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East Asia


Textile enterprises see profit decline

Enterprises in the Chinese textile and apparel industry recorded a drop in profits due to shrinking overseas orders.

Chinese textile and apparel enterprises registered a profit of RMB 104.2 billion (US$15.3 billion) in the first 11 months of 2008, down 1.77% over the same period in 2007, according to the National Bureau of Statistics of China.

Loss registered by Chinese textile and apparel enterprises rose to RMB22.75 billion during the same period under review, which almost double the figure for the same period in 2007, the statistics bureau observed.

Industry observers predicted textile exports to fall by about a third in the first quarter of 2009.

Fujian province increases bank credit for textile industry

The Economic and Trade Commission of Fujian Province of China announced a proposal to promote the sustainable development of light, textile and garment industry in the province last November.

The Commission proposed the financial institutes to provide more credit facility to light, textile and garment companies in Fujian province, in which enterprises with good prospect, entailing substantial socio-economic benefits and employment are more likely to gain assistance and support by the Fujian authorities.

Starting this year, the Fujian authorities establish a system involving a financial discount policy to banks for some focused projects of industry optimization. Under the system, the textile and garment industry is offered more loans and risk guarantee deposit (of 0.5%), while banks are given interest subsidy.

Textile and garment companies with a good brand name to help drive local industry upgrade are prioritized, as well as companies looking for new technologies, materials and product innovation, and those making efforts in the area of environmental protection, e.g. energy-saving.

The textile and garment industry in Fujian province ranked fifth in volume in the country in 2007, and the light industry ranked sixth.

Investment in Chinese textile industry slows down

Data of the Chinese customs office showed that investment in yarn and fabric, garment, and chemical fiber sectors had little growth in 2008. The yarn- and fabrics-making sector had remained the same level as the previous year.

In the first 10 months of 2008, investment in the yarn and fabric sector increased 3.2% from the same period of last year. This growth rate is 22.2 percentage points lower than the growth rate of that in 2007. The investment in this sector amounted to RMB 126.968 billion, representing 1.1% of the aggregate investment in China.

Manufacturers of garments, shoes and caps invested RMB 71.533 billion (+20.6%), whereas producers in the chemical fiber sector poured into RMB 24.84 billion for investment, up 16.3%. However, the growth rates in these two sectors are about 20 percentage points lower than those in 2007.

Automotive fabric makers advised to meet testing standards

To enter into the automotive industrial fabrics industry, Chinese manufacturers are advised to understand the multitude of test requirements obligatory to the automotive OEM, said an industry expert from the US.

"Majority of the test methods used by OEMs (of the USA) will be based on internationally based testing methods." IFAI's Automotive Materials Association Director, Kristy Osman explained: "However, each OEM will also employ internally developed testing methods to address specific concerns unique to those auto makers. Each OEM can provide recommendations for certified third-party testing labs capable of performing these tests."

In the short term, Ms Osman explained that the North American OEM demand for fabric from China or elsewhere will be tied to the worldwide economic situation and consumer demand for automobiles. However, there is an OEM Asian sourcing trend (from mature markets in the West) that will fuel the demand for more automotive fabrics from countries like China.

Product-wise, she believed that the increasing use of green bio-based materials and more fuel-efficient vehicles is crucial in the future.

OEMs in the US and other markets are looking for lighter weight materials with the same durability and qualities, as well as materials that are more resistant to staining. Fabrics that reduce or eliminate interior odors and improve interior air quality and those that reduce static build-up, possess customizable features for the end customer, are anticipated to gain popularity.

The Automotive Materials Association at the Industrial Fabrics Association International (IFAI) organized the first Automotive Materials and Testing Symposium, held in mid-November in Haining City, China.

South East Asia


US ends monitoring program for Vietnam-made garments

US Department of Commerce officials announced last November that, after reviewing the third six months of data from the monitoring program of apparel imports from Vietnam, there is insufficient evidence to warrant self-initiating an antidumping investigation. This program began upon Vietnam's entry into the World Trade Organization (WTO) in January 2007.

