accordance with the Agreement on Textiles and Apparel (ATC). However, resistance to quota removal unfold in the US and EU. Subsequently, China arrived at agreements with the EU and the US in June and November 2005 respectively. The China-US arrangement, helpful from January 2006, governs the exports of a full of 21 groups involving 34 types of Chinese textiles and clothing merchandise to the US in the course of 2006-2008. The China-EU settlement, effective from June 2005, handles 10 classes of Chinese textiles and clothes exports to the EU throughout 2005-2007.
On the other hand, the mainland and Hong Kong agreed in October 2005 to even more liberalise the mainland marketplace for Hong Kong providers under the third period of the Mainland and Hong Kong Closer Financial Partnership Arrangement (CEPA III). Together with other products of Hong Kong origin, the mainland agreed to give all items of Hong Kong origin, like outfits merchandise, tariff-totally free therapy starting from 1 January 2006. According to the stipulated methods, merchandise which have no current CEPA regulations of origin, will delight in tariff-totally free therapy upon applications by community manufacturers and upon the CEPA rule of origins remaining agreed and fulfilled.
Hong Kong garments businesses are highly regarded for ODM and OEM manufacturing. They are capable to provide excellent garments content articles in quick lead time, as overseas importers and merchants ask for clothes suppliers to tighten up supply chain management to ensure the ordered items achieving the shop floor at the right time. Progressively, Hong Kong apparel providers, the founded types in certain, have proven enthusiasm for brand advertising.
Hong Kong’s whole exports of garments rose yr-on-year by 9% in the initial 11 months of 2005. Whilst Hong Kong’s re-exports of clothing rose by 20%, domestic exports fell by 14%. In the initial 11 months of 2005, Hong Kong’s outfits exports to the US and EU rose by 11% and 18% respectively. Although Hong Kong’s apparel exports to Japan levelled off, those to the Chinese mainland declined by 11%.
Sector Features
The apparel business is a main manufacturing sector of Hong Kong. Its gross output is 1 of the highest amongst all production sectors, amounting to HK$35.9 billion in 2003. It is the most significant producing employer in Hong Kong, with 1,673 institutions using the services of 28,752 staff as of June 2005. It is also the primary earner in phrases of domestic exports, getting up 40% of the overall in the first 11 months of 2005.
Hong Kong’s geographic boundary has in no way constrained the progress of the ahead-on the lookout outfits business. The majority of clothing companies have set up offshore manufacturing facilities in an endeavor to lower procedure expenses. Relocation of production services offshore has however resulted in a continuous decline in the range of outfits suppliers in Hong Kong.
Hong Kong is not only a major production centre but also a hub for apparel sourcing globally. Firms doing garment trade in Hong Kong are expert in fabrics procurement, sales and advertising and marketing, good quality manage, logistic arrangements, outfits layouts and intercontinental and countrywide principles and regulations. The professionalism that they command and the mixed expert services provided are not conveniently matched elsewhere. With a full of 15,190 establishments using the services of 95,889 workers, they kind the most significant group included in import-export trade in Hong Kong.
Effectiveness of Hong Kong’s Exports of Outfits
Hong Kong’s overall exports of clothing rose calendar year-on-calendar year by 9% in the first 11 months of 2005. Whilst Hong Kong’s re-exports of garments rose by 20%, domestic exports fell by 14%. The contrasting performance of Hong Kong’s re-exports and domestic exports was mainly ascribed to the expanding relocation of garment manufacturing to the Chinese mainland, resulting from the removing of quotas below WTO’s Arrangement on Textiles and Clothes (ATC). But the declining craze of domestic exports has been reversed considerably in latest months, because of to the re-imposition of quantitative restraints on mainland-created textiles and clothing by the US and EU.
Retail gross sales in the US held firm in the initially 11 months of 2005, soaring by virtually 6% from the exact period in the former year. In the first 11 months of 2005, Hong Kong’s outfits exports to the US rose yr-on-calendar year by 11%.
In the 1st 11 months of 2005, Hong Kong’s whole outfits exports to the EU surged 12 months-on-calendar year by 18%. Garments exports to big EU marketplaces like France, Germany and Italy recorded growth premiums in extra of 20%.
On the other hand, Hong Kong’s garments exports to Japan levelled off in the initial 11 months of 2005 partly owing to the development of immediate shipment. On the back again of the rising income having said that, Japanese shoppers are inclined to resume their spending spree on high quality garments objects. Meanwhile, Hong Kong’s outfits exports to the Chinese mainland dropped by 11% in the very first 11 months of 2005, when compared with the very same period of time previous 12 months.
