Textiles Industry in Hong Kong
The Chinese mainland and Hong Kong agreed in October 2005 to further liberalisethe mainland market for Hong Kong companies under the third phase of CEPA III.Under CEPA III, the mainland agreed to give all products of Hong Kong origin,including textiles, tariff-free treatment starting from 1 January 2006.
Hong Kongs textiles industry serves not only the local clothing manufacturers butalso those on the Chinese mainland and other offshore production bases.Capitalising on the long experience in the manufacture of textiles, many Hong Kongcompanies also engage in textiles trading. Hong Kongs textiles industry is reputedas a supplier of quality dyed and printed fabrics. It is also strong in cotton spinning,denim weaving, knit-to-shape panel knitting and fine-gauge cotton knitmanufacturing.
Hong Kongs textile exports decreased by 7% in the first five months of 2017,following a 13% decline in 2016. Re-exports, accounting for more than 99% of totalexports, fell on par over the same period, while domestic exports rose by 2%.Among those re-exported, more than 75% were originated from the Chinesemainland.
Asia is the leading market for textiles exported from Hong Kong, accounting fornearly 93% of the total textile exports. Of the top 10 destinations for textilesexported from Hong Kong, nine of them are in Asia, with the Chinese mainlandbeing the predominant export market.
Industry Features 
The textiles industry comprising spinning, weaving, knitting and finishing of fabrics had a total of 446 manufacturing establishments as of March 2017, employing 2,569workers or 2.7% of the local manufacturing workforce. The textiles industry is one ofHong Kong's major export earners, accounting for 1.7% of the total exports in 2016.
In recent years, traditional markets, such as the US, the EU and Japan, have renderedtextiles exporters from developing countries, including ASEAN and Bangladesh, morepreferential market access, which has in turn impaired the competitiveness of Hong Kongmanufacturers. Along with rising labour costs and more rigorous environmental
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regulations on the Chinese mainland, an increasing number of Hong Kong textilesmanufacturers have relocated their production of lower-end and mass products toSoutheast Asian countries like Bangladesh, Cambodia and Vietnam. Their manufacturingoperations in Hong Kong are focused on sophisticated and high value-added items,including quality ring-spun, open-end yarn, fine gauge knitted fabrics as well ascomplicated dyed and printed fabrics.
To enhance competitiveness in the global market, some Hong Kong textiles companieshave formed a strategic partnership with indigenous Chinese companies. For instance,some of them have joined forces with mainland cotton suppliers in producing cottontextiles.
Hong Kong's textiles industry is a major supplier to the local clothing industry. Producingtextiles locally, Hong Kong textile manufacturers have an advantage in accommodatingorders from local garment manufacturers in short notice. Meanwhile, a significant portionof textile exports is destined for use in Hong Kong companies offshore production ofgarments, especially on the Chinese mainland.
Performance of Hong Kongs Exports of Textiles 
Textiles Industry in Hong Kong
After a 13% fall in 2016, Hong Kongs textile exports decreased by another 7% in thefirst five months of 2017. Re-exports, accounting for more than 99% of total textilesexports, experienced a similar decline of 7%, while domestic exports rose by 2%. Withmore than three-quarters of the textile re-exports originating from the Chinese mainland,Hong Kongs re-exports of textiles of China origin registered a decrease of 6% inJanuary-May 2017.
Asia is the leading market for textiles exported from Hong Kong, accounting for 93% ofHong Kongs textile exports in the first five months of 2017. Of the top 10 exportdestinations, nine of them are in Asia. The Chinese mainland remains to be the cityspredominant export market, accounting for 50% of Hong Kong's textile exports inJanuary-May 2017.
Other major export markets of Hong Kong textiles include Vietnam, Bangladesh,Cambodia, Indonesia, Sri Lanka, the US, India, Thailand and the Philippines. Inparticular, because of Vietnams cheap labour compared to neighbouring countries andWTO membership, many foreign investors, including those from Hong Kong, have set upgarment factories there. This gives rise to sustained demand for textile imports, makingVietnam the second largest market for Hong Kongs textile exports, after the Chinesemainland.
