Business is booming these days for the garment industry, but the picture is not all rosy because of staff shortages and the ever-present spectre of growing competition from China.
Alexa Chow, managing director, Centaline Human Resources Consultants Limited cites two major changes that have had a favourable impact in the past few years.
First, the European Union's decision to quash the quota system on 1 January 2005 opened up more opportunities for Hong Kong companies. Second, the CEPA arrangement, whereby there is zero tax on products, offers the benefits of processing products both in China and Hong Kong, but as being labelled as "Made in Hong Kong" provided they fulfil the criteria.
These two significant concessions have encouraged more garment-manufacturers to move still more of their operations into China to cut costs and increase profit margins.
"Today it is much easier for brand names to go into China," says Ms Chow. "Garment exports from Hong Kong and the industry generally are both booming."
As a result, demand now exceeds supply for professionals in the industry. Companies facing difficulty in recruiting candidates are offering higher salaries to lure experienced people from other companies, creating a knock-on effect that is causing ripples across the industry.
Ms Chow believes that while the boom situation continues, Hong Kong will remain an important middleman in garment merchandising and design, though the actual manufacturing will stay in China. "Any developments will be streaming towards design and merchandising, though the industry is already following that path so I expect the situation to get even better," she says.
The year 2008 will mark the end of restrictions on China's garment industry, which will give Hong Kong companies more competition from China. "There may be pressure to drive down prices to compete, and that will bring increasing pressure to move more production processes to China, possibly even the design and merchandising element," says Ms Chow. "We will just have to see what happens after the quotas are lifted."
Faced with such increasing competition from mainland manufacturers, Hong Kong companies are trying to cut costs to a minimum. One widely-employed economy is to second key staff to their factories in China, while rarely if ever bringing mainland candidates to fill top jobs here despite their expertise in design or merchandising. However, Ms Chow does not rule out the possibility that in the future skilled professionals from China may be competing with Hong Kong people for senior positions.
She points out that China gave Hong Kong generous help in 2004 by setting up the Closer Economic Partnership Arrangement (CEPA) that gave Hong Kong companies, particularly small and medium-sized enterprises (SMEs), early access to trading in China markets. CEPA permitted the tax-free import into China of Hong Kong-made products, lifting quota restrictions to help Hong Kong recover from the recession caused by the Asian financial crisis. CEPA thus became the lifeline that rescued many floundering SMEs here.
However, SMEs wishing to develop business on the mainland must understand and abide by mainland regulations while having to offer increased salaries to recruit local staff. "Many Hong Kong companies are in the original equipment manufacture (OEM) business, so competition with mainland companies is fierce, and the rising local employment costs could leave them unable to support themselves," Ms Chow cautions.
Hottest job openings
Meanwhile, the hottest job openings for Hong Kong talents on the mainland are for designers and merchandisers at all levels from junior to senior because of Hong Kong's international exposure to the latest trends. Positions in quality assurance and for production managers are usually at a senior level, requiring experienced candidates.
Ms Chow finds that Hong Kong professionals taking mainland jobs are willing to work there on weekdays provided they can return here at weekends. However, there is strong opposition to being permanently stationed there.
Further, she points out that Hong Kong is rich in fashion talents thanks to the wide spread of related courses offered by Hong Kong institutions. "In a bid to maintain Hong Kong's leading position, companies and professionals must frequently upgrade themselves through training, and work even harder to provide quality products and service," Ms Chow concludes.