HK takes over as world's fur trade hub

A subtropical city of seven million as the world's fur hub? Surely not.

Yet, from a small start 30 years ago, when Hong Kong's furriers began selling people in China's remote northeast one of their first luxuries - fur coats - the city has, almost overnight, become the trade's capital.

Hong Kong now handles 70 per cent of the trade in raw furs and 80 per cent of the world's processed furs, according to a United States Department of Agriculture report.

Like a lot of the city's recent business successes, the mainland is the key to the story. Between 2000 and 2009 its fur imports more than doubled in value, from US$165 million to US$463 million. And in 2009 alone, its exports of fur products rose 47 per cent year on year, to US$1.3 billion. Domestic production has rocketed.

Just five years ago, Russia - a natural market for furs and with a population of more than 150 million - was still the biggest importer of mainland furs. Now Hong Kong has taken over.

Traders attending the Hong Kong International Fur and Fashion Fair in Wan Chai this weekend agreed with the US government report that the fur market had been reborn a decade ago thanks to the mainland.

But Tim Everest, spokesman for the show's organisers, the Hong Kong Fur Federation, said the city had always played a key part in the Chinese fur market.

'Back in the 1980s when China was just opening up, Hong Kong furriers already saw this opportunity. They suddenly gave these people in the northeast of China a way to show their wealth. It was almost the first real luxury to hit the store.'

Diane Benedetti witnessed at first hand the emerging mainland market for luxury goods when she produced fur fashion shows there in the early 1990s.

'It was a growing economy which was just being exposed to new, beautiful things,' said Benedetti, vice-president for advertising and promotion for North American Fur Auctions, the largest supplier of wild fur in North America.

She's not surprised by the market's rapid expansion in recent years.

'Now, we have this economy that's not only becoming middle class, but there's more millionaires in China than in America. It's to be expected.'

The biggest group of buyers is from the mainland, Benedetti says, accounting for a third of all buyers, but there is more to the fur story.

'China is a strong market but people need to realise it's not the only market. The Korean market is phenomenal, we have a lot of Russians, eastern [European] countries and North America is starting to come back after the recession.'

Still, for most, China is the story.

Everest, co-owner of a fur trading company, Cyril Murkin, with offices in London and Hong Kong and which supplies fashion houses such as Fendi, Dolce & Gabbana, Armani and Jil Sander, said mainland demand and supply was driving the market.

'Hong Kong is the fur manufacturing hub of the world. The skins come to Hong Kong, they go into China for manufacturing then they come back into Hong Kong for shipment elsewhere. Some garments are then sold on to China.'

As the mainland's desire for fur has increased, so has its production and exports of fur garments.

In the space of just 10 years, the mainland's fur processing industry became the largest in the world, the US Department of Agriculture's Global Agriculture Information Network report, issued last year, said.

Nowhere is that more evident than in Tongerpu in the northeastern province of Liaoning . A fur manufacturer from the town who refused to be named recounted its transformation.

'It was a village 10 years ago. Now it supplies 60 to 70 per cent of the domestic fur market,' he said.

'When we started, we made fewer than 100 garments, then slowly a few hundred, then a few thousand,' he said. Now, his factory alone makes about 6,000 mink coats per year. He also has two shops.

Everest has personally witnessed this man's business grow over the past decade. 'The Tongerpu area supplies Harbin , the city where they sell 300,000 coats per year - that's just incredible. He started very small but now he's a big guy. He will spend a couple of million dollars US at a fur auction.'

Having worked in the fur trade for 50 years, Herbert Wurker, president of the German Fur Association, recalls the time in the 1970s when his country was the hub of the trade, as Hong Kong now is.

'China has been a factor starting a good 10 years ago and now they have become more dominant in basically all kinds of fur. They started slowly with their own consumption and production with exports. Today China is the biggest buyer ... they have become a major factor,' said Wurker, one of 4.500 buyers attending the Wan Chai show's opening day on Friday.

Wurker said previously, fur manufacturers in China would export 60 per cent of finished goods for sale and keep the rest for the domestic market, but this ratio had now reversed.

Benedetti said: 'China's big so it has great potential and it is a leading force because of the sheer volume. In consumption, they are at the top but only for certain items. Different countries like different furs.'

Everest has seen the share of his company's turnover from the mainland rise from 40 per cent to 70 per cent in five years. (Cyril Murkin's annual turnover is US$100 million.)

He estimates 100 to 200 million people on the mainland are regular buyers of fur products.

'The rest of the world is struggling with economic problems but the Chinese retail market grew 18 per cent last year ... So they are going to go out and buy their luxury cars, their 10th fur coat,' he said.

Snapshot of success

What the trade in one animal's fur was worth to the city last year

The value, in HK dollars, of imports and re-exports of raw and tanned mink hides and mink coats and jackets: $23.5b

Source: Census and Statistics Department