Products-sensible, Hong Kong’s exports of woven have on rose by 12% in the initially 11 months of 2005. Although woven have on for gals/girls grew by 13%, these for men/boys recorded a expansion of 8% from the exact same period of time in the preceding year. Knitted wear grew by 2%, with women of all ages/ladies and guys/boys climbing by 1% and 6% respectively. When clothes components declined by 3%, other attire article content, for their element, improved by 13%.
Profits Channels
Hong Kong’s outfits manufacturers have cast robust interactions with their shoppers. They are able to understand and cater for the preferences of really wide purchaser bases. Exporters also have excellent knowledge of intercontinental and nationwide rules and regulations governing apparel exports, these as rules of origin, quota limits, tariff prices and documentation specifications. Minimize, make and trim (CMT) arrangements are widespread while a lot of Hong Kong brands have moved to increased price-included actions such as structure and brand name growth, good quality handle, logistics and content sourcing.
A couple nicely-established community brands have entered into the retailing organization, either locally or in overseas markets. Lots of of them have retail networks in important metropolitan areas around the world together with Beijing, London, New York, San Francisco, Shanghai, Singapore, Sydney, Taipei and Tokyo. Some very well-recognised manufacturing retailers include Baleno, Bossini, Crocodile, Episode, Esprit, G-2000, Giordano, JEANSWEST, Moiselle and U-2.
As a world sourcing hub in Asia, Hong Kong appeals to a selection of international investing residences and significant suppliers. Purchasers sourcing from Hong Kong include things like American and European section merchants (e.g. Macy’s, JCPenney, Federated, Karstadt Quelle, C & A), low cost outlets (e.g., Sears, Concentrate on and Carrefour), specialty chains (e.g., The Gap, The Minimal) and mail purchase residences (e.g. Otto and Terrific Universal Suppliers). Numerous worldwide top quality designer labels — this sort of as Calvin Klein, Donna Karen, Ralph Lauren, Tommy Hilfiger and Yves Saint Laurent — supply garments in Hong Kong as a result of their acquiring places of work or other intermediaries.
Hong Kong’s fashion designers have been attaining throughout the world reputation for their professional knowledge, sensitivity to latest developments and skill to mix commercialism with innovation. Medium to substantial-priced manner garments bearing Hong Kong designer labels is getting offered/have been bought in renowned department
stores overseas such as Bloomingdale’s, C & A, Harrod’s, Isetan, Macy’s, Marui, Mitsukoshi, Nieman Marcus and Seibu.
Trade fairs and exhibitions continue to be common areas for purchasers and suppliers of outfits to congregate. To create connections and check out industry possibilities, Hong Kong makers and traders have included them selves actively in worldwide reveals led by the Hong Kong Trade Enhancement Council (TDC), such as the kinds in Beijing, Chengdu, Dalian, Dubai, Dusseldorf, Hong Kong, Moscow, Mumbai, Paris and Tokyo. ‘Hong Kong Manner Week’ is organised 2 times a year and draws in global suppliers and customers to take part in the exhibition. Organised by TDC, ‘World Boutique, Hong Kong’ is the to start with independent function in Hong Kong devoted to endorsing designers’ selection and brand names from around the world.
Business Trends
Alterations in retail landscape: In the US and EU, big-scale suppliers are going through drastic restructuring and consolidation, in certain, the increasing prominence of hypermarkets these kinds of as Wal-Mart. To bolster competitiveness, Sears and Kmart have merged to form the 3rd most significant retail team in the US.
Escalating importance of private labels: Personal labels, in essence, have grow to be an more and more efficient promoting tool among the garment retailers. In get to differentiate as nicely as upgrade the picture of their goods, big vendors have started to place a more powerful emphasis on their own labels. In accordance to Cotton Incorporated, personal labels accounted for 45% of full US clothing product sales in 2003, up from 39% in 2001. In some grownup clothing types, these types of as skirts, non-public labels accounted for as significant as 76% of the whole sales. It is also estimated that 45% of items offered in the EU are offered underneath personal labels. Renowned vendors these kinds of as H&M, Marks & Spencer, Orsay, Palmers, Pimkie, Springfield and Kookai have owned their non-public labels. As customers want to have non-public labels on day-to-day garments like jeans, components and T-shirts, the doorways are also open to the source of these clothing products to private label owners.
Developing curiosity in China’s domestic sector: The rapid growth of mainland’s financial state has attracted excellent desire of Hong Kong garments providers to explore its garments industry. A TDC survey on mainland’s garment consumers indicates that Hong Kong models are ranked selection 1 by the respondents in the mid-selection section. While intercontinental brands are most preferred in the high-conclude phase, mainland manufacturers dominate the very low-end. In addition, the identical study finds out that in the eyes of mainland consumers, Hong Kong providers are extremely sturdy in everyday dress in, as they are normally of very good layout and quality. In essence, lots of mainland customers have developed a much better consciousness of Hong Kong brand names by tour to and browsing in Hong Kong. Consequently, Hong Kong’s casual dress in has efficiently projected a positive picture to mainland consumers.