"Commerce has concluded the third review of the import-monitoring program covering certain textile and apparel products from Vietnam as agreed to upon entry of Vietnam into the WTO," said Assistant Secretary for Import Administration David Spooner. "This final investigation reveals that prices of Vietnamese apparel are in line with, and in most cases even exceed, other major suppliers, including Central America."

Five different apparel product groups from Vietnam: trousers, shirts, underwear, swimwear and sweaters were examined from February to July 2008.

Commerce then compared trends in unit values and import levels to other suppliers of these products to the United States, including Bangladesh, CAFTA-DR (e.g. Costa Rica, Dominican Republic and El Salvador), Cambodia, India, Macau, Malaysia, Pakistan and Thailand.

Based on this comparison, Commerce concluded that there was insufficient evidence to self-initiate an antidumping investigation.

Targets 1 billion square meters fabric

Vietnamese Ministry of Industry and Trade (MOIT) passed a plan on developing the woven fabric served for the textile and garment industry in a bid to ensure sustainable development of such economy and drive industry.

The industry planned to produce one billion square meters of woven fabric by 2010, including 500 million square meters to serve export, toward 1.5 billion square meters of which one billion square meters is to serve export by 2015, according to the Vietnamese authorities.

For the achievement of these targets, textile and garment industry will stay focus on developing key products of high demand and building dying centers that is estimated to be funded with US$ 2.5 billion from various sources, including local and foreign investment, the authorities said.

Export earns US$ 9.1 billion last year

The Vietnamese Ministry of Industry and Trade (MOIT) reported that textile and garment exports turnover of the country in the first 11 months of 2008 reached US$8.2 billion, up 17.7% over the same period of 2007. It estimated the whole-year figure to be around US$9.1 billion, slightly below its target at US$9.5 billion.

Between January and November 2008, growths in exports to the US and EU slowed down while exports to other major markets like Taiwan, the ASEAN, Canada and Japan performed better.

Local cotton processing plants under pressure

Vietnam's cotton growing area reduced sharply since early 2008, causing a lack of cotton materials fed for local cotton processing plants. Two plants of totally 20,000 tons/year capacity in Central Highland of Vietnam faced closure.

After two years of entering World Trade Organization (WTO), Vietnam's cotton farming industry witnessed a gradual disappearance of local cotton producing and processing plants as low-price imported cotton flooded into the country, said an official at Vietnam Cotton JSC, Vietnam’s biggest cotton planting and processing company.

Experts at the Vietnam Cotton Company said that more than 50% imported cotton of Vietnam is from US, which enjoys zero import tax for cotton since 2008 when Vietnam became official members of WTO. This helps bring down the cotton price in Vietnam while keeping quality. Another major cotton exporter to Vietnam is India.

The statistics released by the company showed that, Vietnam's cotton growing area declined sharply to 6,000 ha with a total output of 2,600 tons cotton in the 2007-08 crop period.

"Because of the low economic effect in comparison with other agriculture products, the Central Highland area – the cotton growing center of Vietnam, the year 2008 sees a strong decline in the growing area," said Truong Cong Duyet, Deputy Director of Tay Nguyen Cotton JSC.

The total cotton growing area in the region declined to 400 ha in the 2008 crop period from 3,600 ha in 2007, as farmers turned to grow maize, cassava, potato and other crops.

Yarn imports shrink in year-end months

Statistics of the General Custom Department reported that Vietnam imported 30,400 tons of yarn in November 2008 at US$50 million, down respectively 24.1% and 30.6% over the same period of last year.

In the first 11 months of 2008, the imports turnover reached 379,300 tons for US$724.3 million, down 1.4% in quantity but up 7.9% in value on year.

Yarn imports from Taiwan were 13,200 tons at US$17.1 million last November, representing a sharp decrease in both quantity (-11.3%) and value (-28.8%) from October 2008. From January to November of 2008, the import quantity reached 157,700 tons, at US$269.6 million, down respectively 11.8% and 4.8% on year.

