The mainland and Hong Kong agreed in October 2005 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.
Hong Kong s textiles industry serves not only the local clothing manufacturers, but also those on the Chinese mainland and other offshore production bases. Capitalising on the long experience in the manufacture of textiles, many Hong Kong companies are also engaged in textiles trading. Hong Kong’s textiles industry is reputed as a supplier of quality dyed and printed fabrics. It is also strong in cotton spinning, denim weaving, knit-to-shape panel knitting and fine-gauge cotton knit manufacturing.
Hong Kong’s textile exports decreased by 13% in the first four months of 2012, after levelling off in 2011. Re-exports, accounting for more than 98% of total exports, grew at the same pace of 13% over the same period, while domestic exports fell by 17%. Among those re-exported, more than 71% were originated from the Chinese mainland.
Asia is the leading market for textiles exported from Hong Kong, accounting for more than 92% of the total textile exports. Of the top 10 destinations for textiles exported from Hong Kong, nine of them are in Asia, with the Chinese mainland being the predominant export market.
No. of Establishments**
766 (manufacturing) – Dec 2011
6,240 (import and export) – Dec 2011
5,787 (manufacturing) – Dec 2011
28,110 (import and export) – 2011
* Industry statistics refer to production in Hong Kong only. ** Excluding knitwear from yarn
The textiles industry – comprising spinning, weaving, knitting and finishing of fabrics – had a total of 766 manufacturing establishments as of December 2011, employing 5,787 workers, or 5.2% of the local manufacturing workforce. The textiles industry is one of Hong Kong s major export earners, accounting for 2.5% of the total exports for the first four months of 2012.
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*
Jan - Apr 2012
Knitted or Crocheted Fabrics
Special Yarns and Fabrics
Man-made Textile Materials
Insignificant *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.
After levelling off in 2011, Hong Kong’s textile exports fell by 13% in the first four months of 2012. Re-exports, accounting for more than 98% of total textiles exports, experienced a decline of the same magnitude, while domestic exports continued its downtrend with a 17% slide. With 72% of them originating from the Chinese mainland, re-exports also registered a decrease of 13% in January-April 2012.
Asia is the leading market for textiles exported from Hong Kong, accounting for more than 92% of Hong Kong’s textile exports. Of the top 10 export destinations, nine of them are in Asia. The Chinese mainland remains to be the city’s predominant export market, accounting for nearly two-thirds of Hong Kong s textile exports during January-April 2012.
Other major export markets of Hong Kong textiles include Vietnam, Indonesia, Cambodia, Bangladesh, Thailand, Sri Lanka, the US, the Philippines and India. In particular, because of Vietnam’s cheap labour and WTO membership, many foreign investors, including those from Hong Kong, have set up garment factories there. This gives rise to sustained demand for textile imports, making Vietnam the second largest market for Hong Kong’s textile exports, after the Chinese mainland.
Product-wise, Hong Kong s exports of textile yarns (down 21%), woven fabrics (down 16%), knitted or crocheted fabrics (down 7%) and cotton (down 16%) all suffered decline, in the first four months of 2012.
Hong Kong is both a leading production centre and a global hub for clothing sourcing. As such, Hong Kong s textiles industry is well positioned to serve both 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 are also using Hong Kong as a gateway to promote their products to other Asian economies. For instance, Brazil’s fast-growing fashion industry is attempting to leverage Hong Kong’s trade platform to promote their textiles and apparel on the Chinese mainland.
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. Organised by the HKTDC, the Hong Kong International Home Textiles Fair offers a wide range of high quality products such as bathroom textile, bedroom textile, kitchen textile, carpet and floor covering. It is a specialist platform, giving exhibitors and buyers of home textiles immediate access to markets in Asia and beyond.
In line with the global manufacturing landscape and fierce competition across the board, Hong Kong s textiles industry has been moving up the value chain to cater to the demand for upmarket textile products with original designs or brands. Today, the operation of the textiles industry in Hong Kong is focused mainly, if not all, on higher value-added activities such as sales and marketing, quality control, designs and development, while offshore plants are specialised in production operations. This, in turn, results in a high proportion of re-exports (98%) in Hong Kong’s textiles exports portfolio.
With rising labour costs, RMB appreciation, fluctuations in raw material prices and stricter environmental regulations on the Chinese mainland, many Hong Kong s textiles manufacturers have re-allocated their production facilities to other Southeast Asian countries, like Vietnam, Cambodia and Bangladesh. A few companies have even set up offshore production in Latin America (e.g. Mexico) to take advantage of preferential treatments allowed by regional trade agreements such as North American Free Trade Agreement (NAFTA).
