Overview
Textile quotas have been removed among WTO members at the first working day of 2005 in accordance with the Settlement on Textiles and Apparel (ATC). Nevertheless, resistance to quota removal unfold in the US and EU. Subsequently, China achieved agreements with the EU and the US in June and November 2005 respectively. The China-US agreement, helpful from January 2006, governs the exports of a total of 21 teams involving 34 groups of Chinese textiles and apparel goods to the US during 2006-2008. The China-EU settlement, effective from June 2005, handles 10 classes of Chinese textiles and garments exports to the EU during 2005-2007.
On the other hand, the mainland and Hong Kong agreed in October 2005 to even further liberalise the mainland market place for Hong Kong corporations less than the third stage of the Mainland and Hong Kong Nearer Financial Partnership Arrangement (CEPA III). Alongside with other products of Hong Kong origin, the mainland agreed to give all solutions of Hong Kong origin, together with apparel objects, tariff-free of charge procedure beginning from 1 January 2006. According to the stipulated methods, products and solutions which have no present CEPA rules of origin, will delight in tariff-cost-free treatment on apps by local producers and on the CEPA rule of origins getting agreed and satisfied.
Hong Kong garments providers are reputable for ODM and OEM output. They are in a position to provide top quality apparel posts in limited direct time, as overseas importers and retailers ask for garments suppliers to tighten up source chain management to make certain the requested goods reaching the retail outlet ground at the ideal time. Ever more, Hong Kong apparel providers, the established types in particular, have demonstrated enthusiasm for manufacturer advertising.
Hong Kong’s complete exports of clothes rose yr-on-12 months by 9% in the 1st 11 months of 2005. While Hong Kong’s re-exports of apparel rose by 20%, domestic exports fell by 14%. In the first 11 months of 2005, Hong Kong’s garments exports to the US and EU rose by 11% and 18% respectively. Although Hong Kong’s garments exports to Japan levelled off, all those to the Chinese mainland declined by 11%.
Market Characteristics
The outfits sector is a major manufacturing sector of Hong Kong. Its gross output is 1 of the maximum amid all manufacturing sectors, amounting to HK$35.9 billion in 2003. It is the major production employer in Hong Kong, with 1,673 establishments using the services of 28,752 staff as of June 2005. It is also the primary earner in conditions of domestic exports, using up 40% of the complete in the initial 11 months of 2005.
Hong Kong’s geographic boundary has by no means constrained the advancement of the forward-on the lookout outfits marketplace. The greater part of apparel brands have established up offshore generation facilities in an attempt to lower procedure prices. Relocation of output facilities offshore has nevertheless resulted in a regular drop in the variety of clothing producers in Hong Kong.
Hong Kong is not only a primary production centre but also a hub for apparel sourcing globally. Companies carrying out garment trade in Hong Kong are knowledgeable in materials procurement, revenue and marketing, high quality command, logistic arrangements, garments layouts and worldwide and countrywide guidelines and regulations. The professionalism that they command and the merged companies provided are not quickly matched in other places. With a whole of 15,190 establishments using the services of 95,889 staff, they kind the premier group associated in import-export trade in Hong Kong.
Overall performance of Hong Kong’s Exports of Apparel
Hong Kong’s overall exports of clothes rose calendar year-on-year by 9% in the first 11 months of 2005. Although Hong Kong’s re-exports of clothing rose by 20%, domestic exports fell by 14%. The contrasting functionality of Hong Kong’s re-exports and domestic exports was basically ascribed to the increasing relocation of garment manufacturing to the Chinese mainland, resulting from the removal of quotas beneath WTO’s Arrangement on Textiles and Outfits (ATC). But the declining development of domestic exports has been reversed considerably in current months, because of to the re-imposition of quantitative restraints on mainland-created textiles and clothing by the US and EU.
Retail revenue in the US held agency in the very first 11 months of 2005, climbing by almost 6% from the exact period of time in the earlier yr. In the initially 11 months of 2005, Hong Kong’s clothes exports to the US rose calendar year-on-yr by 11%.
In the initially 11 months of 2005, Hong Kong’s whole garments exports to the EU surged 12 months-on-12 months by 18%. Clothing exports to key EU marketplaces like France, Germany and Italy recorded progress prices in surplus of 20%.
On the other hand, Hong Kong’s apparel exports to Japan levelled off in the to start with 11 months of 2005 partly thanks to the craze of direct cargo. On the back of the climbing earnings nonetheless, Japanese buyers are inclined to resume their spending spree on premium outfits goods. Meanwhile, Hong Kong’s clothing exports to the Chinese mainland dropped by 11% in the initial 11 months of 2005, compared with the similar interval very last year.
