Last year, mainland optical exports to Japan surged 26 per cent, followed by exports to Germany, which saw a surge of 15 per cent. Industry analysts say one reason for the increase is overseas firms outsourcing to low-cost mainland producers under original equipment manufacturing (OEM) arrangements.

China's optical manufacturing industry is of epic proportions, with entire industrial zones devoted to the manufacture of spectacles.

In the Wenzhou area of Zhejiang province, for example, more than 800 companies are operating, with a workforce of 120,000, according to industry sources. Products are mainly frames and sunglasses, 95 per cent of which are for export.

Competing against such industrial synergy can be difficult. Even established Hong Kong companies with manufacturing facilities in southern China are changing their strategic direction to focus on higher-end branded products.

One reason is that profit margins are becoming slimmer in the non-branded sector. Kerry Chan Ka-wai, manager of Hong Kong-based optical producer Auto-Winner, which has been producing frames in China for more than 10 years, says the company plans to change its industrial mix so as not to compete directly with Wenzhou's low-cost producers.

According to the Hong Kong Trade Development Council (HKTDC), organiser of this year's optical fair, Hong Kong producers will be forced to move their manufacturing up the value chain.

'Hong Kong companies are broadening their business base by expanding into the distribution of brand-name products and setting up retail optical business in the Chinese mainland,' the HKTDC report says.

'There are cases where local manufacturers form strategic alliance with overseas companies to explore new market opportunities.'

The report adds that the manufacturing sector is well supported by ancillary industries that supply advanced materials such as cellulose acetate sheets, precision micro-parts, electroplating and mould-making.

With cost pressures building up at the lower-end, Hong Kong manufacturers are more often now engaged in making spectacle frames mainly on an OEM or ODM (original design manufacturing) basis for international brands and designer labels.

Meanwhile, Hong Kong manufacturers increasingly are applying for quality management recognition, such as ISO 9000.

The Hong Kong Optical Fair ranks as Asia's largest and most established optical exhibition. In its 10th year, the fair will be attracting 400 exhibitors, with participation from 18 countries and regions, the organisers say. Nine national pavilions will showcase the products of individual countries, including low-cost producers South Korea, the mainland, and Taiwan.

Strong OEM orders to overseas purchasers helped Hong Kong's spectacle manufacturers weather what would have been an otherwise poor year for optical sales, because of the global economic slowdown.

Exports to the European Union grew by 9 per cent, helping to offset a decline of 6 per cent to the United States. The US ranks as Hong Kong's largest spectacles customer with 38 per cent, followed by the European Union at 34 per cent and Italy at 12 per cent.

Corrective/protective spectacles, including prescription frames and sunglasses, were the largest export category, sharing 66 per cent of Hong Kong's total spectacles exports in 2001, according to the HKTDC.

Frames and mountings accounted for another 21 per cent, parts for frames and mountings 7 per cent, and lenses and contact lenses 6.3 per cent.

'The spectacles industry has evolved from a medicinal to a consumer-based business,' the HKTDC report says.

'Marketing spending is increasingly becoming a key differentiating factor for spectacles and frames, and designer brands are likely to offer higher perceived value to consumers who are becoming more careful about quality and comfort.'

A trend noted by the HKTDC is that manufacturers are entering into licensing agreements with overseas brand holders to design, manufacture and market spectacles for fashion brands involving inter-industry co-operation. The report cites Arts Optical of Hong Kong, which has agreed to produce Theme and Garfield eyewear.

Visitors to this year's fair can take part in a variety of events, including a gala dinner, an eyewear design competition and a business matching meeting.

The HKTDC, along with sponsoring educational institutions, challenged designers to explore the theme of 'boundless creativity'. The winning entries will be announced at a ceremony tomorrow.

The HKTDC has invited three industry experts to share their views at two separate seminars. Martin Graf and Stephanie DeLong, journalists working for eyewear trade magazines, will talk on regional trends, and Mary Yan Yan Chan of Perclers Paris will speak on general fashion trends.