What Hong Kong (textile) exporters are expecting

What Hong Kong (textile) exporters are expecting

A new study by the Hong Kong Trade Development Council and based on a survey of 3500 local manufacturers and traders revealed that one third of the respondents are expecting an unsatisfactory or very unsatisfactory business year 2012 and another 45 % expect an “average” business performance

Close to 90 % of the respondents see the cause of this dimmed outlook in the weak purchasing power in target markets, particularly in Western Europe and the USA, and 87 % state that their product prices became uncompetitive because of increased costs and the unfavourable move of exchange rates leading to higher production costs in the Pearl River Delta (PRD) because of the appreciation of the Chinese currency. The later is an important fact since Hong Kong exporters produce or source their products in Mainland China. There they face a fierce competition from their domestic competitors. All of that is not considered as the usual economic cycle but the problems will prevail for quite some time in the developed economies (debts, budget restrictions, higher taxes, etc.). The respondents are convinced that this leads to structural challenges but still they are not inclined (three out of four) to move their production and sourcing to lower-cost regions because they consider that such sites and sources will be more difficult to manage (68 %) than in the neighbouring PRD and some 40% state that PRD is the best manufacturing location with comprehensive support services.

When not moving out than you need to move up by adopting higher value-added activity and 71 % state that they will pass on higher costs to their customers. Already 62 % were able to raise their export unit prices and they claim that buyers were willing to swallow these higher prices. Only one third of the respondents voiced the opinion that price increases have to be accompanied by new products or quality improvements of existing products (45%). 30% stated that they will develop or enhance their design of brands (including clothing and textiles) and 79 % will step-up marketing and promotion activities and 75 % intend to explore or step up market development, particularly in China and emerging markets because they expect – on the longer run – decreasing demand from developed markets.

However, some 60 % of the responding trading companies state that they will be rapidly expanding or steadily grow and around one third of these companies are rather young companies having been established after 2000 and this speaks for further growth and meeting the challenge by re-inventing themselves and when needed, time and time again.

www.hktdc.com


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