OPA gives textile professionals fresh opportunities

WHEN THE WORLD Trade Organisation's global textile quotas expired in January last year, it was expected that direct exports from the mainland to the United States and the European Union would soar, and the Hong Kong garment industry would decline. In fact, the US and the EU, under pressure from their respective domestic textile industries, which are wary of mainland exports, have sought protection under the WTO and reintroduced restrictions on some mainland textile exports, which are expected to expire in 2008. One strategy that garment manufacturers have used to work around the restrictions is the Outward Processing Arrangement (OPA), which allows them to claim that the garments are made in the special autonomous regions of Hong Kong or Macau. Hong Kong's textile and clothing re-exports to the EU and the US surged 80 per cent and 33 per cent respectively, from April to July last year, according to the Trade and Industry Department. 'OPA is the single largest caveat not impacted by the elimination of textile quotas. The result has been a resurgence for the Hong Kong and Macau garment industry,' said Doug Rogers, vice-president, M&V International Manufacturing (HK). So OPA has opened the door of opportunity for garment industry professionals in Hong Kong. 'At OPA facilities, sewers essentially put the fabric components together, like putting together the pieces of a puzzle,' said Emily Tein, a former employee of Polo Ralph Lauren. For subcontractors and manufacturers alike, there is an increased need for skilled labourers such as sewers in Hong Kong. High labour and shipping costs incurred in OPA compliance for garments are making manufacturers and traders based in Hong Kong and elsewhere look at sourcing from regions other than China, such as Cambodia, Vietnam and the Indian subcontinent. However, Hong Kong industry professionals will play an important role in sourcing and managing the actual production, not only in China but also in emerging markets. Merchandisers perform an important task for traders, buyers and retailers in translating the design and specifications of the garment for smooth factory production. 'We are comparing the price of garments produced in China to those produced elsewhere, but we want to keep one foot in the door until we are sure of the progression of exports to the EU and the US. We are working with mainland suppliers who can also produce garments elsewhere,' said Philip Booth, general manager of Mondial Asia. As a result, Mondial Asia is looking to fill two management-level positions, for a product sourcing manager who will perform senior merchandising responsibilities and a finance and commercial manager. Merchandisers form the backbone of the Hong Kong garment industry, and most buying offices in Hong Kong rely on their skills. In addition to the OPA, another important trend is increasing pressure on costs, driving the retailers to deal directly with the manufacturer, eliminating the trader. 'Some of our international buyers are trying to work directly with us,' said Fred Ng, executive director of USI Holdings, a manufacturer supplying apparel for many international brands and owner of the Gieves & Hawkes brand. 'In the past, overseas retail buyers were dependant on an agent but now, with overnight courier services and computers and the internet, better communication is possible and quick decisions can be made,' added Mr Ng, who is also a director of the Federation of Hong Kong Garment Manufacturers. USI Holdings is looking for people to make the most of the expanded opportunities created by OPA and closer ties between retailers and manufacturers. This direct dealing between retailers and manufacturers is a double-edged sword for the garment sector. There will be more opportunities for manufacturers that have operations here, while those that do not may lose business to manufacturers in China. However, some trading firms here are coping by expanding vertically into manufacturing operations. Another potential threat to the garment industries of Hong Kong and southern China is Shanghai's emergence as a garment industry centre. 'As a centre for co-ordinating the business, Shanghai is beginning to rival Hong Kong,' Mr Booth said. However, Shanghai's industry was not as advanced as Hong Kong's, for example, in the area of materials control, he added. The industries in both areas are supported by important ports, but their pattern of development differs. While Hong Kong's capital had provided the impetus for the development of the garment industry in southern China, Shanghai's garment industry owed more to local people and was nurtured by the inclusion of textile courses at nearby universities, Mr Rogers said. But the biggest potential long-term challenge to Hong Kong is after 2008, when the OPA caveat is expected to expire. Hong Kong offers a lot of the advantages due to its history as an international business centre and experience in servicing multinational firms. 'While a lot of manufacturers built up capacity, nobody left Hong Kong after the quotas for textiles were abolished earlier in 2005,' Mr Ng said. After the OPA expires, Hong Kong will remain a key player as many of the sales and marketing, finance and administration functions will stay here. 'Central location with respect to the garment production areas such as India and Southeast Asia, and convenient air transport make Hong Kong a logical base to cover Asia Pacific,' Mr Booth said. SEWING UP SUCCESS Many new career opportunities as OPA drives assembly to Hong Kong Entry barriers lower than in most industry sectors, with only a high school degree and interest required Fluency in Putonghua and English, and China experience important to advance up the career ladder Hong Kong's advantages as a regional business centre to ensure opportunities are available after 2008