CEPA
On 18 Oct 2005, the mainland and Hong Kong agreed to even more liberalise the mainland market place for Hong Kong businesses beneath the third section of the Mainland and Hong Kong Closer Financial Partnership Arrangement (CEPA III). Together with other products and solutions of Hong Kong origin, the mainland agreed to give all solutions of Hong Kong origin, which include clothes products, tariff-free of charge procedure starting from 1 January 2006. According to the stipulated procedures, solutions which have no present CEPA rules of origin, will love tariff-free remedy upon apps by regional manufacturers and upon the CEPA rule of origins becoming agreed and satisfied. But non-Hong Kong manufactured clothing products and solutions will stay matter to tariff fees of 10-25% when getting into the mainland.
The promulgated rules of origin for outfits goods to benefit from CEPA’s tariff preference are basically very similar to the present guidelines governing Hong Kong’s exports of these solutions. Commonly speaking, the principal manufacturing procedure of lower-and-sewn garment is stitching of areas into garments. If linking and/or stitching is/are necessary, this sort of procedure/procedures must also be accomplished in Hong Kong. For piece-knitted garment, if it is created from yarn, the principal process is knitting of yarn into knit-to-condition panel.
If the piece-knitted garment is produced from knit-to-shape-panels, the principal approach is linking of knit-to-condition panels into garment. If stitching is required, it ought to also be done in Hong Kong.
Trade Steps Affecting Exports of Garments
According to the ATC, textile quotas ended up eliminated among WTO members at the to start with working day of 2005. Even so, resistance to quota elimination spread in the US and EU. Notably in the US, China-particular safeguards on 10 groups of clothes items from China were being invoked. In opposition to this qualifications, China arrived at agreements with the EU and the US in June and November 2005 respectively.
The China-US settlement, helpful from January 2006, governs the exports of a total of 21 groups involving 34 types of Chinese textiles and apparel goods to the US for the duration of 2006-2008. It permits an annual development of 10-15% in 2006, 12.5-16% in 2007 and 15-17% in 2008. The China-EU arrangement, helpful from June 2005, provides for an once-a-year advancement of 8-12.5% in 10 types of Chinese textiles and clothing exports to the EU all through 2005-2007. In addition, both of those EU and US agreed to exercise restraint in invoking China-specific safeguard against Chinese textiles and clothes that are not lined in the agreements.
Products Trends
Official Dressing: Though everyday don accounts for the bulk of apparel sales, a normal development in direction of stricter company gown codes has led to a soaring demand for formal dressing, specially fits. According to a survey by Cotton Integrated in late 2004/early 2005, 38.5% of respondents believe that that folks dressed as well casually at do the job. This is a 6.5 percentage position boost around the very same yr-in the past.
Teen: A single of the important driving forces of garments market seems to be the youngsters in the coming many years. The quantity of youngsters in the US expects to boost from 31.6 million in 2001 to 34.1 million in 2010. A modern survey by Teenage Investigation Endless identified that teens are preserving dollars by benefit browsing. Though JCPenney is their favourite division retailer, Goal and Wal-mart are their favourite hypermarkets. In addition, Aged Navy is their possibilities among specialty attire merchants.
Silver Market place: Ageing populace gets to be a frequent phenomenon in a lot of made countries in Europe as effectively as Japan and the US. Elderly individuals constitute a major marketplace section named ‘silver market’. Supported by cost savings, social security positive aspects and pensions, several elderly people today have fairly potent shelling out ability. It is believed that the age team of 65 calendar year and over accounted for about 21% of Japan’s use expenditure in 2000. A study executed by the Japanese authorities also exhibits that individuals who are 60 a long time previous and previously mentioned possess practically 3 instances the financial belongings of individuals in the 40-50 age team. In the US, those aged at or previously mentioned 65 amounted to 18.1 million in 2001, and the range is anticipated to swell to 26 million in 2015.
Plus-dimensions Industry: The in addition-sizing current market has been an spot of advancement for lots of years, and the trend is envisioned to continue on in the coming long term. It is approximated that 65 million women in the US wear measurement 14 or above. This team represents 1-50 % of the US female population. It is reported that some renowned brand names have already responded to the pattern by featuring products of larger size these providers include things like Liz Claiborne, Ralph Lauren and Tommy Hilfiger.
Quick-treatment Outfits: Garments created of stain-resistant and wrinkle-totally free materials are well obtained in the industry. It is believed that about a quarter of apparel is now produced of quick-care materials, and its recognition is anticipated to proceed in the following number of years. While significant attire models like Dockers and Liz Claiborne have by now promoted extensively effortless-care apparel, significant hypermarkets, like Wal-Mart, also give more goods of this kind of high quality.
Source: Hong Kong Trade Growth Council