Overview




Textile quotas ended up removed among WTO customers at the to start with working day of 2005 in accordance with all the Arrangement on Textiles and Clothing (ATC). On the other hand, resistance to quota elimination distribute while in the US and EU. Subsequently, China reached agreements using the EU and the US in June and November 2005 respectively. The China-US settlement, helpful from January 2006, governs the exports of a overall of 21 groups involving 34 classes of Chinese textiles and clothing products and solutions for the US during 2006-2008. The China-EU settlement, successful from June 2005, handles 10 types of Chinese textiles and clothing exports to the EU for the duration of 2005-2007.




Alternatively, the mainland and Hong Kong agreed in Oct 2005 to even more liberalise the mainland market for Hong Kong businesses under the 3rd section of your Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA III). In conjunction with other merchandise of Hong Kong origin, the mainland agreed to offer all merchandise of Hong Kong origin, which include garments goods, tariff-free cure setting up from one January 2006. In keeping with the stipulated treatments, solutions that have no existing CEPA principles of origin, will enjoy tariff-free procedure on purposes by regional manufacturers and upon the CEPA rule of origins remaining agreed and fulfilled.




Hong Kong outfits corporations are respected for ODM and OEM generation. They are able to supply high-quality outfits content articles in brief direct time, as international importers and shops ask for garments suppliers to tighten up source chain administration to ensure the requested products achieving the shop floor with the appropriate time. Progressively, Hong Kong apparel corporations, the established kinds in particular, have revealed enthusiasm for manufacturer advertising.




Hong Kong's whole exports of clothing rose year-on-year by 9% during the initial 11 months of 2005. When Hong Kong's re-exports of garments rose by 20%, domestic exports fell by 14%. During the very first eleven months of 2005, Hong Kong's garments exports towards the US and EU rose by 11% and 18% respectively. Although Hong Kong's clothing exports to Japan levelled off, these towards the Chinese mainland declined by 11%.




Industry Functions




The clothing marketplace is usually a main manufacturing sector of Hong Kong. Its gross output is one of the greatest between all producing sectors, amounting to HK$35.nine billion in 2003. It's the greatest manufacturing employer in Hong Kong, with 1,673 institutions employing 28,752 personnel as of June 2005. It is also the foremost earner concerning domestic exports, using up 40% with the whole during the 1st 11 months of 2005.




Hong Kong's geographic boundary has never constrained the event of the forward-looking outfits business. The majority of outfits producers have set up offshore manufacturing amenities within an try to lessen operation prices. Relocation of output services offshore has on the other hand resulted inside of a regular drop inside the variety of apparel makers in Hong Kong.




Hong Kong will not be only a major output centre but in addition a hub for outfits sourcing globally. Companies executing garment trade in Hong Kong are experienced in materials procurement, gross sales and internet marketing, top quality management, logistic preparations, apparel designs and global and nationwide rules and rules. The professionalism which they command plus the mixed providers presented usually are not effortlessly matched in other places. Which has a full of fifteen,a hundred ninety institutions choosing 95,889 staff, they sort the most important group involved with import-export trade in Hong Kong.




Performance of Hong Kong's Exports of Garments




Hong Kong's total exports of clothing rose year-on-year by 9% in the initial 11 months of 2005. Although Hong Kong's re-exports of garments rose by 20%, domestic exports fell by 14%. The contrasting overall performance of Hong Kong's re-exports and domestic exports was fundamentally ascribed to the expanding relocation of garment manufacturing for the Chinese mainland, resulting through the removal of quotas below WTO's Settlement on Textiles and Clothes (ATC). Although the declining craze of domestic exports continues to be reversed fairly in modern months, resulting from the re-imposition of quantitative restraints on mainland-made textiles and apparel from the US and EU.




Retail gross sales inside the US held organization within the very first 11 months of 2005, mounting by almost 6% within the same time period in the preceding year. In the to start with eleven months of 2005, Hong Kong's apparel exports to the US rose year-on-year by 11%.




During the initially 11 months of 2005, Hong Kong's full outfits exports to the EU surged year-on-year by 18%. Clothes exports to main EU marketplaces like France, Germany and Italy recorded progress premiums in extra of 20%.




Then again, Hong Kong's outfits exports to Japan levelled off while in the initial eleven months of 2005 partly as a result of the pattern of immediate shipment. About the back of your mounting money having said that, Japanese consumers tend to resume their investing spree on quality garments goods. In the meantime, Hong Kong's garments exports for the Chinese mainland dropped by 11% during the initial eleven months of 2005, as opposed with the similar period of time past yr.




