A new but prosperous future

KW Yeung, vice chairman, the Hong Kong Institution of Textile and Apparel

Almost all local garment manufacturers have already slipped across the border to Guangdong. Thanks to the growing demand for Hong Kong's merchandising and marketing expertise, however, opportunities within this sector look rather rosy

It is common knowledge that Hong Kong has changed from a manufacturing centre to a service centre and that its manpower requirement has likewise shifted from being predominantly technology-based to service-oriented. Almost inevitably, this has, in turn, made a strong impact on the indigenous garment industry.

Indeed, in terms of textiles, Hong Kong has completely changed. "Almost all the manufacturing base has now moved to mainland China," says Professor KW Yeung, vice chairman of the Hong Kong Institution of Textile and Apparel. He notes that the few clothing manufacturers to remain in Hong Kong do so because they operate an outward processing arrangement to qualify for the "country of origin" rules.

The local manufacturing base is only likely to contract further with the removal of the import quota system on textiles and clothing on 1 January 2005, when it will no longer be necessary for WTO members to satisfy the country of origin rule. Prof Yeung believes that this will leave Hong Kong with a few very efficient factories that offer a quick response, "where buyers want to have very fast supply", as well as those manufacturing highly-specialised high-end products.

All is far from lost, however. Rather than supplying garments per se, Hong Kong will probably provide the garment industry with its merchandising and marketing expertise. "Hong Kong will still be a fashion centre, but rather somewhere to do business," explains Prof Yeung. "Buyers will come here to use our services. As there are so many factories in mainland China, [foreign] buyers just won't know where to go to. It will be much easier for them to use an agent."

He expects large agents such as Li & Fung, one of Hong Kong's major merchandising houses, to attain even greater prominence after import systems are removed. "There'll be more and more clothing manufacturing in mainland China. The whole industry, apart from the manufacturing base itself, could be even more prosperous, as more business will be going through Hong Kong."

ow will this impact recruitment? Essentially, Hong Kong should be viewed as a service-provider, specialising in merchandising, marketing and retail personnel - all of whom are likely to be highly sought-after. "At the same time, we will be looking for good design people, who are not just good at the creative part of design but also product development," comments Prof Yeung. "However, I'm not saying that there are no opportunities for manufacturing, if people are willing to work in China. A lot of our graduates are working in Chinese factories, where they are well sought-after."

On the other hand, demand for expertise in spinning, weaving, knitting, dyeing and finishing, garment-making and the manufacture of textile goods is slowly being phased out. While garment-making, knitting and the manufacture of niche products continues at some Hong Kong factories, almost all other specialisations have already vanished.

Today, garments destined for the mass market are all made on the mainland, thanks to its abundant and cheap labour. However, Hong Kong still has its finger in the pie, in Guangdong if not elsewhere. With an estimated workforce of close on three million working for the garment industry under Hong Kong management in this province, it is clearly a major manufacturing base for the SAR.

A niche for people with marketing, design, product development and retailing expertise

Is localisation a threat to Hong Kong's expatriate managers? Not according to Prof Yeung, who believes that opportunities should continue. "At least in the foreseeable future, China will be very strong on the manufacturing side - but not on the business side. People with marketing, design, product development and retailing expertise will, I am sure, have a niche."

In addition, Hong Kong residents working on the mainland are likely to benefit from the disappearance of import quotas, especially when this is married to a supply of high-quality garments. "I really think this will be positive," explains Prof Yeung.

In essence, although its labour is undeniably cheap, the mainland enjoys good management skills - thanks to investment from Hong Kong, Taiwan, Korea and Japan. The knock-on effect of such superior skills is that Chinese products beat those from other "cheap labour territories" hands down. According to Prof Yeung, this, combined with an absence of import quotas, will see increasing numbers of buyers flocking to the mainland. The result? Increasing business - and with it a rise in demand for expert management.

Of course, China's entrance into the World Trade Organisation will also affect the textile and clothing industry and its recruitment needs. With ever-decreasing protection, opportunities for Hong Kong brands should burgeon across the border. "What we can do is create more brands, so that they will have a bigger market there for our retail business," adds Prof Yeung. "Some of our big names, such as Giordano, are already doing very well in mainland China. If there are fewer restrictions, our retail business can expand and recruitment needs will shift even further towards retailing."

Taken from Career Times 19 September 2003
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