Yarn imports from Thailand reached 60,200 tons (-1%) and US$98 million (+3.6%) in the first 11 months of 2008. Meanwhile, Korea exported 30,400 tons (+7.1%) and US$75.2 million (+15.4%).

Turnover of yarns from China last November plunged 44.2% in quantity and 36.9% in value over October 2008 and respectively 55.2% and 30.3% over November 2007. From January to November of 2008, Vietnam spent US$114.5 million on Chinese imported yarns with 50,700 tons from China, up 34.2% and 29.2% on year.

The average import price of yarn was between US$1,131- 2,530 per ton, up 9.5% on year.


Textile production worth US$115 billion by 2012 & expected

Undeterred by the global slump that can derail the export target this fiscal year (2008-09), the Indian Textiles Ministry has set a target of achieving worth US$55 billion overseas shipment in the next four years.

Of the total US$115 billion by 2012, exports will be US$55 billion while domestic market will be US$60 billion by 2012.

"The industry which was growing at 3%-4% during the last six decades has now accelerated to an annual growth rate of 16% in value terms and will reach a level of US$115 billion by 2012," a Textiles Ministry release said.

In 2007-08 the total textile and apparel industry was valued at US$52 billion. India's textile exports in the last fiscal (2007-08) was US$21.46 billion, it said adding export target for 2008-09 is 20% more than what were achieved in 2007-08.

Textiles Minister, Shankersinh Vaghela, however had stated that the export target for FY 2008-09 would not be achieved.

In the second and third quarters of 2008, textile exports witnessed a growth of 11.5%. But from last October onwards exports came under severe pressure.

Additionally, the government announced last December an additional Rs 1,400 crore under Technology Upgrdation Fund Scheme for the sector.

Silk industry hopes to expand domestic market

Silk exports from India could fall by over 50% during this fiscal (2008-09) in the face of the global economic slowdown.

Silk industry is as vulnerable to the global slump as the textile industry, according to H Hanumanthappa, Chairman of the Central Silk Board. He said: "We hope that demand will revive soon in the major markets, notably the US, once the new administration assumes charge, though the near term prospects are not too bright. Demand should pick up over the next six to nine months."

In FY 2008-09, silk exports from India had already fallen year on year by 21% to touch Rs 2,640 crore and the board had projected this figure to touch Rs 3,800 crore. In effect, this means that silk exports could be only around Rs 1,900 crore, industry observers say.

Statistics showed that exports to the US during between April and August 2008 reached US$55.7 million against US$61.56 million for the same period in 2007.

Thus, the CSB was now looking at expanding the domestic market through various initiative including promotion of wild (Vanya) silks, Hanumanthappa added.

Vanya or wild silks comprise of four varieties -- tasar, oak tasar, eri and muga. Output of Vanya silks was projected to reach 5,000 tonnes by the end of the 11th year plan period (2007-2010). "We are expanding the area under tasar cultivation in Jharkhand," he added.

Local consumers receiving more attention

In the wake of the losses in the export markets, more textile and garment enterprises turned their attention to the domestic market in India.

Domestic retailers are strengthening their brand presence by launching exclusive retail outlets not just in the metros, but also in the second- and third-tier cities. Consumers in smaller cities, according to Dun & Bradstreet (D&B) India, are less prone to the fear of economic recession.

In the near term, the Indian garment industry expected a reasonable growth in the domestic market even as multiple challenges confront them in the export market. "The bleak outlook for exports is likely to curtail new expansion plans on the manufacturing front. However, retail expansion is expected to continue owing to textile and garment players' increased domestic market focus," said Yashika Singh, D&B's head of economic analysis.

"There could probably be a slight drop," BS Nagesh, managing director of Shoppers Stop, an Indian retailer, said.