Product-smart, Hong Kong’s exports of woven use rose by 12% in the very first 11 months of 2005. Whilst woven have on for ladies/ladies grew by 13%, people for adult men/boys recorded a advancement of 8% from the exact same interval in the former calendar year. Knitted have on grew by 2%, with girls/girls and males/boys soaring by 1% and 6% respectively. When apparel extras declined by 3%, other apparel articles or blog posts, for their section, amplified by 13%.
Gross sales Channels
Hong Kong’s garments makers have cast potent interactions with their clients. They are ready to have an understanding of and cater for the preferences of incredibly wide client bases. Exporters also have very good awareness of worldwide and countrywide procedures and regulations governing garments exports, this kind of as guidelines of origin, quota restrictions, tariff fees and documentation necessities. Lower, make and trim (CMT) preparations are common even though a lot of Hong Kong brands have moved to larger benefit-extra pursuits these types of as style and design and model improvement, quality control, logistics and substance sourcing.
A several effectively-recognized nearby manufacturers have entered into the retailing company, either locally or in abroad marketplaces. Several of them have retail networks in important cities about the world together with Beijing, London, New York, San Francisco, Shanghai, Singapore, Sydney, Taipei and Tokyo. Some very well-regarded producing merchants involve Baleno, Bossini, Crocodile, Episode, Esprit, G-2000, Giordano, JEANSWEST, Moiselle and U-2.
As a worldwide sourcing hub in Asia, Hong Kong draws in a number of intercontinental investing houses and significant stores. Buyers sourcing from Hong Kong incorporate American and European division suppliers (e.g. Macy’s, JCPenney, Federated, Karstadt Quelle, C & A), discount retailers (e.g., Sears, Goal and Carrefour), specialty chains (e.g., The Hole, The Constrained) and mail order houses (e.g. Otto and Good Universal Shops). Quite a few intercontinental high quality designer labels — these types of as Calvin Klein, Donna Karen, Ralph Lauren, Tommy Hilfiger and Yves Saint Laurent — supply clothes in Hong Kong by way of their purchasing offices or other intermediaries.
Hong Kong’s vogue designers have been attaining around the globe status for their professional knowledge, sensitivity to present traits and capacity to blend commercialism with innovation. Medium to large-priced fashion clothes bearing Hong Kong designer labels is getting marketed/have been sold in renowned division
stores abroad these kinds of 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 prospective buyers and suppliers of garments to congregate. To set up connections and discover market place chances, Hong Kong companies and traders have involved by themselves actively in international exhibits led by the Hong Kong Trade Progress Council (TDC), like the types in Beijing, Chengdu, Dalian, Dubai, Dusseldorf, Hong Kong, Moscow, Mumbai, Paris and Tokyo. ‘Hong Kong Fashion Week’ is organised twice a 12 months and attracts worldwide suppliers and consumers to take part in the exhibition. Organised by TDC, ‘World Boutique, Hong Kong’ is the initially impartial event in Hong Kong dedicated to endorsing designers’ collection and brand names from all over the world.
Sector Tendencies
Improvements in retail landscape: In the US and EU, huge-scale shops are undergoing drastic restructuring and consolidation, in individual, the increasing prominence of hypermarkets these kinds of as Wal-Mart. To fortify competitiveness, Sears and Kmart have merged to sort the third most significant retail group in the US.
Developing great importance of personal labels: Private labels, in essence, have become an increasingly powerful marketing and advertising instrument amongst garment vendors. In order to differentiate as well as improve the picture of their merchandise, significant merchants have commenced to place a stronger emphasis on their own labels. According to Cotton Integrated, private labels accounted for 45% of total US apparel revenue in 2003, up from 39% in 2001. In some grownup clothing categories, such as skirts, personal labels accounted for as large as 76% of the whole product sales. It is also believed that 45% of goods marketed in the EU are sold below personal labels. Renowned merchants such as H&M, Marks & Spencer, Orsay, Palmers, Pimkie, Springfield and Kookai have owned their personal labels. As people wish to have non-public labels on each day clothes like jeans, components and T-shirts, the doors are also open up to the offer of these clothes items to personal label proprietors.
Escalating desire in China’s domestic marketplace: The fast expansion of mainland’s financial system has attracted wonderful curiosity of Hong Kong clothing companies to take a look at its garments marketplace. A TDC study on mainland’s garment customers suggests that Hong Kong brands are rated selection one particular by the respondents in the mid-assortment phase. Even though intercontinental makes are most most popular in the substantial-finish segment, mainland makes dominate the reduced-conclusion. In addition, the identical study finds out that in the eyes of mainland customers, Hong Kong providers are very potent in relaxed put on, as they are usually of excellent design and style and excellent. In essence, a lot of mainland individuals have created a more robust consciousness of Hong Kong makes through tour to and purchasing in Hong Kong. Hence, Hong Kong’s informal wear has properly projected a good picture to mainland customers.