Product-wise, Hong Kongs exports of knitted or crocheted fabrics, textile yarns, wovenfabrics, textile made-up and floor coverings registered respective declines of 3%-64% inthe first five months of 2017. However, finishing accessories and special yarns andfabrics increased by 3% and 2%, respectively, in the first five months of 2017.
Hong Kong is both a leading production centre and a global hub for clothing sourcing. Assuch, Hong Kong's textiles industry is well positioned to serve both local and overseasclothing manufacturers and merchandisers. While many Hong Kong textile manufacturersand traders supply their products to the clothing manufacturers in Asia, particularly onthe mainland, international textile companies are using Hong Kong as a gateway topromote their products to other Asian economies. For instance, an increasing number offashion brands and designers from Latin American and Central and Eastern Europe areattempting to leverage Hong Kongs trade platform to promote their textiles and apparelon the Chinese mainland.
Textiles Industry in Hong Kong
The industry is capable of producing either a wide range of quality products in bulk orspecialised items within a short lead-time for varied applications. Its competitive edgelies in the superb quality and swift response to fashion trends and market demand. Theindustry has also earned a worldwide reputation for unique quality, expertise,workmanship and flexibility.
Hong Kong is an ideal one-stop shopping centre for buyers looking for new and trendyfabric materials. The Interstoff Asia Essential, held twice a year in spring and autumn, isa significant marketing and sourcing platform in the region for both fabric manufacturersand buyers alike. Organised by the HKTDC, the Hong Kong International Home TextilesFair offers a wide range of high-quality products such as bathroom textile, bedroomtextile, kitchen textile, carpet and floor covering. It is a specialist platform, givingexhibitors and buyers of home textiles immediate access to markets in Asia and beyond.
In line with the global manufacturing landscape and fierce competition across the board,Hong Kong's textiles industry has been moving up the value chain to cater to the demandfor upmarket textile products with original designs or brands. Today, the operation of thetextiles industry in Hong Kong is focused mainly, if not all, on higher value-addedactivities such as sales and marketing, quality control, designs and development, whileoffshore plants are specialised in production operations. This, in turn, results in a highproportion of re-exports (almost 99%) in Hong Kongs textiles exports portfolio.
With rising labour costs, volatile raw material prices and stringent environmentalregulations on the Chinese mainland, many Hong Kong's textiles manufacturers haverelocated their production facilities to other South-east Asian countries, like Vietnam,Cambodia, Myanmar and Bangladesh. A few companies have even set up offshoreproduction in Latin America (e.g. Mexico) and Africa (e.g. Nigeria) to take advantage ofpreferential treatments allowed by regional trade agreements such as North AmericanFree Trade Agreement (NAFTA) and the EUs GSP scheme.
To stay tuned to the advancements of manufacturing technology and productrequirements, the textiles industry, as a capital-intensive business, has invested heavilyin keeping up with the latest technological trends. Advanced production technologies aresourced mostly from vendors from Germany, Italy, Spain, Switzerland, Japan and SouthKorea. Modern technologies like automatic web spreading, nano bio-functional materialsfinishing and Texparts Zero Underwinding are no strangers to local manufacturers.
In the meantime, the Hong Kong Research Institute of Textiles and Apparel (HKRITA),which was established in 2006, also help enhance the competitiveness of the industry bydeveloping and transferring fashion and textile technologies. At the 45th InternationalExhibition of Inventions of Geneva in 2017, HKRITA won two gold medals with juryscommendation, one gold medal, four silver medals and two special awards for all sevenparticipating entries, including new functional textiles made from bio-based anddegradable fibres, and fine worsted yak yarns and fabrics using a newly developedspinning method and system. As such, Hong Kong textiles manufacturers are able tooffer a wider range of fibres, yarns, and fabrics to clients.
To comply with the global trend of green manufacturing, more textile corporations haveadopted the bluesign standard one of the industrys major voluntary standards forenvironmental sustainability. To be qualified, a corporation must reveal its chemical
Textiles Industry in Hong Kong