Speeches and Presentations

Speech by Acting SCED at Prime Source Forum 2011

Following is a speech by the Acting Secretary for Commerce and Economic Development, Mr Gregory So, at the Prime Source Forum 2011 today (March 31):

Distinguished guests, ladies and gentlemen,

I am delighted to join all of you today at the Prime Source Forum 2011.

With some 400 senior executives in the textiles and clothing industries from over 20 countries at today's forum, this is a marvellous opportunity to reflect on the sheer magnitude of the collective executive experience present in this theatre!

As I reflected on what my message might be to bring to such a distinguished audience this morning, it could not have been more clear to me. You have heard that "the only constant is change". Today I would like to tell you that in Hong Kong, "our status quo is progress".

In the time remaining, I would like to share with you the progress made by our textiles and clothing industry and what the Hong Kong Government has done, acting as a catalyst and facilitator, to help the industry achieve positive results.

The textiles and clothing industry

Since the late 1970s, our pioneering textiles and clothing manufacturers have led the way and moved their production into the Pearl River Delta region, creating the borderless manufacturing concept. Throughout the past decades, Hong Kong has developed from a manufacturing base to a sourcing hub of textiles and clothing products.

Our traders are well-known for their substantive knowledge about sourcing products to cater for dispersed customer bases. They possess excellent knowledge of international and national rules and regulations governing exports, such as rules of origin, tariff rates and documentation requirements, and are able to deliver quality products in short lead time. We have attracted a large number of international trading houses and major retailers to source from Hong Kong, including American and European department stores, specialty chains and mail order houses. Many international premium designer labels also source their clothes in Hong Kong through their buying offices and other intermediaries.

With a total population set to reach 1.4 billion by 2015, the rapid growth of an increasingly affluent middle class in the Mainland has formed a huge potential consumer market for our products. Hong Kong, being a trend-setter for the Mainland, has been acting as a platform for local and overseas companies to enter into the Mainland market.

Moreover, our textiles and clothing industry have been moving up the value chain towards Original Brand Manufacturing (OBM) production. Hong Kong has been diversifying to services complementary to manufacturing such as sourcing, research & design (R&D), marketing, and supply chain management. Our brand names have also been expanding into overseas markets. All these have created unprecedented opportunities for our textiles and clothing industry.

Brand-name building

The Government is committed to assisting Hong Kong enterprises in developing their brands and tapping into the Mainland and international markets. We have been working closely with the business community, trade associations and related organisations in helping enterprises of different sectors to develop their brands and to build up a high quality international image for Hong Kong brands. Hong Kong's fashion designers have been gaining worldwide reputation for their professional expertise, sensitivity to current trends and ability to blend commercialism with innovation. The many fashion trade fairs held in Hong Kong strategically empower our local designers to go global, to explore overseas markets and further enhance Hong Kong's position in fashion and clothing industry.

Innovation and technology

Indeed, some of our well-established manufacturers have entered into the retail business, either locally or in overseas markets. Many of them have retail networks with their own labels in major cities around the world. Our textiles and clothing industry has remained globally competitive through the use of capital-intensive and technologically advanced machinery, and computer and information technologies, such as computer-aided design (CAD) and computer-aided manufacturing (CAM). Hong Kong is also the forerunner in applying computer for 3D simulation of garment fitting. To address environmental concerns, our manufacturers are now spending R&D resources in improving the entire production chain, including the wastewater treatment control for dyeing processes and the energy saving system in the garment sewing process.

Government support

In order to provide further support for our enterprises, the Government has put in place different schemes including the SME Development Fund, SME Export Marketing Fund, SME Loan Guarantee Scheme, Innovation and Technology Fund, Design Smart Initiative and Research and Development Cash Rebate Scheme. These schemes can assist enterprises, including those in the textiles and clothing industry, in restructuring and upgrading, building their brands, and improving product design and technology. This year, we will particularly encourage eligible organisations to apply for the SME Development Fund (under Trade and Industry Department) to implement projects that can help SMEs develop and promote their brands and tap the Mainland domestic market. Relevant supporting organisations, including the Hong Kong Trade Development Council and Hong Kong Productivity Council also provide the trade with support services on technological upgrading, management improvement, branding and market development, as well as market information.

The Government aims to provide effective and efficient infrastructure to facilitate business development. For many years we have been one of the world's busiest container ports and rank first in terms of international air cargo throughput. The Hong Kong International Airport is efficient, reliable and well-connected. Besides international connections, a number of projects aiming to improve our connection with the Mainland are underway. These include the Hong Kong-Zhuhai-Macao Bridge and the Hong Kong Section of the Guangzhou-Shenzhen-Hong Kong Express Rail Link. These closer and more efficient rail and transport links between Hong Kong and the Mainland will give Hong Kong enterprises a huge advantage to seize the business opportunities in the Mainland.

Our Mainland advantages have been further enhanced by the Mainland and Hong Kong Closer Economic Partnership Arrangement, or CEPA in short. Under CEPA, all Hong Kong products which meet the relevant CEPA origin rules can enjoy zero tariff on importation into the Mainland, which greatly enhances the competitiveness of Hong Kong products. Indeed, textiles and clothing products have been a major beneficiary under CEPA. So far, over 65,500 Certificate of Hong Kong Origin applications under CEPA have been approved. About a quarter of these applications cover textiles and clothing products, with total export value over US$438 million.

The beauty of CEPA is that it is nationality-neutral. CEPA does not impose any restriction on the ownership or source of capital of the manufacturers. All of you are welcome to set up companies in Hong Kong and enjoy zero tariff benefits.

Partial liberalisation of Hong Kong's textiles control system

Since the global elimination of textiles quotas by the World Trade Organisation Agreement on Textiles and Clothing from January 1, 2005, Hong Kong has been streamlining and modifying its textiles control arrangements to provide greater facilitation to the trade while ensuring origin compliance of the textiles and clothing products claiming Hong Kong origin.

In the light of the latest developments in the global textiles trading environment and local textiles trade, we have prepared legislation to relax the textiles control arrangements by removing the licensing requirement for textiles imports and exports involving "non-sensitive markets" and for all textiles transshipments. "Non-sensitive markets" currently cover textiles imports from places other than the Mainland, and textiles exports to places other than the Mainland and the US. Subject to the completion of the legislative process, the relaxation will come into effect in mid May 2011.


Ladies and gentlemen, our textiles and clothing industry has undergone a long and interesting evolution. This is the result of smart business decisions made by our smart business people. The Government is a facilitator, providing the best environment in which our businesses will grow, excel and prosper. Today we have hundreds of business people gathering at this Forum, which provides a perfect place for exchanging views on the opportunities and challenges ahead of us. Remember, our status quo is progress!

Thank you very much. I wish you all, a very fruitful forum, and an enjoyable stay in Hong Kong.

Thursday, March 31, 2011