By Inside Fashion Staff

Times are tough for trade fairs.  Companies are cutting costs, buyers have less time (and budget) for travel and there’s been an increasing number of niche fairs and an increasing number of new markets (China, India, Brazil, Colombia, Russia, Middle East) all competing for a slice of the same pie.  It’s survival of the fittest.

Hong Kong Fashion Week (January 17-20) was at best a disappointment to most of the companies exhibiting.  Once a robust event drawing top level local buyers and a strong representation of international buyers, this year’s show pulled few visitors from anywhere.  A few booths seemed to be trading, but many exhibitors complained to Inside Fashion that they saw as few as five visitors a day.  The halls were frighteningly empty most of the time with more of the “visitors” actually being bored exhibitors who were strolling around the fair since there wasn’t much happening at their own booth.

Noticeably fewer Hong Kong exhibitors participated this year, with most of the big players conspicuously absent.  Likewise, the Indian pavilion was significantly smaller this season.  The vast majority of exhibitors hailed from Mainland China, and who despite receiving government subsidies to participate, were somewhere from disappointed to angry about the lack of action at the fair.  

Was it the lack of promotion, lack of category focus, poor timing (just before Chinese New Year – but then it’s held at this time every year) or the global economy? No one was sure, but everyone agreed that Hong Kong Fashion Week, like many other fairs, is quickly fading from the “must attend” list.  

From the dreary theme – purple and black Gothic looking décor – to the empty halls, clearly organizer Hong Kong Trade Development Council need to rethink their strategy.
 

Looking Homeward

Responding to ongoing weakness in the international markets, most exhibitors were focusing on making China connections.

“Many Mainland Chinese [customers] have been asking if we can sell directly into China.  It is going to be quite advantageous for us…this is the way forward,” said Jessie Au of Winglin Knitting Factory Ltd., a Hong Kong-based knitter.  “People in China have more money to spend now.”

Rising manufacturing cost coupled with China’s economic policies lean more towards spurring domestic consumption and away from low-cost manufacturing for export, the opportunity for old-school OEM’s to explore avenues for ODM, branding and retailing have become all the more attractive.  

“The world has changed in the last few years and China is no longer just about low-cost manufacturing.  Many companies are now trying to extend their business into the middle or high end to gain premiums and widen margins,” said Roy Leung, of Wen’s (HK) Ltd, a Hong Kong-based garment exporter and manufacturer.  Part of this will be to develop private labels and brands.

“In ten years time, China will have a show like Bread & Butter,” he added, referring to the trendy European fair for young, street chic apparel.

Wen’s will be planting a flag in the Chinese domestic market by opening their first concept store in the Guangzhou CBD district in April this year selling their own private label, Inkpunkture, and as well as some of the European brands which they manufacture.

Domestic Demand

You could feel the stress of manufacturers who faced rising costs and shrinking export markets.  With few buyers, placing smaller orders, manufacturers were facing severe price pressures that were putting a tighter than ever squeeze on margins.

The solution was once again to look inwards rather than outwards.

“[Chinese] domestic manufacturers pay higher CMT prices than what we, as exporters, can pay. So the factories end up selling to the domestic market where they can get higher prices.  This is very typical during the Chinese New Year period,” said Sandy Cheung, general manager of Cyber Girl (HK) Ltd., a garment manufacturer.  “Worker salaries have gone up, they have more holidays and they can spend more money.  This demand is favored by the government.”

Labor shortages in China are adding to the problem.  Some exporters told Inside Fashion that they try to plan their production for the less busy times of year in order to negotiate better prices.  Manufacturing today has become a constant juggling act, said one exhibitor, expressing frustration as the confluence of shortages and price increases that have hit hard this past year.

Exporters, who have always relied on sourcing in China are suddenly considering alternative sources.  

On the other hand, Chinese manufacturers are looking to create their own brands to sell to their home market.

Alice Ong, general manager of Alice Fashion HK Ltd. and Museum Fashion Design Consultants Ltd was at Fashion Week tap into this growing market.  Museum sells designs to Chinese manufacturers who look to sell to the domestic market.

 “Overseas buyers are only looking at price nowadays. In China they’re more willing to spend,” said Ong. “Many factories don’t know how to sell or design a brand in China and we can fill the gap in the market.”

While China certainly holds out hope as the next big market for the international apparel industry, one this is for certain:  The competition is going to be massive as brands from around the world, plus the nation’s increasing domestic labels, converge on the market and scramble for their share. How lucrative it will be for each player remains to be seen.