Hong Kong bra makers are feeling exposed. They have seen quotas imposed by the US late last year put the brakes on surging demand for cheap bras from China. But, any lifting of the quotas brings the prospect of more competition for top manufacturers such as Hong Kong-listed Top Form International.
In 2002, sales of Chinese-made bras jumped 231 per cent in the United States, the most lucrative market, after US quotas were lifted at the start of that year.
Chinese bra makers took market share from countries such as Indonesia and Bangladesh to account for 24 per cent of the US bra market in 2002. This share rose to 33 per cent last year. The huge rise in sales prompted the US to impose a one-year quota on Chinese bras on December 24 under a 'safeguard mechanism' when imports are deemed 'disruptive' to the market.
This year, sales of Chinese-made bras in the US are tapering off. On May 10, imports into the US reached 28 per cent of the quota of 16.8 million dozen for this year, well below targets. Sales are growing slower than 7.5 per cent annually, the growth limit set by the current quota.
The mainland's quota of 16.8 million dozen this year accounts for about 40 per cent of the US market, more than four times its quota of four million dozen in 2001. Despite the quotas, China is the top exporter of bras to the US, with market share of almost 40 per cent. Indonesia and Mexico follow with about 10 per cent each.
The current quota, given the sharp rise on the 2001 quota, should be sufficient for established manufacturers such as Top Form, which produces half of its on the mainland, according to research by Singapore brokerage GK Goh.