Garment makers fail to share exporters' optimism

PUBLISHED : Friday, 16 March, 2012, 12:00am
UPDATED : Friday, 16 March, 2012, 12:00am


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Confidence among Hong Kong traders has risen slightly amid signs of recovery in the US and improving sentiment in the euro zone, according to a survey.

But garment exporters are even more pessimistic amid intensifying labour shortage problems and rising competition in the mainland.

The TDC Export Index, based on the views of 500 local exporters, rebounded to 43 during the first quarter this year from a two-year low of 40.6 last quarter. In the clothing sector, however, confidence level slumped to 37.7 this quarter from 42.9 in the previous period. A figure below 50 indicates a negative outlook.

Among the 500 exporters polled, 57 per cent said labour shortages during the Lunar New Year in the mainland were more severe than before, while nearly half said wages had jumped more than 10 per cent in China in the past three months, driving the labour-intensive clothing manufacturers into a corner.

'Some exporters have moved away from the Pearl River Delta to save costs, but the larger majority preferred to stay,' TDC chief economist Edward Leung Hoi-kwok said.

In another TDC survey conducted in December of 3,473 Hong Kong exporters, three-quarters said they had no plans to move despite an increasingly difficult business environment in the Pearl River Delta. Most do not like having production bases too far from home as they are too difficult to manage. Others said the delta had the best support infrastructure.

Exporters are more confident in the mainland market than the US, Europe or Japan. Beijing has only recently wound down a projection of gross domestic product growth from 9.2 per cent to 7.5 per cent this year and a comment by Premier Wen Jiabao on Wednesday has sparked fear of further drop in mainland's property prices, which could hurt consumer sentiment.

Leung said that was very unlikely: 'The mainland is changing a number of policies to make the economy rely more on domestic consumption than foreign direct investment, so I believe mainland's retail sector will grow even better than its economy.'

Government figures showed that the total value of domestic exports and re-exports in Hong Kong fell by 8.6 per cent year-on-year to HK$259 billion in January. The Council projected earlier that growth in Hong Kong's export value this year may slow to a mere 1 per cent.