He believed that the garment retail market in India is healthy and could witness a growth of 8%-10% on a year-on-year basis. "This is on account of retailers getting support from the dealers. They seem to be willing to pass on a part of the benefit to customers, which could boost the domestic market," adds Mr Nagesh. To counter the slowdown and a dipping export market, retailers offered additional discounts and special offers.


Lobbying for free trade pact

Pakistan stepped up its diplomatic efforts with the 27-member European Union (EU) for negotiating a free trade agreement (FTA) and also qualifying for some of the concessions and incentives to be given to developing countries under a new Generalised System of Preferences (GSP) to be introduced in 2009 for a period of five years.

Federal Commerce Secretary, Syed Asif Shah, visited a number of European capitals to solicit support for Pakistan in negotiations with the EU Commission, according to an official at the Trade Development Authority of Pakistan (TDAP).

Pakistan's mission in Brussels also actively engaged the EU Commission on various issues. "Our lobbying is on bilateral basis with EU individual member countries and also at the EU Commission in Brussels by our negotiators and top officials," the source added.

Following negotiations initiated by former Commerce Minister, Humayun Akhtar Khan, the EU Commission agreed to appoint a consultant to find out the impact of EU-India FTA on Pakistan's business and economy.

But after Doha Development Agenda stagnated several Asian countries have lined up at EU Commission in Brussels to conclude an FTA with Europe. Till the end of 2007, the ASEAN, China, South Korea, India and a few South American countries were among those, which sought FTAs with EU, according to industry experts.

Japanese companies to invest in Pakistan for textile production

Japanese business enclave on 200 acres in the vicinity of Port Qasim was under planning.

A joint study group comprising businessmen in Japan and Pakistan had discussions last December to finalise the draft report, and a final report to their governments was expected, according to Majyd Aziz, vice-president of the Japan-Pakistan Business Forum (PJBF).

The joint study group focused mainly on projects in several fields, including textiles. It identifies corruption as major impediment in promotion of investment.

Mr Majyd revealed that three Japanese companies planned to visit Pakistan with specific investment proposals in early 2009.

Japanese direct foreign investment in 2007-08 showed a sharp rise of 133% to US$131 million from US$64 million in 2006-07. "Bulk of the investment was in automobiles," market sources say.

At present, there are 35 companies in Karachi working with Japanese investment and technical assistance. "It is a world reputed brand name and is sure to add premium to our garment products in international export market," Mr Majyd said.


Hesitant in making large investment

The global financial meltdown along with the shortage of energy supply is taking its toll on sale and import of knitwear machinery albeit the increasing growth in export of knitwear and other garments in Bangladesh.

This was quite evident in the KNIT+TEX Bangladesh-2008 international exhibition held last November.

The knitwear manufacturing sector, the single largest forex earner of the country, expected an annual 15% growth for this fiscal (2008-09) with a projected export of US$5.5 billion.

"It is undeniable that the knitwear export is rising; but behind the scene, the manufacturers are less confident in making big investments like buying new industrial machinery than ever before due to the less bank support they are receiving," said Sultan Mahmud of Anam Corporation; an exhibitor that imports and supplies sewing machines for the knitwear industry.

Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) President, Fozlul Hoque, said, "Despite the increasing export, lower investment in the knitwear sector is prevalent for some time now, and this is not only due to the lack of confidence amid the global downturn but also due to the high interest rate and the apparent energy shortage."

"With the recent energy price hike and the prevailing energy shortage, the proper operation and maintenance of the machinery and equipment have become a tougher task," he observed.

Different opinions over rules of origin

BGMEA and BKMEA, two leading Bangladeshi exporting sectors, took opposite stands on the proposed new rules of origin (ROO) of the European Union (EU).

Officials at the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) said that the knitwear sector, having sufficient backward linkages, will be negatively affected as the proposed ROO of EU encourages import of fabrics.

In contrast, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) officials considered the new ROO beneficial to further boost the country's export to the EU market. It will also help enhance Bangladesh's competitiveness in the global market.

The EU, placed a new ROO for the least developed countries, which enjoys generalised system of preference (GSP). The new ROO will be effective from January 2010 after being approved by its member nations.

