California Apparel News

HONG KONG—An inclement economic climate, a changed world following the terrorist attacks of Sept. 11, and China’s accession to the World Trade Organization were the heady issues setting the stage for Hong Kong Fashion Week Fall/Winter 2002, the latest edition of Asia’s biggest fashion event.

In spite of the tough milieu, the event, which ran Jan. 15–18 at the Hong Kong Convention and Exhibition Centre, managed to generate increases in exhibitor participation and buyer attendance, as both parties were eager to capitalize on expansion opportunities into China that will become available with the elimination of quotas by 2005.

Market organizers from the Hong Kong Trade Development Council (HKTDC) reported that buyer attendance surged 25 percent from last year’s figure to 19,062 but was still down from nearly 31,000 in 1996. The number of U.S. buyers was up 12 percent, to 461, but still off from 1999’s mark of 580. The number of buyers from mainland China soared 75 percent to 3,191, as many canvassed the show for cutting-edge looks and designs.

“We’re looking for hot brands—we want newness,” said Peng Apple, a buyer for JUSCO Teem Department Store, located in the eight-story shopping center Teem Plaza in Guangzhou City, China.

There were 909 exhibitors, an 11 percent increase from last year. The mainland China contingent represented a sizable presence with 228 exhibitors, a 41 percent jump. Signs of weakness, however, were still evident in the reduction of the number of countries and regions represented, down from 22 to 19, with many countries represented by a single stand.

HKTDC’s Garment Advisory Committee has worked behind the scenes to boost the numbers at Fashion Week, said its chairman, Christopher Cheng. For the past couple of years, it has offered paid hotel fare to new buyers, a practice that resulted in 200 new buyers this year. In addition, exhibitors benefited from admission price freezes since 1997.

World Boutique creates global fashion source

The newest addition to the event won’t happen until next year with the creation of HKTDC’s World Boutique. Set to run concurrently with Fashion Week in January 2003, the World Boutique will feature the lines from established and emerging global designers under one roof. A key component of it will be the addition of more comprehensive trend forums and seminars covering the challenges of the fashion industries.

The show aims to rev up the fashion focus of the market week. HKTDC said the event will draw about 80 percent of its designers from Asia and only about 20 percent from outside the continent in its first effort. Organizers hope to run the show separately three years from now.

The ranks of Hong Kong designers who have crossed the European and U.S. fashion borders remain thin, but promising. Some of Hong Kong’s fashion elite—Joseph Li, Barney Cheng, Joanna Chu-Liao and Flora Cheong-Leen—have gained entry into high-profile American stores Bergdorf Goodman, Neiman Marcus and Henri Bendel. Other design houses have had the opportunity to place their fashions on the runways at 7th on Sixth in New York since 2000, which has opened the doors to inquiries and repeat orders.

Mood mixed onshow floor

Held in three main halls, the event showcased middle-market merchandise, bigger-ticket items from designers and major brands as well as the collections from 59 regional designers, and the group pavilions of exhibitors from mainland China, India, South Korea, Macau, Pakistan, Taiwan and Vietnam.

Exhibitor Edward Zhao, manager of knitwear manufacturer Zhejiang Orient Holdings Co. Ltd., based in Hangzhou, China, said his business has slowed since Sept. 11.

“Many of my clients have reduced their orders,” said Zhao, whose $300 million firm produces men’s and women’s clothing for such U.S. firms as J.C. Penney, Van Heusen and Liz Claiborne.

Fashion Week seemed slower to him than in past years, but he was able to distribute samples for women’s tops and bottoms to potential clients from Japan and Europe.

Grace W. M. Lee, managing director of Baboon Clothing Ltd. in Hong Kong, said buyers were placing orders for some of her ruffle skirts and fur-trimmed denim jackets.

Lee said she met with buyers from China, Kuwait and Japan, but wished she could have broadened her reach to include more European and U.S. buyers.

Other designers remained focused on China.

“The U.S. and Europe is not a priority—their quantities are too much. There’s more potential in China to do smaller orders for more people,” said Kevin Yeung, a women’s party dress and business casual designer and chairman of the Hong Kong Fashion Designers Association.

Yeung, who produces in China, concedes that he still finds himself in a price squeeze when doing business with China and that there are limitations with a country whose banking system still represents hybrids of private/public domains.

“Sometimes, Chinese buyers at Fashion Week think our clothes are too expensive, so we often have to redo styles in less expensive fabrics,” he said. “And, we’ve found that Chinese banks prefer to give you cash deposits rather than letters of credit, which makes it difficult to produce.”

For some California buyers, the negotiations proved more fruitful than planned.

“It was much more interesting than I thought it would be,” said Ralph Maya, president of Los Angeles-based Maya & Sons Inc., a wholesaler of discount goods. “I planned to stay one day and stayed three days. Hong Kong people are very eager to work with us and to strike deals.”

Maya said he purchased $50,000 worth of clothing to sell to his clients Factory-2-U Stores, Ross Stores Inc. and Forman Mills.

Also impressed was Gilbert Ouaknine from Miami-based JJJ, a seller of women’s junior tops and jeans, who spent $150,000 on orders.

“The design and research here are amazing—you get extra things you can’t get in China,” he said. “I’d rather pay more in production in Hong Kong and not deal with the headaches of entering China for a few weeks.”

Global Retailers Still Flocking to Hong Kong

With no shortage of retail, Hong Kong is home to upscale, international brand names, but even the titans had to give in to discounting this past month. Hong Kong’s high-end department store chain, Lane Crawford Ltd., known for its breadth of global contemporary labels, touted sales of 30 percent to 50 percent off merchandise, as did the Japan-based department store chain Seibu.

Stores doing a brisk business were local names U2 and Giordano, the latter a vertically integrated retailer whose styles and branding emulate a Gap/Banana Republic hybrid. Even troubled United Kingdom-based Marks & Spencer scrapped plans to sell its stores to franchisees in Hong Kong last December. Instead, as a result of drawing little interest from prospective buyers, the retailer intends to continue running the units as direct subsidiaries.

The cloud, however, may be lifting, according to the latest figures released by the Hong Kong Census and Statistics Department. For November 2001, retail sales in Hong Kong fell 4.2 percent, a slight improvement following the previous month’s 6.1 percent plummet, which represented the steepest falloff since September 1999.

It’s that silver lining that retailers hold on to as they invest in Hong Kong for its long-term prospects as a jumping-off point for expansion in China.

Giorgio Armani is preparing to open one of its biggest spaces to date, a 22,000-square-foot unit housing Emporio Armani and Giorgio Armani under one roof in Hong Kong’s Chater Road Development. Los Angeles-based BCBG Max Azria, already sold at Lane Crawford, opened its first freestanding store last year on Canton Road in Kowloon, one of the city’s most popular shopping streets. Louis Vuitton celebrated the opening of its third store in Hong Kong in December 2000 at the region’s swanky shopping center, Pacific Place. And Cerutti opened its 4,000-square-foot Asian flagship store in Hong Kong in March 2000.

Still, analysts say there’s turbulence ahead until the Asian economy rights itself.

“There’s been a falloff in tourism from the U.S. and Asia, even before 9/11, and Hong Kong businesses—especially retail—are heavily dependent on those dollars,” said Pam Stubing, a retail analyst who follows the Asian sector at Ernst & Young LLP in New York. “Retailers who enter the market are going to be hard-pressed there, and they should realize they’re there for the long haul.”

It’s a risk retailers are willing to take.

“Retail in this area has become a significant force,” said BCBG’s founder and chief executive, Max Azria. “It’s essential for [us] to have a strong presence in this market.”