CEPA
On 18 October 2005, the mainland and Hong Kong agreed to further liberalise the mainland sector for Hong Kong companies less than the 3rd period of the Mainland and Hong Kong Nearer Financial Partnership Arrangement (CEPA III). Together with other products of Hong Kong origin, the mainland agreed to give all merchandise of Hong Kong origin, which includes outfits things, tariff-absolutely free therapy starting off from 1 January 2006. According to the stipulated treatments, products which have no current CEPA regulations of origin, will love tariff-no cost treatment method on apps by nearby companies and on the CEPA rule of origins currently being agreed and achieved. But non-Hong Kong designed outfits solutions will keep on being topic to tariff charges of 10-25% when getting into the mainland.
The promulgated principles of origin for garments goods to gain from CEPA’s tariff choice are basically very similar to the present guidelines governing Hong Kong’s exports of these items. Frequently talking, the principal production course of action of minimize-and-sewn garment is sewing of sections into garments. If linking and/or stitching is/are demanded, this sort of approach/procedures have to also be carried out in Hong Kong. For piece-knitted garment, if it is manufactured from yarn, the principal system is knitting of yarn into knit-to-form panel.
If the piece-knitted garment is produced from knit-to-form-panels, the principal procedure is linking of knit-to-shape panels into garment. If stitching is demanded, it need to also be completed in Hong Kong.
Trade Actions Impacting Exports of Clothes
According to the ATC, textile quotas were removed between WTO customers at the initial working day of 2005. Nonetheless, resistance to quota removal spread in the US and EU. Significantly in the US, China-specific safeguards on 10 groups of clothing items from China were invoked. Versus this background, China arrived at agreements with the EU and the US in June and November 2005 respectively.
The China-US agreement, effective from January 2006, governs the exports of a overall of 21 groups involving 34 types of Chinese textiles and apparel products to the US during 2006-2008. It enables an annual expansion of 10-15% in 2006, 12.5-16% in 2007 and 15-17% in 2008. The China-EU arrangement, effective from June 2005, delivers for an annual expansion of 8-12.5% in 10 categories of Chinese textiles and clothes exports to the EU all through 2005-2007. In addition, both of those EU and US agreed to exercise restraint in invoking China-unique safeguard against Chinese textiles and clothing that are not included in the agreements.
Product Tendencies
Formal Dressing: When everyday don accounts for the bulk of outfits income, a general pattern in direction of stricter corporate dress codes has led to a soaring need for formal dressing, especially satisfies. In accordance to a study by Cotton Incorporated in late 2004/early 2005, 38.5% of respondents think that individuals dressed far too casually at function. This is a 6.5 proportion stage enhance over the same 12 months-ago.
Teen: Just one of the key driving forces of clothes market appears to be the adolescents in the coming years. The amount of young adults in the US expects to maximize from 31.6 million in 2001 to 34.1 million in 2010. A new study by Teenage Analysis Unrestricted observed that teens are preserving money by benefit buying. Whilst JCPenney is their favourite section shop, Target and Wal-mart are their favourite hypermarkets. In addition, Aged Navy is their selections among the specialty apparel retailers.
Silver Market: Ageing populace becomes a common phenomenon in lots of produced nations around the world in Europe as properly as Japan and the US. Aged persons constitute a major sector segment known as ‘silver market’. Supported by price savings, social protection gains and pensions, lots of elderly men and women have instead robust spending electric power. It is believed that the age group of 65 12 months and earlier mentioned accounted for about 21% of Japan’s usage expenditure in 2000. A survey executed by the Japanese federal government also exhibits that persons who are 60 several years aged and above possess almost three times the monetary belongings of all those in the 40-50 age group. In the US, these aged at or higher than 65 amounted to 18.1 million in 2001, and the range is expected to swell to 26 million in 2015.
In addition-sizing Sector: The as well as-sizing industry has been an space of development for quite a few a long time, and the pattern is envisioned to continue on in the coming potential. It is believed that 65 million females in the US don dimensions 14 or previously mentioned. This group signifies one-fifty percent of the US feminine populace. It is described that some renowned makes have currently responded to the trend by presenting goods of greater sizing these firms include Liz Claiborne, Ralph Lauren and Tommy Hilfiger.
Uncomplicated-care Garments: Clothes made of stain-resistant and wrinkle-no cost materials are properly been given in the sector. It is estimated that about a quarter of clothing is now made of quick-care fabrics, and its acceptance is expected to go on in the up coming few yrs. Though key clothing brands like Dockers and Liz Claiborne have by now promoted thoroughly effortless-treatment clothing, significant hypermarkets, like Wal-Mart, also present more goods of these good quality.
Resource: Hong Kong Trade Progress Council