Product-wise, Hong Kong's exports of woven don rose by 12% inside the initially eleven months of 2005. Even though woven use for women/girls grew by 13%, these for men/boys recorded a growth of 8% in the similar period while in the past 12 months. Knitted use grew by 2%, with women/girls and men/boys rising by 1% and 6% respectively. While outfits accessories declined by 3%, other clothing article content, for his or her component, elevated by 13%.




Product sales Channels




Hong Kong's clothes brands have forged sturdy associations with their prospects. They're able to have an understanding of and cater to the preferences of incredibly wide customer bases. Exporters also have fantastic familiarity with international and nationwide principles and laws governing outfits exports, such as regulations of origin, quota limits, tariff premiums and documentation demands. Slice, make and trim (CMT) arrangements are prevalent though many Hong Kong manufacturers have moved to bigger value-added functions these kinds of as design and brand name growth, quality control, logistics and material sourcing.




A handful of well-established local makers have entered in the retailing company, both domestically or in abroad markets. Most of them have retail networks in key cities about the whole world which includes Beijing, London, Big apple, San Francisco, Shanghai, Singapore, Sydney, Taipei and Tokyo. Some well-known producing vendors involve Baleno, Bossini, Crocodile, Episode, Esprit, G-2000, Giordano, JEANSWEST, Moiselle and U-2.




For a worldwide sourcing hub in Asia, Hong Kong appeals to numerous global buying and selling houses and main stores. Potential buyers sourcing from Hong Kong include American and European department shops (e.g. Macy's, JCPenney, Federated, Karstadt Quelle, C & A), discount retailers (e.g., Sears, Target and Carrefour), specialty chains (e.g., The Gap, The Limited) and mail order properties (e.g. Otto and Great Universal Retailers). Several international quality designer labels -- these as Calvin Klein, Donna Karen, Ralph Lauren, Tommy Hilfiger and Yves Saint Laurent -- source clothes in Hong Kong through their buying offices or other intermediaries.




Hong Kong's fashion designers have been gaining worldwide reputation for his or her professional expertise, sensitivity to current trends and ability to blend commercialism with innovation. Medium to high-priced fashion clothing bearing Hong Kong designer labels is becoming sold/have been sold in renowned office

merchants abroad these kinds of as Bloomingdale's, C & A, Harrod's, Isetan, Macy's, Marui, Mitsukoshi, Nieman Marcus and Seibu.




Trade fairs and exhibitions remain frequent places for purchasers and suppliers of clothing to congregate. To establish connections and explore market place opportunities, Hong Kong makers and traders have included themselves actively in worldwide shows led through the Hong Kong Trade Enhancement Council (TDC), which includes the kinds 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 intercontinental suppliers and potential buyers to participate inside the exhibition. Organised by TDC, 'World Boutique, Hong Kong' is definitely the to start with independent event in Hong Kong dedicated to promoting designers' collection and brands from all-around the entire world.




Industry Trends




Changes in retail landscape: During the US and EU, large-scale suppliers are undergoing drastic restructuring and consolidation, especially, the growing prominence of hypermarkets these as Wal-Mart. To strengthen competitiveness, Sears and Kmart have merged to type the third biggest retail team while in the US.




Growing importance of private labels: Private labels, in essence, have become an ever more powerful advertising tool between garment merchants. In order to differentiate as very well as upgrade the image of their goods, big stores have started to put a stronger emphasis on their own labels. According to Cotton Incorporated, private labels accounted for 45% of total US clothing income in 2003, up from 39% in 2001. In some adult attire classes, such as skirts, private labels accounted for as high as 76% from the total profits. It is also estimated that 45% of products and solutions sold inside the EU are sold underneath private labels. Renowned merchants these types of as H&M, Marks & Spencer, Orsay, Palmers, Pimkie, Springfield and Kookai have owned their private labels. As customers desire to have private labels on everyday garments like jeans, components and T-shirts, the doors are also open for the offer of these clothes things to private label owners.




Growing interest in China's domestic market place: The rapid expansion of mainland's economy has attracted great interest of Hong Kong apparel organizations to explore its clothing sector. A TDC survey on mainland's garment shoppers indicates that Hong Kong brands are ranked variety a person with the respondents inside the mid-range segment. Whilst worldwide brands are most preferred during the high-end segment, mainland brands dominate the low-end. In addition, exactly the same survey finds out that from the eyes of mainland people, Hong Kong firms are very potent in casual have on, as they can be generally of good design and style and high-quality. In essence, several mainland buyers have developed a stronger awareness of Hong Kong brands through tour to and shopping in Hong Kong. Therefore, Hong Kong's casual wear has successfully projected a positive image to mainland shoppers.