The BKMEA, a group of over 1,300 knit factories, would lobby against the new proposal as it will lead to the closure of many local factories, said Md Fazlul Hoque, President of BKMEA.

Knit's GSP utilisation in the EU is 88% while woven have 24%, according to industry estimates.

Sri Lanka

Asking to float currency

The Sri Lanka Garment Buying Offices Association (SLGBOA) and the Sri Lanka Chamber of Garment Exporters (SLCGE) appealed to the monetary authorities to allow the Sri Lankan rupee to a realistic level so that garment exports and imports in general could remain competitive.

A statement issued jointly by the two organisations said: "We urge the Monetary Authorities to be proactive like our competitors and allow the Sri Lankan Rupee to float to a realistic level so that our apparel exports in particular and exports in general can remain competitive and survive this crucial and critical period."

The two associations said that Sri Lanka's competitors such as India and Bangladesh had floated their currencies and that had facilitated exports.


Turkish carpet industry invests in French machinery

The production of traditional and modern carpets in the fast-growing Turkish city of Gaziantep is about 300 millions square meters in 2008. A large number of the advanced spinning and weaving machines come from France, according to the UCMTF, the French textile machinery manufacturers' association.

"We are confident in our future, we can sustain competition from countries with much lower labour costs In fact, we export all over the world, to the US (18% of our exports), Saudi Arabia (14%), many European countries and even China," said I.YalÇin Konukoglu, the President of the Gaziantep carpet makers Association.

Gaziantep and its close vicinity house 189 carpet mills, which employ directly or indirectly more than 30,000 employees. These mills represent 80% of the Turkish carpet industry, and 70% of them are vertically integrated, i.e. they spin their own yarns and weave the carpets.

Bruno Ameline, Chairman of the UCMTF, said Turkey is a very important market for the French textile machinery, with about 10% or US$100 million being shipped to Turkey in 2007 (about 10%). Evelyne Cholet, the UCMTF Secretary General, added that French textile machinery manufacturers serve as technology partners for the Turkish market to meet the best standards.

Italian technical textile machinery promoted

The Association of Italian Textile Machinery Manufacturers (ACIMIT) and the Italian Institute for Foreign Trade (ICE) organized a technical workshop on Italian technology for Automotive Engineering Innovative Materials in New Delhi, India, this January. Business Co-Ordination House (BCH) was the co-oganizer of this symposium.

Some Italian manufacturers of machinery for technical textiles and nonwovens introduced their updated technologies, as well as exchanging views and ideas on technology and holding trade talks with local textile operators.

About 100 of its member companies are involved in the production of machinery for technical textiles or nonwovens, according to the ACIMIT estimates. This sector is observing a steadily growing turnover, accounting for 10% on the total turnover of Italian textile machinery industry.

Potential segments in the Indian technical textiles and nonwovens sectors include the fields of automobiles and construction.

The ACIMIT held two technical workshops on Italian textile machinery for the production of technical textiles and nonwovens in the Chinese cities of Hangzhou and Wuxi in February.

A technical workshop on Italian technology for finishing sector in Teheran, Iran, was also organized in February.

Italian exports to Iranian market reached a value of 34 million euros in 2007 (+19% on previous year). In the first eight months of 2008, Italian sales amounted to 20 million euros. Finishing machinery represent 21% of total Italian exports.

UK changes fire safety requirements for children's nightwear

Businesses selling children's nightwear in the UK and the European Union should be aware of changes to the UK regulation, following the new EU Standard on the Flammability of Nightwear (BS EN 14878) that has come into effect since November.

According to a recent advisory note published by the UK government, BS EN 14878 covers nightwear garments, and fabrics intended for nightwear for babies and children from birth up to age 14 years only. The UK Regulations apply to nightwear for children up to age 13 and adults, and all garments for babies.

Test methods for assessing flammability performance for BS EN 14878 are different from those used under the UK Regulations, and the labeling requirements also vary.

