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AFTER YEARS OF recession, Japanese consumers have been forced to buy cheaper products, leading to a boost in Hong Kong's apparel exports to the world's second-largest economy.

Hong Kong's apparel exports to Japan, including exports and reexports, increased an average of 13 per cent annually over the past three years, according to a report released by the Hong Kong Trade Development Council (TDC).

Japan's apparel imports totalled US$18 billion last year.

China is the largest source of apparel exports to Japan, accounting for 78 per cent of the total.

Of that 78 per cent, Hong Kong's exports accounted for 10 per cent.

The Japanese are known around the world for their expensive tastes, usually buying quality locally made products or European imports from high-end department stores.

But with the recession biting into their incomes, they have lowered their standards and are now frequenting retailers and general merchandise stores for cheaper products.

'Demand for medium-to-low priced apparel items has soared in Japan in recent years and created new opportunities for Hong Kong exporters,' TDC assistant chief economist Dickson Ho Tat-kuen said.

'Although many Japanese people, especially the working class, are still looking to buy famous brands imported from Europe, the ordinary Japanese in general is looking for 'value-for-money' items.'

The value of retail sales has declined in Japan from 14.4 trillion yen (about HK$900 billion) in 1990 to 10.1 trillion yen in 2000.

But Mr Ho said the fall did not come from a decrease in quantity. Instead, it was because of the deflation problem in Japan.

'The quantity of purchase did not decrease, it is the price of the merchandise which has dropped quite a lot,' he said.

The report also said the price of exports to Japan had been driven lower, making exporters think twice about doing business with Japan.

Chiu's Manufacturing Company managing director Chiu Chun-pong said he used to receive orders from Japanese companies, but now is reluctant to accept too many orders.

'It's difficult to do business as the price is too low. Japanese exports constitute only about 1 per cent to 2 per cent of our turnover,' Mr Chiu said.

Mr Chiu, whose company produces winter coats, said the competition for entering the Japanese market was high as Japan had no quota on apparel imports.

However, Mr Ho said Hong Kong had the advantage in capturing the market in Japan as most Japanese companies had a positive perception of Hong Kong manufacturers.

Mr Ho said Japanese companies believed Hong Kong's exports, because of lengthy experience in the apparel industry, were of a high quality and had a top level of professionalism. Hong Kong also served as a sourcing hub for apparel exporters, Mr Ho said.

'Japanese companies are very demanding,' he said. 'They have very stringent quality control over the products.

'Hong Kong companies, which have better management over mainland companies, have the advantage.'

Aside from ensuring product quality, Mr Ho said Hong Kong companies should build closer business relations with Japanese companies and respond quickly to orders.

'A close business relationship is important as you will know better the fashion trend in Japan and thus grab more business opportunities,' Mr Ho said.



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