CEPA




On 18 Oct 2005, the mainland and Hong Kong agreed to further more liberalise the mainland market for Hong Kong firms beneath the 3rd stage with the Mainland and Hong Kong Closer Financial Partnership Arrangement (CEPA III). In conjunction with other merchandise of Hong Kong origin, the mainland agreed to offer all solutions of Hong Kong origin, such as outfits items, tariff-free treatment method setting up from 1 January 2006. According to the stipulated strategies, merchandise that have no current CEPA guidelines of origin, will appreciate tariff-free cure upon programs by nearby suppliers and upon the CEPA rule of origins getting agreed and met. But non-Hong Kong made apparel items will remain subject to tariff rates of 10-25% when entering the mainland.




The promulgated principles of origin for apparel products to benefit from CEPA's tariff preference are generally similar to the existing principles governing Hong Kong's exports of these products and solutions. Generally speaking, the principal producing process of cut-and-sewn garment is sewing of parts into garments. If linking and/or stitching is/are required, these kinds of process/processes must also be done in Hong Kong. For piece-knitted garment, if it is manufactured from yarn, the principal process is knitting of yarn into knit-to-shape panel.




If the piece-knitted garment is manufactured from knit-to-shape-panels, the principal process is linking of knit-to-shape panels into garment. If stitching is required, it must also be done in Hong Kong.




Trade Measures Affecting Exports of Outfits




In line with the ATC, textile quotas have been removed between WTO users on the very first working day of 2005. Nevertheless, resistance to quota elimination unfold in the US and EU. Particularly from the US, China-specific safeguards on 10 groups of clothing merchandise from China were being invoked. Against this background, China reached agreements with all the EU along with the US in June and November 2005 respectively.




The China-US arrangement, efficient from January 2006, governs the exports of a total of 21 teams involving 34 classes of Chinese textiles and apparel products and solutions to your US throughout 2006-2008. It allows an annual progress of 10-15% in 2006, twelve.5-16% in 2007 and 15-17% in 2008. The China-EU agreement, effective from June 2005, provides for an annual growth of 8-12.5% in ten groups of Chinese textiles and outfits exports to the EU for the duration of 2005-2007. In addition, both EU and US agreed to exercise restraint in invoking China-specific safeguard against Chinese textiles and clothes that will not be covered in the agreements.




Products Trends




Formal Dressing: Even though casual wear accounts for that bulk of garments profits, a general craze towards stricter corporate dress codes has led to a increasing demand for formal dressing, particularly suits. In accordance with a survey by Cotton Incorporated in late 2004/early 2005, 38.5% of respondents believe that people dressed too casually at work. This can be a six.5 percentage point increase over exactly the same year-ago.




Teenager: Amongst the important driving forces of apparel market appears to be the teenagers within the coming years. The volume of teenagers while in the US expects to increase from 31.6 million in 2001 to 34.one million in 2010. A the latest survey by Teenage Research Unlimited found that teens are saving money by price shopping. Even though JCPenney is their favourite section keep, Target and Wal-mart are their favourite hypermarkets. In addition, Old Navy is their choices amongst specialty attire retailers.




Silver Market place: Ageing population becomes a prevalent phenomenon in many developed countries in Europe as effectively as Japan along with the US. Elderly people constitute a significant industry segment called 'silver market'. Supported by savings, social security benefits and pensions, lots of elderly people have rather powerful shelling out power. It truly is estimated that the age group of 65 yr and above accounted for about 21% of Japan's consumption expenditure in 2000. A survey conducted with the Japanese government also shows that people who are 60 years old and above possess almost three times the financial assets of people in the 40-50 age team. Inside the US, all those aged at or above 65 amounted to 18.one million in 2001, and also the variety is expected to swell to 26 million in 2015.




Plus-size Industry: The plus-size sector continues to be an area of growth for numerous years, along with the pattern is expected to continue inside the coming future. It is actually estimated that 65 million women of all ages while in the US wear size fourteen or above. This team represents one-half from the US female population. It really is reported that some renowned brands have already responded on the pattern by offering items of larger size; these corporations include Liz Claiborne, Ralph Lauren and Tommy Hilfiger.




Easy-care Clothes: Clothes created of stain-resistant and wrinkle-free fabrics are perfectly received from the current market. It really is estimated that about a quarter of apparel is now manufactured of easy-care fabrics, and its popularity is expected to continue inside the next number of years. Although significant clothing brands like Dockers and Liz Claiborne have already marketed extensively easy-care clothes, major hypermarkets, like Wal-Mart, also offer more products of these high quality.




Source: Hong Kong Trade Improvement Council




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