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SCMP Reporter

THE value of textiles with false labels of origin seized by Hongkong authorities last year soared 150 per cent on the 1991 figure.

  Customs officials could not identify whether the increase showed massive growth in the illegal transshipment of textiles through Hongkong, or reflected the results of tighter enforcement by the Government.

  Illegal transshipment occurs when the source of goods is mis-labelled to avoid textile quotas in the true country of origin.

  Because China's production capacity far exceeds its quotas, it is believed that many Chinese products are falsely labelled.

  In 1991 there were 199 consignments of falsely labelled textiles worth $55 million seized in Hongkong.

  Last year, this grew to 233 consignments worth $137 million, according to the Customs and Excise Department.

  ''It may not reflect actually whether there's been an increase in illegal activities,'' said Mr Leung Yau-yam, head of trade controls with the Customs and Excise Department.

  He noted that the number of customs personnel specialising in textiles had increased by 25 per cent over the past four or five years - to a total of 500 officers specialising in that area.

  In July, the department launched an 11-member textile fraud task force.

  ''We have put in more people there so naturally there should be more seizures,'' Mr Leung said.

  It is impossible to put an exact figure on the level of illegal transshipments because it is assumed that many slip through customs checks.

  A US Customs Service official said that, despite the co-operation of Hongkong authorities, illegal transshipments through the territory remained a major problem as market forces pushed Hongkong textile factories across the border.

  ''Places like Hongkong, Taiwan and Korea are working themselves out of the textile market'' as their increasingly affluent workers refuse ''hot, dirty work in a factory'' for low wages, the US customs official said.

  Meanwhile, he said China had far more production capacity than it quotas.

  While China's US textile quotas are roughly comparable to the quotas assigned to Taiwan and Hongkong, ''it has a capacity that is maybe two or three or four times these places'', he said.

  The US customs official estimated that up to four million Chinese workers would lose their jobs if the illegal transshipments were eliminated.

  ''It's like water behind a dam - when it keeps rising and rising . . . it spills over the top,'' the official said.

  ''Supply is there [in China], production is there. It's going to find its way to the market.''   The official called the Hongkong Customs and Excise Department ''very hardworking and very co-operative'' but said that, with the huge volume of textiles passing through the territory, ''there's going to be some slippage''.

  In comparison with Hongkong, Taiwan and South Korea have ''much less enforcement'', the US customs official said.

  While China ''has come a long way'' in its effort to crack down on the problem of illegal transshipments, ''there is a lot more it can do'', the official said.

  Illegal transshipments of mainland textiles could be used as ammunition by American textile manufacturers, eager for tougher curbs on China's exports, during the debate on renewal of China's Most Favoured Nation trading status, said another US official.

  But the official emphasised that estimates of the value of illegal transshipments were purely speculative.

   He said he had not seen anybody, anywhere produce anything to support specific estimates.

  Nevertheless, the illegal transshipments undoubtedly added to the problem of the huge US trade deficit with China, which officially topped US$18 billion last year.

  The deficit would be larger if illegal transshipments were calculated, the official acknowledged.

  The US is the world's biggest market for apparel.

  Under the illegal practice, which is believed to be going on in Hongkong and around the world, the transshipped goods are delivered to a third country, where their labels are changed to hide their true source.

  While the original source of the goods may have trouble staying within its quota limit, the third country is chosen because it may not have reached its limit or it may not be subject to restrictions.

  It is not illegal to exchange the products in Hongkong - only to change the origin labels in the third country.

  Nevertheless, the Government has expressed concern that some consignments could be the subject of illegal action once they reach their destination.



Label-of-origin fakes soar