To stay tuned to the advancements of manufacturing technology and product requirements, the textiles industry, as a capital-intensive business, has invested heavily to keep up with the latest technological trends. Advanced production technologies are sourced mostly from vendors from Germany, Italy, Spain, Switzerland, Japan and South Korea. Modern technologies like automatic web spreading, nano bio-functional materials finishing and Texparts® Zero Underwinding are no strangers to local manufacturers. As such, Hong Kong textiles manufacturers are able to offer a wider range of fibres, yarns and fabrics to clients.
To comply with the global trend of green manufacturing, more textile corporations have adopted thebluesign® standard – one of the industry’s major voluntary standards for environmental sustainability. To be qualified, a corporation must reveal its chemical processes, dye compositions and relevant green workplace initiatives for scrutiny. Apart from the bluesign standard, Global Organic Textile Standard (GOTS), the Oeko-Tex® Standard 100 or Oeko-Tex® Standard 1000 are other popular product labels that textile manufacturers use to show their greenness.
In line with the 12th Five-Year Plan, the China National Textile and Apparel Council (CNTAC) has recently issued the Outline for Science and Technology Progress of Textile Industry in the 12th Five-Year Period , aiming to promote comprehensive upgrade of China s textiles industry management and boost the development of high-end textiles products. Other areas covered include promoting technology innovation, energy conservation and emission reduction, setting up industry-related standards and developing domestic brands.
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 textile products will remain subject to average tariff rates of 10-25% when entering the mainland
General Trade Measures Affecting Exports of Textiles
Despite the elimination of textile quotas among WTO members in 2005, the US and EU had subsequently imposed safeguard measures against imports from the Chinese mainland. Starting 1 January 2009, however, textile and clothing products originating in China no longer require any import licence or surveillance document before entering the EU. Meanwhile, textile and clothing shipments to the US made on or after 1 January 2009 are no longer subject to any quotas.
Among various kinds of fibres, cotton remains the most preferred material for consumers in the appeal market. With reference to the 2012 survey by the Cotton Incorporated, more than 8 out of 10 UK consumers prefer cotton clothing because of comfort (87%), nature (87%) and quality (85%). Meanwhile, some man-made fibre fabrics, such as polyester and polyester blends, are gaining popularity, partly due to the technical improvements such as moisture absorption.
From the perspective of product innovation, microfibers are drawing greater attention from textiles manufacturers. The major benefits of textile products made of microfibers are its light in weight and superior performance in keeping warm. Aside from microfibers, many innovative new fibres and fabrics have bought demand in many different areas. To answer the needs, more and more breathable, flexible, anti-bacterial, anti-ultraviolet, wrinkle-free, water-resistant and environmental friendly materials are invented and marketed.
According to Texworld, technology and innovation remain the buzzwords in the coming seasons. Fancy weaves and prints will give more flexibility in the choice of manufacturing processes, while digital prints as well as artisanal decoration will make textiles more malleable. Meanwhile, hand-crafted excellence, original visuals and exceptional handles will continue to be sought after, given consumers’ ever-growing appetite for uniqueness and distinctiveness. As for technology and innovation, Hong Kong Research Institute of Textiles and Apparel (HKRITA) launched 65 research and development projects in the past six years; 41 out of them were completed and the relevant technologies were successfully applied to suit the need of the local textiles industry, including the Advanced Functional Clothing CAD Simulation System.
Consumers, particularly Europeans, are enthusiastic about the environmentally friendly properties of biodegradable natural fibres like organic cotton, soy fibre and ahimsa silk. To keep up with this trend, manufacturers have also expanded their production of green textiles by utilising more bio-degradable materials and environmentally-friendly manufacturing processes, including high-efficiency management practices, process control, special processes, and recycling of wastewater. For example, the cotton textile industry can reduce its environmental footprint at least 50% by employing technologies currently used in modern plants with reference to the Cotton Incorporated. A visible commitment to sustainable practices may therefore give environmentally-friendly manufacturers a noticeable competitive advantage.
Apart from rising green consciousness, product safety remains a major concern for consumers, not confining to developed market, but emerging markets such as the Chinese mainland. For instance, a number of disqualified apparel fibers consisting of unsatisfactory levels of pH value, formaldehyde content and banned azo dyes, have been reported on the Chinese mainland in recent years. In traditional markets, for example, the EU’s Rapid Alert System for Non-Food Products (RAPEX) released 70 alert bulletins in the first quarter of 2012 on Chinese textiles and apparels, accounting for 22% of the total number of alert bulletins over Chinese mainland products, up 338% y-o-y.
With the rapid urbanisation of towns, along with the marriage and baby boom, the demand for high-end household textile products is growing rapidly on the Chinese mainland. It is reported that the annual growth rate of consumption of household textile products will exceed 20% in the next 10 years, while the sector of household products is expected to replace the garment industry to present the leading demand for textiles.