Profiles of Hong Kong Major Manufacturing Industries |
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Profiles of Hong Kong Major Manufacturing Industries |
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Last updated: 31 July, 2008
Textiles Overview
Industry Features*
** Excluding knitwear from yarn The textiles industry - comprising spinning, weaving, knitting and finishing of fabrics - had a total of 866 manufacturing establishments as of March 2008, employing 9,656 workers, or 6.3% of the local manufacturing workforce. The textiles industry is one of Hong Kong's major export earners, accounting for 3.7% of the total exports for the first half of 2008. In recent years, with rising production costs and stringent environmental regulations, an increasing number of manufacturers have shifted their production of lower-end products to the Chinese mainland and Southeast Asian countries. Their manufacturing operations in Hong Kong are focused on sophisticated and high value-added items, including quality ring-spun, open-end yarn, fine gauge knitted fabrics as well as complicated dyed and printed fabrics. To enhance competitiveness in the global market, some Hong Kong textiles companies have formed strategic partnership with indigenous Chinese companies. For instance, some of them join force with mainland cotton suppliers in producing cotton textiles. Hong Kong's textiles industry is a major supplier to the local clothing industry. Producing textiles locally, Hong Kong textile manufacturers have an advantage in accommodating orders from local garment manufacturers in short notice. Meanwhile, a significant portion of textile exports is destined for use in Hong Kong companies’ offshore production of garments, especially on the Chinese mainland. Performance of Hong Kong’s Exports of Textiles^
^ Since offshore trade has not been captured by ordinary trade figures, these numbers do not necessarily reflect the export business managed by Hong Kong companies. *Insignificant After dropping by 3% in 2007, Hong Kong’s textile exports experienced another 5% decrease during the first half of 2008. Re-exports, accounting for almost 97% of total textiles exports, dropped by 5%. More than 70% of these re-exports were originated from the Chinese mainland, and they decreased by 4% in the first half of 2008. Meanwhile, domestic exports further slackened, registering another 11% decrease during the period. Asia is the leading market for textiles exported from Hong Kong. It accounts for almost 90% of Hong Kong’s textile exports. Of the top 10 destinations for textiles exported from Hong Kong, eight of them are in Asia. The Chinese mainland is the predominant export market, accounting for almost 70% of Hong Kong's textile exports during January-June 2008. Other major export markets of Hong Kong textiles include Vietnam, Cambodia, Bangladesh, Indonesia, Sri Lanka, the US, Thailand, Philippines and Jordan. In particular, because of Vietnam’s cheap labour and recent WTO membership, many foreign investors have set up garment factories there, which give rise to the demand for textile imports. After rising by 3% and 30% in 2006 and 2007, Hong Kong’s textile exports to Vietnam increased further by another 30% in the first half of 2008. Product-wise, Hong Kong's exports of textile made-up (up 1%), finishing accessories (up 1%), special yarns and fabrics (up 9%) and floor coverings (up 15%), recorded positive growth in first half of 2008. Meanwhile, the laggards were man-made textile materials (down 14%), cotton (down 11%) and woven fabrics (down 10%). The textile yarns and knitted or crocheted fabrics both edged down by 5% during the period. Sales Channels Hong Kong is both a leading production centre and a hub for clothing sourcing globally. As such, Hong Kong's textiles industry is well positioned to serve both the local and overseas clothing manufacturers and merchandisers. While many Hong Kong textile manufacturers and traders supply their products to the clothing manufacturers in Asia, particularly on the mainland, international textile companies also show enthusiasm in using Hong Kong as a gateway to promote their products to other Asian economies. The industry is capable of producing either a wide range of quality products in bulk or specialised items within a short lead-time. Its competitive edge lies in the superb quality and swift response to fashion trends and market demand. The industry has also earned a worldwide reputation for unique quality, expertise, workmanship and flexibility. Hong Kong is an ideal one-stop shopping centre for buyers looking for new and trendy fabric materials. The Interstoff Asia/International Fabric Show, held twice a year in spring and autumn, is a significant marketing and sourcing platform in the region for both fabric manufacturers and buyers alike. Industry Trend In recent years, with rising production costs inflated in part by stringent environmental regulations, Hong Kong's textiles manufacturers