Prepared By: ICE, HK

Textile industry

Textile industry is one of Hong Kong�s major export earners, accounting for 4.4% of total domestic exports in 2003. The industry is comprised of procedures such as spinning, weaving, knitting and finishing of fabrics. As of July 2004, there are around 1,019 manufacturing establishments in Hong Kong, which employ 11,357 workers or 6.7% of the local manufacturing workforce.

Performance of Hong Kong�s Exports of Textiles

In light of fierce competition in the global market, especially from other low cost countries, Hong Kong�s textile industry has opted to move up-market to supply sophisticated textile products with original designs. This industry trend has resulted in Hong Kong focusing on higher value-added activities such as sales and marketing, quality control, design and development while offshore plants mainly specialize in lower value-added manufacturing operations.

With the aim of strengthening productivity, Hong Kong�s textile industry has invested heavily in capital-intensive and advanced machinery, so as to stay competitive with the latest technology know-how in the global textile industry. Modern machinery like open-end spinning machines and shuttle-less looms has been widely adopted by local manufacturers. Due to a lack of local supply of advanced machinery, cutting edge technologies are primarily sourced from Japan, Germany, Italy and Switzerland.

Textile Machinery Market

Hong Kong relies on imported machinery for production purpose of its local textile industry and more importantly for the trading business with Mainland China.

The textile machinery sector in Hong Kong is primarily occupied with imported equipment, as the volume of locally produced machinery is not as significant. Top supplying countries of textile machinery to Hong Kong in 2004 include Germany, Japan, Mainland China, Italy and Switzerland.

According to the trade statistics for 2004, Germany is the leading supplier of textile machinery to Hong Kong by capturing around 27.09% of the import market with a value of around US$208.62 million, up by 25.36% over the preceding year. The market share for Japan has slightly dropped to 23.47%, despite a growth of 8.13% in import value, reaching US180.77 million for the year.

As the Hong Kong textile industry only absorbs a small percentage of the imported machinery, a large portion of the equipment is destined for re-export purposes. A comparison on import and re-export figures for textile machinery is as follows:

Regarding the re-export business, China is the major destination, capturing around 77.48% of market share in 2004, accounting for US$391.39 million in value, which once again reinforces the status of Hong Kong as a gateway for the mainland. The machinery being re-exported to China are mainly consumed by China�s textile factories, as well as those Hong Kong manufacturers that have relocated their production plants in the mainland, in particular at the southern China region.

Over the years, Japanese machinery has been leading the Hong Kong market in terms of both value and market share, owing to its high quality and prompt after-sales service.

Equipment from Mainland China and Taiwan, on the other hand, is well known for their low price as compared with other imported machinery. However, the standard of this machinery, especially the production of the Mainland China, is of much lower quality, and is often criticized as imitating the technology from other advanced countries.

Although the standard of such machinery has improved during the years, the quality still lags behind international standard, and thus is only used for production of lower-priced items. After China�s entry to the WTO, more mutual collaborations are expected between foreign enterprises and machinery builders from Mainland China, which will eventually raise the quality level of Chinese-made machinery.

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