California Apparel News

HONG KONG—Mainland China apparel manufacturers attending the Spring/Summer 2002 run of Hong Kong Fashion Week said they were looking forward to their country’s entry into the World Trade Organization (WTO) and the scheduled elimination of quotas in 2005 to boost exports to the United States and Europe.

“Right now it is difficult to do business with Europe and the U.S. because of the quotas,” said Paulo Pan, sales manager for mainland China manufacturer Esse. “If China joins the WTO, the quotas will end [and] we believe our product will be more competitive in the world. Now [apparel manufactured in] India, Pakistan and Vietnam is cheaper than [apparel manufactured in] China [because] of quotas. It restricts China to export textile and garments to Europe and the U.S.”

Esse was one of 103 mainland China exhibitors at Hong Kong Fashion Week, which featured 507 exhibitors in all—a 12.7 percent increase over last year’s figure of 450 exhibitors—at the Hong Kong Convention & Exhibition Centre. The show floor was divided into separate pavilions for members of the Hong Kong Designers Association, Asian/Pacific designers and manufacturers from several countries. This year’s show saw an increase in the number of mainland Chinese and Indian manufacturers attending, according to organizers.

Hong Kong Fashion Week drew 12,771 visitors to the July 9–13 event. According to organizers, approximately 7,700 of the visitors were from Hong Kong. The largest contingent of overseas visitors, numbering 1,942, came from mainland China, and 322 from the United States. Last year, the total visitor count for the Spring/Summer shows was 13,624, including 5,446 from outside Hong Kong.

The Spring/Summer run of Hong Kong Fashion Week is the smaller of the two fashion and trade shows hosted annually by the Hong Kong Trade Development Council (HKTDC). The larger Fashion Week has been held in January for more than 30 years, but the HKTDC added the July show only eight years ago.

Sandra Lee, Hong Kong secretary for economic services, presided over the opening ceremonies of Fashion Week, noting the apparel industry’s position as the largest employer in the manufacturing sector in Hong Kong—and the region’s plans to support its apparel businesses.

The apparel industry employs “some 50,000 workers and domestic exports total almost $77.5 billion. Re-exports were valued at more than $111 billion,” she said, adding, “These are good reasons why we are determined to make sure Hong Kong has the capacity to cope with the rapid changes in trends and the means to get products to the market in a timely manner.”

The two main barriers limiting business between the U.S. and Asian countries are quotas and turn times. If China joins the WTO, as is expected, quotas and duties will be eliminated by 2005 for goods shipped between member countries. The elimination of duties will mean that U.S. manufacturers and retailers will likely see a drop in prices for apparel manufactured in China. Turn time for apparel manufactured in Asia and shipped to the U.S. is much longer—-at least 45 days—-compared to the much faster deliveries for Mexico and Central America production. For example, Kelvin Lo of Hong Kong-based Campus Corporation Ltd. said deliveries range from one to two months for small orders to two to three months for larger orders. The manufacturer produces denim, wovens and knits in mainland China and Vietnam for labels such as Kookai, Morgan, Itam and Y London. Bugle Boy was a past customer of the company.

U.S. Recession May Open Asian Doors

The slowing U.S. economy and its effect on the apparel business in Asia was on the agenda at Cotton Inc.’s seminar titled “U.S. Retail Market Overview.” The seminar included the latest figures on the U.S. apparel retail market compiled by the New York-based cotton marketing organization.

“It would appear that the chances of the U.S. economy going into a technical recession is getting less—I won’t say it won’t happen, but it’s getting less,” said Jim White, Cotton Inc. director for Southeast Asia. White noted the recent drop in consumer confidence and declining retail sales in the U.S. but added that retail apparel “is probably impacted less as far as consumer spending is concerned” than other categories.

“The bad news is there has been a huge price deflation in most of the last seven years, and there is enormous pressure to keep prices low,” he said.

White also noted the passage and implementation of the Caribbean Basin Initiative (CBI), which eliminated duties on goods manufactured in the Caribbean basin from U.S. fabric and yarn and then shipped to the U.S. He told the audience to expect some U.S. production to shift to the CBI region, just as the passage of the North American Free Trade Agreement in 1995 spurred an increase in exports to the U.S. from Mexico. According to White, much of the apparel that will be produced in the CBI region will be commodity products such as socks and underwear. White said Cotton Inc. expects to see more shifts in production with the elimination of quotas and duties on goods exported from China to the U.S. in 2005.

“We speculate that CBI will lose market share back to Asia after 2005,” he said.

Web Role for Fashion

Secretary Lee also stressed the crucial role the Internet plays in speeding up the fashion cycle.

“The e-revolution has made the fashion industry more competitive with everyone trying to cut response time to the minimum,” she said.

Several exhibitors from mainland China also noted the Internet’s importance in landing overseas business.

Esse’s Pan said his company finds some of its U.S. and European accounts though Web sites such as MeetChina.com (www.meetchina.com) and Alibaba.com (www.alibaba.com). The company produces men’s and women’s apparel for manufacturers such as Abercrombie & Fitch and Sears at its facility in Ningbo, China. Pan said he expects his U.S. and European business to grow with China’s entry into the WTO.

Similarly, Ricky Lai, merchandising manager for Hong Kong-based Rolls Group Ltd., which produces designer brands such as Lu Lu Cheung, Terra Rosalis and 21LU, said he expects his U.S. business to expand with the elimination of quotas on Hong Kong apparel exported to America.

“When the quota is eliminated, we think this will be the chance to expand to the U.S. market,” he said, noting that U.S. retailers have carried the company’s collections in the past.

U.S. retailers will have an opportunity to take a look at some Hong Kong brands this fall when the HKTDC takes a group of designers to Seventh on 6th for a group runway show, according to Patrick Chan, HKTDC manager of fashion services. This will be the second time the organization has hosted the group show in New York, and the current lineup for the show includes several designers and manufacturers’ brands, among them, Blanc de Chine, Bleu de Chine, Silvio Chan, Flora Cheong-Leen, Dorian Ho, Michael Hui, Shanghai Tang and Cecelia Yau.