Top Form moves to offset US import quota threat

PUBLISHED : Thursday, 18 September, 2003, 12:00am
UPDATED : Thursday, 18 September, 2003, 12:00am

Customers will bear the costs of its plan to shift brassiere production offshore

The threat by the United States to restore quota restrictions could force brassiere maker Top Form International to redistribute production between China and overseas and pass on the extra costs to customers.

The original equipment manufacturer said it would allocate 'quota-sensitive' items to factories outside China to minimise the impact.

'The anti-dumping threat has cast a shadow over our business. We will move some production to the Philippines and Thailand if the US introduces the quota system again,' chairman Willie Fung Wai-yiu said.

In July, the American Textile Manufacturers Institute petitioned the Bush administration to restrict imports of brassieres, gloves, dressing gowns and knitted fabric from China, saying a surge in imports was threatening their survival.

Quota restrictions on the four types of mainland products cited in the petition were removed when China joined the World Trade Organisation. Such restrictions could be reintroduced if the mainland is found to have 'disrupted' the US market.

The US Commerce Department is studying the petition and a preliminary ruling could be issued in November or early next year.

'Some pressure groups hope to take advantage of the upcoming presidential election, but on the other hand, the US importers and retailers oppose the possible anti-dumping action,' Mr Fung said.

High labour costs and strong currencies in some developed economies have helped accelerate the global trend of outsourcing production to China.

Mainland production accounts for 49 per cent of Top Form's output, while Thailand makes up 42 per cent. The Philippines has the remaining 7 per cent.

However, the workforce in China was more efficient and capable of more sophisticated production, group managing director Eddie Wong Chung-chong said.

Under the quota regime, the US will contain the annual growth of China's exports of the four items at 7.5 per cent, based on the export volume in any 12 months of the preceding 14 months.

A quota fee could also become an additional cost and its fluctuation could increase uncertainty.

The fee for the European Union's quota on the import of mainland-made brassieres surged from 25 US cents per dozen at the beginning of the year to $1.30 a dozen now.

Top Form would pass on 70 per cent of the quota fee to customers.

'We have been operating under quota restrictions for 20 years. We can cope with it if it is introduced again,' Mr Fung said.