BS EN 14878, but not the UK Regulations, includes a toxicity assessment for all applied flame retardants such as those which might be applied to cotton fabrics.

EU releases funds for 6,000 redundant Italian textile workers

The European Commission (EC) under the European Globalisation adjustment Fund (EGF) announced last December to provide 5,955 redundant textile workers in four different Italian regions: Sardinia, Piedmont, Lombardy and Tuscany a funding of about 35 million euros.

"These applications go to show that the Fund benefits workers from small and medium sized enterprises as well as those from large companies," said European Employment Commissioner Vladimír Špidla. "Globalised trade and production bring growth and employment for most of us, but some can also be negatively affected."

The EGF funding aims at helping workers who are "severely and personally trade-adjustment redundancies," according to the EC. The Italian redundancies in the textile sector follow the general shift of clothing and accessories production in the European Union towards lower-cost non-EU countries.

For daily news of the textile industry, please visit textile.2456.com

Gateways to China aspire to move up along fashion supply chain
Country Focus: Hong Kong and Macau, special administrative regions of China

by Benjamin Tang and Staff Reporters

Hong Kong and Macau are two special administrative regions under the sovereign of China. The two cities are among the freest economies in the world, providing an advantageous platform for textile and garment manufacturers to build up production capacity (many are additional capacity on top of facilities in the Chinese mainland), so as to get close to the end consumer market of China. Hong Kong has also been putting efforts to advance itself from a major Asian sourcing center to an important design center in the region.

Aggregate textile and apparel exports of Hong Kong reached HK$265.49 billion in the first ten months of 2008, representing a slight drop of 3.5% compared to the same period of previous year, according to data of Census and Statistics Department of the Hong Kong government.

Whilst the textile and apparel re-exports through Hong Kong increased 0.9%, the Hong Kong-made goods dropped 33.5%.

Industry insiders explained that the change of trading pattern was caused by the lift of quota system on the China-made products by the European Union (EU).

With effect from 1 January 2008, textiles originating in China are no longer subject to quantitative restrictions imposed by the EU, but certain textiles are subject to double control surveillance licensing, but outward processing trade (OPT) arrangement continues to apply to certain made-up garments from China for 2008.

Textile and apparel exports of Hong Kong and Macau between January and October 2008 (in HK$ billion) (Source: statistics departments of Hong Kong and Macau governments)
As a result, the Hong Kong-made products with the Outward Processing Arrangement (OPA) became less attractive to Hong Kong exporters, who shifted to manufacture the products entirely on the mainland China and then export them via the Hong Kong port, under the OPT arrangement.

Textile and apparel re-exports to the EU from Hong Kong rose 16.2% to HK$63.48 billion between January and October of 2008, while the Hong Kong-made exports plunged 65.2% to HK$2.92 billion.

Similar trade pattern shift was also observed in Macau, where the domestically made textile and apparel exports to the EU dropped 51.7% to MOP1.128 billion during the period under review, according to trade data from the Macau government's statistics department.

Hong Kong's top three exporting markets are the United States, Europe and Japan. Trade figures of the first ten months have not yet reflected the challenges brought by the tightened credit market, which has made corporate borrowing more difficult and costly. As effects of the global financial crisis are unfolding, the export performance of Hong Kong, as well as that of Macau, will be further affected negatively.

Dire situation may last 18 months

Despite a global downturn in economic situations occasioned by the American financial crisis – and Hong Kong is not immune from the spillover effects – textile industry leaders remain tough-minded and optimistic about the future.

A majority of manufacturers of textiles and clothing in Hong Kong has relocated to offshore manufactories outside Hong Kong – to places like China, Indo-China, Bangladesh and elsewhere.

