Quiet, but busy, sums up the atmosphere at the 2009 Fall/Winter Hong Kong Fashion Week (January 12-15). Booths lacked the flair and design of previous years and the uncarpeted hall floors revealed bleak concrete. But this didn't stop over 1,400 exhibitors from around the world and thousands of trade visitors from flocking to what has long been regarded Asia’s largest and most prominent apparel sourcing fair.
The twice-a-year event, organized by the Hong Kong Trade Development Council (HKTDC) attracted familiar faces from textile producers like Macau, India, Taiwan and China, as well as new participants from Argentina, Germany, and Mexico. A significant number of new traders came from Russia, the Middle East and Eastern European countries such as Poland and Croatia, exemplifying the increased demand for fashion goods in emerging markets around the world. Inside Fashion heard mixed reviews from exhibitors who expressed their views on the state of the industry amidst a tough global economy.
With the fashion industry contributing to over 8% of exports in the past year, Hong Kong has always been considered a center for the global apparel industry. Many companies on display have been long time exhibitors at the fair, including Hong Kong-based knitter Tridelphia Limited. “We have been participating in this fair for the past 15 years”, says Michael Murjani, Director of Tridelphia Limited. “We participate because it’s in Hong Kong and we get many buyers from overseas that are coming here to look for manufacturers”. Even with rising competition from the neighboring Macau and Guangzhou, Hong Kong manages to maintain its competency as an international center point for trade and exhibition.
“Compared with last year, the fair has been relatively calm”, said Yorkmass Ltd director, Fred Lee. “Most of our customers have either been old or existing clients and we haven’t had that many new ones”. The Hong Kong-based knitter as well as many others shared similar views that traffic levels were significantly lower than the previous years, mainly due to companies scaling back on operations and cutting spending on travel.
“It's been a terrible year for producers everywhere due to a combination of fluctuations in China's rising labor costs, changing labor laws and labor shortages as well as the global economic crisis, all coming at us at the same time”, said Mr. Lee. Many other exhibitors said that they expected sales declines of 20 to 30% in 2009 compared to last year.
Many exhibitors at Fashion Week believed that the fair was lacking the dynamism and action from previous years as the manufacturing sectors had been hit hard and early by the downturn. Buyers and consumers alike were scouring for bargains and cheaper goods in lower quantities, while designers tried their hardest to impress by offering new innovative ideas and creativity in their designs.
In general, the fair appeared to be more design-driven than trade-driven as the World Boutique area boasted a new record of over 270 exhibitors and 460 brands. Trade was down but innovation seemed to be the strongest pillar, supporting the industry with fresh inspiration and talent. “In times of financial uncertainty, traders and consumers tend to look for stylish products, which is why we need innovative ideas more than ever before”, said Raymond Yip, Assistant Executive Director of the HKTDC.
Fair organizers positioned the event as a showcase for international and local design talent, as well as a major sourcing fair for traders around the world, but some exhibitors did not see it that way. A trade fair being held in mid-January did not seem to help Mr. Murjani and his business.
“To be frank, the timing of the fair is extremely bad. Most big buyers come to Hong Kong to source for the winter collection around October, November and in some cases, even early December as they need all their samples before Christmas. This is because right after the New Year they will start to plan their purchases”, said Mr. Murjani as he expressed discontent at the HKTDC’s poor regard for the workflow and timetable of the fashion industry.
“A lot of companies are looking for May shipment ex-Hong Kong for fall 2009 deliveries, but because this fair is happening right before the Chinese New Year - and nothing can be done until after the holiday - it would almost be mid to end March before buyers receive their samples”, he explains. Many exhibitors agreed that the best timing would be early December, after the European shows are over but early enough to sync with Europe’s buying season.
Overall, this year’s early Chinese New Year period (starting January 26) has negatively affected most manufacturers. Many exhibitors claimed to have reductions in orders by at least 10 to 15%. With China’s appreciating currency, rising labor costs and economic uncertainty around the world, exporters have suffered immensely. With orders down and business limited, some factories have opted to close down altogether in order to save costs. “Many manufacturers have chosen to stop their business until the situation improves as they do not have any orders in hand. I can’t tell you when exactly they will open again as no one can guess when the market will recover”, says Mr. Lee of Yorkmass Limited.
Despite humble outlooks and cautious approaches for the current year ahead, many of the exhibitors remain fairly confident in their businesses’ ability to weather the storm. “Although we have seen less customers at this fair, the ones we received have been more serious in terms of business”, says Jennifer Tsang, Assistant Marketing Manager of Fast Base Enterprises Ltd.
“Even with the critical economic situation, we are still receiving a lot of enquiries from our customers, existing and new ones. We have heard about a lot of factories closing down on the mainland but actually a lot of buyers are still looking for newer, better and more reliable suppliers for their products. This may be beneficial for us as we have the competitive advantage of having our own designs. We have our own designers which produce over 1200 styles per season and this offers big range for our customers to choose from”, Ms. Tsang said. She emphasized that although most buyers held conservative budgets, buyers would still have to buy and it depended on how the supplier was be able to offer added value to its products and services.
“Our strategy for this year is to lower costs and try to work with our customers. We cannot promise lower prices but we will certainly add value to our company by widening our full package service to cover all areas which will include design, marketing, production as well as logistics. We provide LDP service which is basically a door-to-door service and it greatly reduces the burden for our customers to have to organize their own shipping arrangements”.
Cosi International Limited, a Hong Kong-based manufacturing agent catering to the Italian market, also expressed their optimism at the fair. “We are doing very well at the fair considering that this is our first time here,” said Siggi Hilburger, Consultant at Cosi International.
Cosi’s Technical Manager Francesco Boaglio was also quite positive about the fair. “Our aim is not to go for the cheapest price, but a correct price in terms of quality, as well as establishing good relationships with our suppliers. Our strategy at Fashion Week is to widen our customer base from Italy to other retailers around the world. Asia will be our main focus for this fair”, he said.
Business is slow now but manufacturers believe that they will become busier in the coming year. Although reductions in profits are expected, said that their key strategy would be to concentrate on adding value to products and services, controlling production costs and to maintain the best price for customers. When asked about what their main strategy was, Jennifer Tsang did not hesitate for a second. “We must remain optimistic in order to do well”, she said. Oversupply and intense competition have been pressuring manufacturers for the past few years. The bubble has burst and a new optimal level will be set and only the strong firms with real competitive values will survive.