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Mounting inflation, cheaper garments by china alarms south-east Asia

14
Apr '06

A textile affiliate of Honk Kong based Sun Hing Knitting Factory Ltd that shifted production back in 1980s to Guangdong, in southern China, now considers to relocating itself to a cheaper location.

Andrew Leung, who heads this Group, and is also a Deputy Chairman of the Federation of Hong Kong Industries representing the industrial sector in the territory's ¬Legislature confirms, production costs across the Pearl River Delta which is the biggest manufacturing base in the world, have increased gradually in recent times, but the site's several advantages can not be easily replicated.

He says they will be shifting only a portion of this unit, and continuing their most critical operations in the delta itself as the present factory site has its own location advantages.

Owner of Sun Hing Knit a factory located in Huizhou, a city situated in the Pearl River Delta claims that moving inland or even overseas would reduce several cost pressures but would also push company's transportation cost and reduce flexibility.

Although, Leung prefers Hong Kong's more expensive Kwai Chung port to Yantian in Shenzhen that is comparatively cheaper, however, the time bound fashion industry cannot afford any delays in delivery even while costs grow.

In a recent survey by the American Chamber of Commerce, about one-third of the country's exports went through Guangdong and were found to be more profitable.

When cheap Chinese garments flooded the US and the EU, their respective trade representatives exercised right to unilaterally restrict the influx by imposing textile quotas as a safeguard measure.