By Karen E. Thuermer, AJOT
No industry is as highly competitive when it comes to cost cutting manufacturing than the textile and garment industry. But for big brand names such as Victoria Secret, cost, as well as skilled workmanship, go hand in hand. Add to those qualities efficient supply chain modes to get product quickly to market. Meeting demands, delivering style, and providing product on time for a specific season are key factors when it comes to producing and selling clothing in such a competitive market.
High quality advantages
Willy Lin is chairman of the Hong Kong Shippers' Council as well as managing director of Milo's Knitwear (International) and vice chairman of the Textile Council of Hong Kong. Mr. Lin reports that Hong Kong continues to offer an excellent venue for making high quality garments for companies such as The Limited, The Gap, and Liz Claiborne. 'Costs here are three and one-half times higher than in China, but we have an excellent transportation hub. Hong Kong is also the freest market in Asia,' states Mr. Lin.
From Hong Kong, shipments can be transported by land, sea, or air -- depending on the customer's requirements. 'We have no import duties, and we can import and produce value added product without selling the product at a higher price. In fact, India may be cheaper for making garments than China, but companies operating there face huge barriers,' he states.
Consequently, despite competition from China and other Asian locations such as Sri Lanka, India, and Bangladesh, Hong Kong provides a superb location for back office operations for clothing manufacturing.
'We source high quality raw materials, such as yarn from Italy,' he states. 'In some cases, we even ship the finished product back to Italy to be sold.'
The textile, clothing and footwear industries have been among the most important manufacturing industries in Hong Kong since the 1960s. Enlivened with succeeding generations of young entrepreneurs, the industries have thrived in a dynamic and competitive global market through progressive development of operational efficiency and flexibility, high quality customer services and technical expertise plus worldwide manufacturing facilities. With China's accession into the World Trade Organization (WTO), China agreed to reduce its tariffs on textiles and apparel products from 24.3% to 9.4% last year. Consequently, the reductions in tariffs allows textile, clothing, and footwear manufacturers in China to import raw materials at a lower cost and provide foreign products with greater access to China.
The situation bodes well for Hong Kong, thereby multiplying the opportunities for manufacturers there to strengthen their positions as one-stop sourcing centers. In addition, with the need to ship clothing products quickly, Hong Kong offers a top location.
Milo's, for example, provides storage and distribution services for Italian yarn and fabric producers. 'We even supply all their other customers in Asia,' Mr. Lin states. 'We provide just-in-time services from Hong Kong, which enables local manufacturers to receive the raw materials within 24 hours of the order placement. This is at least three to four days faster than air shipments directly from Italy.'
On the ocean side, Hong Kong operates well since it is often the last port of call in Asia before ships sail to North America and Europe. 'Shipping out of the Shenzhen ports takes at least an extra two to three days,' Mr. Lin says. 'In addition, using the port here means there is no risk of extended delay arising from Customs complexity when shipping out of Hong Kong. For high fashion, garments and other time-sensitive merchandise, unexpected delays could be disastrous.'
Sourcing center
Another good example of a company that operates well as a sourcing center is Yangtzekiang Garment Manufacturing Co. Ltd. Headquartered in Kowloon, Hong Kong, this firm exports approximately 30 million pieces of woven and knitwear garments to t