have established offshore production facilities in low-cost countries, particularly on the Chinese mainland and in Southeast Asian countries. A few companies have also set up offshore production in Latin America, including Mexico, to take advantage of preferential treatments allowed by trade agreements between these countries and their trading partners, typically the US. In the face of fierce competition in the global market, Hong Kong's textiles industry is moving up-market to supply sophisticated textile products with original designs. Today, the operation of the textiles industry in Hong Kong is focused on higher value-added activities such as sales and marketing, quality control, designs and development while offshore plants are specialised in lower value-added operations. The textiles industry has invested heavily in capital-intensive and advanced machinery to keep up with the latest technology know-how. Advanced production technologies are sourced mostly from vendors from Germany, Switzerland and Japan. Modern machinery like open-end spinning machines and shuttleless looms has been widely adopted by local manufacturers. As such, Hong Kong textiles manufacturers are able to offer a wide range of fibres, yarns and fabrics to clients. CEPA Provisions On 18 October 2005, the mainland and Hong Kong agreed to further liberalise the mainland market for Hong Kong companies under the third phase of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA III). Under CEPA III, the mainland agreed to give all products of Hong Kong origin, including textiles, tariff-free treatment starting from 1 January 2006. According to the stipulated procedures, products which have no existing CEPA rules of origin, will enjoy tariff-free treatment upon applications by local manufacturers and upon the CEPA rule of origins being agreed and met. But non-Hong Kong made textiles products will remain subject to tariff rates of 10-25% when entering the mainland. Details of CEPA tariff preference, including origin criteria, are available from the following hyperlink: http://www.tid.gov.hk/english/cepa/files/mainland_2007.pdf. Trade Measures Affecting Exports of Textiles According to the ATC, textile quotas were eliminated among WTO members at the first day of 2005. However, resistance to quota removal spread in the US and EU, and China subsequently reached agreements with the US and the EU. The China-US agreement governs the exports if a total of 21 groups involving 34 categories of Chinese textiles and clothing products to the US during 2006-2008. On the other hand, the China-EU agreement already expired by year-end 2007. Now, a joint surveillance system with China has been established to monitor EU imports of Chinese textiles and apparel, which will operate for one year, covering 8 out of the 10 previously restricted categories. In the EU, the azo dyes Directive 2002/61/EC has come into effect. The Directive prohibits the use of azo dyes, which could release one or more of 22 specified aromatic amines in concentrations above 30ppm, in textile and leather articles which have the potential of coming into direct and prolonged contact with the skin or oral cavity. It also prohibits the placing on the market of such items. Product Trends Cotton remains the preferred fibre for most consumers. Europeans, in particular, are enthusiastic about the environmentally friendly properties of biodegradable natural fibres. Consumers also tend to buy more manmade fibre fabrics, particularly polyester and polyester blends. The growth in demand for polyester is partly due to the technical improvements achieved over the last few years, particularly in respect of moisture absorption. In addition, innovative new fibres and fabrics have buoyed demand in many different areas. To answer the needs, more and more breathable, flexible, anti-bacterial and anti-ultraviolet, wrinkle-free, water-resistant, and environmental friendly materials are invented and promoted. For the purpose of keeping up with the trend, Hong Kong manufacturers are seeking for cooperation with research institutions. For instance, Spark Thread (HK) Ltd has cooperated with the Sichuan Institute of Textile Industry, and successfully introduced the pupa protein viscose filament yarn dyeing technology. Microfibres have been getting more and more attention. The major benefits of textile products made of microfibres are its light in weight and superior performance in keeping warm. In the field of furnishings, microfibres are more often used in the area of decorative fabrics and drapery. According to Texworld, uniqueness and distinctiveness are the key words in the coming seasons. What make fabrics unique are hand-crafted excellence, innovative technology, original visuals and exceptional handles. Emotional colour contrasts and eccentric motifs can fulfill people’s desire to be distinguishable. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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