As a global sourcing hub for textiles and apparel, Hong Kong has been undergoing a major transformation in helping brands offer innovative product offerings, digitizing processes to increase efficiency, as well as achieving sustainability business goals.
With ever-increasing needs for supply chain stakeholders to be more resilient, Hong Kong’s textiles industry aimed to enrich its focus in various ways, including procuring sustainable or alternative localized materials like vegan leather or organic cotton, digitizing production via robotics, automation and 3D design, and localizing production.
In one example of Hong Kong’s apparel sourcing prowess, suppliers are finding and testing new materials in collaboration with the Hong Kong Research Institute of Textiles and Apparel (HKRITA), a research institute that helps textile and fashion businesses conduct government-funded research and development projects. A number of global achievements were won by HKRITA’s projects—one such project, “Regenerating Bio-based Leather from Leather Waste,” has won the Gold Award at the Special Edition 2022 Inventions Geneva Evaluation Days.
Across the board, Hong Kong has drawn many skilled employees that have extensive experience engaging factories in the region and are well-versed in relevant fields like product planning, digital design, sustainability and quality control.
Anne-Laure Descours, chief sourcing officer of Puma, said that the local sourcing knowhow is a major selling point for brands.
“It’s not just because the costs remain lower than those in Europe and North America,” Descours wrote in the report. “It’s because of the expertise that’s here. The speed and efficiency are here.”
Puma has located its sourcing headquarters in Hong Kong since 2014 as it recognized that being close to its manufacturing partners in the region was key. Given that Descours has nearly 30 years of experience working at Hong Kong-based sourcing stalwarts including Li & Fung and Otto International, Descours knows the importance of maintaining a presence in the market.
“Sourcing decisions are best managed from within the sourcing region itself since much of the product expertise at the headquarters is instead focused on design and marketing,” Descours noted.
In another example of a business that has succeeded in the Hong Kong market, amfori is a leading global business association for driving open and sustainable trade with over 2,500 retailers, importers, brands and national associations from more than 40 countries. Since 2011, it has established its office in Hong Kong to manage the operations and activities across Greater China and subsequently extended to the Asia Pacific region.
“Since decades ago, hundreds of our members have set up their sourcing offices in Hong Kong given its proximity to their key sourcing countries, including Mainland China, Bangladesh, India, Vietnam, etc. amfori’s regional team provides a full range of membership service support to our members and their suppliers in pursuing responsible trade and sustainable supply chains”, said Joyce Chau, director, Asia Pacific of amfori.
The geographic advantage of Hong Kong is that an average flight from all of the key sourcing countries is less than five hours. The city is also in a favorable position to take part in regional initiatives that support sustainable and open trade in Asia, the engine of global economic growth. This helps cater for the growing business opportunities for buyers and suppliers.
An easy-to-set-up trade hub
Setting up sourcing operation in Hong Kong is easy. For businesses looking to set up in the market, they can register a private limited company in Hong Kong. Hong Kong has no value-added tax (VAT) and only collects 15 percent salaries tax—one of the lowest tax rates in the region.
The number of overseas and Mainland Chinese companies in Hong Kong increased from 7,986 in 2016 to 9,025 in 2020, with nearly half coming from import/export trade, wholesale and retail.
Contact the InvestHK team at firstname.lastname@example.org.