Vice-chairman of the Hong Kong Textiles Council, Mr Willy Lin said the textile industry has been going strong for over 30 years, with partnerships established in Vietnam and other southeastern Asian countries. Hong Kong is a major hub of this industry, with its allure of lower manufacturing prices, and with China as a phenomenal market to expand into. The China textile and clothing trade, meanwhile, has boomed, with the number of manufacturers mushrooming. They have been turning to high-level, sophisticated, and computerized operations. While manufacturing parts are made and designed in China, other processes, like merchandising, has tended toward a European-style operation. European styles, for example, have been converted into local designs with territorial flavors. Sales have expanded to the US and even remote parts of Europe like Russia. The industry is able to diversify in the midst of – and in spite of – the global financial crisis.

In November 2008, Mr Lin predicted that the financial crisis will hit the hardest in the coming 18 months or so, and he expressed hope for a turnaround in the present dire situation by 2010.

Moreover, "Everybody is bound to suffer in this economic climate; no one is immune. The supply chains need cash," he said.

To loosen the credit market, the Hong Kong announced support measures to help small and medium-sized enterprises (SMEs), including those in the field of textile and apparel manufacturing.

The Hong Kong government announced last December to provide up to HK$100 billion in loan guarantees for enterprises. The maximum loan amount for each enterprise rose to HK$6 million, with HK$3 million being revolving credit. The loan can be used for a wider range of purposes and all firms, except listed companies, can apply.

Hong Kong to leverages know-how to set fashion trend in Asia

Despite the gloomy outlook for this year, Hong Kong designers are ready to tap the rapidly growing but also fast changing retail market in China.

In a survey conducted in the second quarter of 2008, the Trade Development Council of Hong Kong wrote: "Hong Kong is recognised as a fashion sourcing centre in Asia, and it is also perceived as the trendsetter for many Asian countries, and in particular for the Chinese mainland...In particular, Hong Kong fashion designers are more sensitive to international fashion trends and have more solid experience in the international fashion business."

A total of 140 fashion designers and garment manufacturers based in Hong Kong were interviewed in the HKTDC survey.

"Local fashion designers are in high demand in the Chinese mainland, because of their experience and global vision in design, marketing, brand consultancy and management services," said HKTDC Assistant Chief Economist, Dickson Ho.

The HKTDC survey findings showed that with Hong Kong's garment manufacturing know-how and fashion design professionals, the city is regarded as a fashion design hub in Asia, behind Tokyo but ahead of Seoul, Shanghai, Beijing, Singapore and Bangkok.

Time to remodel the business

Riding on the role as a sourcing platform for both western and eastern markets, Hong Kong is changing to be a more creative center in the fashion scene, said a veteran Hong Kong garment marker, Felix Chung. Mr Chung is Director of Chungweiming Knitting Factory and also Chairman of the Hong Kong Apparel Society.

At a Hong Kong Fashion Week seminar organized by the Hong Kong Trade Development Council this January, Mr Chung said that there are four paths for Hong Kong garment makers to find their future growths:

  • Traditional export business (often OEM and some ODM)

  • Serves as a platform to help foreign brands to enter the retail market of China

  • Chinese companies can enter foreign markets via Hong Kong (in terms of business know-how)

  • Chinese companies make use of knowledge of Hong Kong apparel industry to better position their products, using Made-in-Hong-Kong label and trade benefits under the Closer Economic Partnership Arrangement (CEPA) between China and Hong Kong

  • All the above paths call for design talents, Mr Chung added, and those in Hong Kong may gain advantages with their designing capabilities, international exposure and understanding of China market tastes. "Hong Kong apparel industry needs to be develop itself as a high-quality fashion and creative industry," he said.

    Macau to strengthen cost advantage and networks

    In the meantime, Macau's textile and garment industry has been declining in recent years. However, low labor cost in Macau with legitimate labor importation has helped the city maintain its competitiveness.

    According to local industry players, imported labor from mainland China, who are skillful, is allowed throughout the city at a relatively low cost close to that of China. Against this background, a number of major Hong Kong textile and garment makers have built production facilities in the city to offset possible trade risks in the US and EU markets.

    In addition, Macau also counts on the good network with Spanish-speaking countries for more trade opportunities.
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