Rag trade 'openings' may mean closures
On reading Simon Pritchard's article headlined 'Opening in the rag trade' (South China Morning Post, August 1), it is conceivable that China would emerge as a textile- and garment-production powerhouse in Asia after the removal of remaining export quotas as required by World Trade Organisation rules. But with the anticipated rapid consolidation in the textile and garment industry in China as a result, small- and medium-sized Hong Kong clothing manufacturers may become the losers.
With the cost of production in the southern part of China soaring, Hong Kong clothing manufacturers are under increasing pressure to relocate their plants. If the prediction that China will become the centre for textile and garment production in Asia materialises, Hong Kong clothing manufacturers would have to shift their production facilities further into the 'hinterland' of China where there is an abundant pool of cheap labour. This would enable them to keep the cost of production down and stay competitive. Yet Hong Kong clothing manufacturers might not have the resources, managerial experience and 'connections' to operate successfully in areas beyond the southern part of China.
In the 1980s and early 1990s, our clothing manufacturers prospered in southern China by taking advantage of the close proximity, shared ethnic ties and cultural heritage between Guangdong province and Hong Kong, and the availability of a large pool of cheap labour. As they move their production facilities inland, they would inevitably lose some of those distinctive advantages. In turn, this would impede their ability to manage their plants. Equally worrying is that a large number lack managers with extensive experience in operating businesses outside southern China.