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Textile firms positioning for quota-free age |
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2004-7-8
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As the quotas end December this year, Hong Kong prepares to shift manufacturing bases to mainland China’s low cost centres, to capitalize on the situation likely to occur then.
The current shake out is the outcome of almost a decade long moves of production shifting to mainland as well as countries such as Bangladesh and Cambodia, squeezing the territory''s global market share from 20 per cent to under 10 per cent today.
Creating a niche in the supply chain management and high-end production in Hong Kong thus effects survival. They believe an open market place will be to their advantage.
Big names like Sun Hing Knitting Factory, which produces knitwear for French designer Sonia Rykiel and Marks & Spencer, is investing US$2.5 million this year to expand production capacity by 25 per cent on the mainland and Hong Kong.
In another development, Luen Thai Holdings, the territory''s biggest garment maker, will use proceeds from listing on the stock exchange this month to fund new factories on the mainland.
HK’s textile exports totalled US$36 billion last year, about 16 per cent of its total exports. This year, garment shipments were 11 per cent higher in the first quarter than a year ago and should accelerate next year, analysts said.
The scope to expand on the mainland is huge: under quotas, the mainland is restricted to exporting around 250,000 dozen cotton shirts a year to the United States, while Bangladesh exports about 7 million dozen, according to the Textile Council.
The transition to a quota-free system will be difficult.
Under WTO rules, the United States and Europe can impose ‘anti-surge’ quotas until end-2008, curbing annual import growth from a country to 7.5 per cent per product category if they feel their domestic industry is being disrupted. |
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