FOREWORD

2004  was an unsettling year for the Hong Kong textile and clothing industry. With the
impending abolition of the three-decade-old quota system in 2005, business
enterprises are confronted with multiple challenges. Opportunities brought about by
elimination of textile and apparel quotas; benefits from a highly productive and
experienced low cost production centres in China built up by Hong Kong entrepreneurs
are likely to be off-set by the threat of the imposition of the “safeguard”and “antidumping”
mechanism on the hot categories by USA and EU. Even Hong Kong’s favorite
manufacturing region, Guangdong is beset by the shortages of manpower and energy
whilst the introduction of export tax on export of hot-category garments by the Chinese
Government will hamper competitiveness and profits.

While we can perceptibly feel the improvement in Hong Kong’s general economy, we
probably need a crystal ball to foretell the outlook for our clothing industry. One certainty
remains - the industry needs to increase its investments in implementable research and
development; enhance its fashion design and technical support capabilities; broaden its
sourcing base and streamline its supply chain management practices. The backbone of all
these activities is a composite of technology, process and management system as well as
an uncompromising supply of competent qualified human resources.

I advocated in 2002 that there will be a stronger demand of designers, merchandisers,
quality auditors and administrative assistants to support the large and small foreign
investors setting out their ventures into the China market. Despite the lack of a
comprehensive study, the overwhelming vacancies posted in the newspaper for staff of
abovementioned categories demonstrated the validity of such a comment. Clothing
Industry Training Authority (CITA) will continue to provide industry-led vocational training
to prepare practitioners with the required skills.

This time, I want to share some experiences with the management of CITA - focus on
There have been many technological advances in the past few years. CITA should adopt
by the Brands as well as the “immediate customers”represented by the manufacturing
industry.

There have been many technological advances in the past few years. CITA should adopt the key technologies to create “process innovation”and assist our industry to make quantum leaps instead of incremental changes towards productivity. In the areas of “fit”, with our Digital Garment Fit Technology Centre, we can assist Brands to define “fit”and Manufacturers to apply this standard. In the area of “code of conduct”, with our WRAP and Eco-tex collaborations, we can assist the industry to understand and document compliances effectively. In the area of IT, we can create standards for communicating technical details and shorten the product development cycle time.

Consider what is more effective - for the Brands to commit to the adoption of a garment fit evaluation standard and methodology or ask an individual factory to improve its garment pattern technique? Adoption of new technology is never easy. The driving force for its application should better come from the customer. I believe that CITA can act as the catalyst and assist in the “change”process. We can apply our competency and expertise, collaborate with Brands in building standards and effective processes, and through practical application of technology, assist the industry to implement “process innovation”.

The Members of the Board will also face a most serious challenge in the coming years - the practical aspect of operating CITA. CITA is funded through a system of levies from apparel domestic exports. With the uncertainty roaming through 2004, the domestic exports of apparel and clothing accessories for the year reached HK$63.4 billion*, taking up 50.3% of the total domestic exports. This brought in a gross training levy of HK$19.7 million, showing a mere increase of 1.3% comparing with last year. Consequently, a small surplus of half a million dollars was reported. However, 2005 is expected to show a totally different picture. The prudent Members of the Authority, in its last meeting in November had collectively estimated that the training levy would reduce by as much as 40% in the coming year. This will post a threat to the bottom line for 2005. Although CITA’s management has committed to increase the operating income, this will not be sufficient. The Authority will need to maintain its dialogue with the Government to resolve the problem of the impending large deficits due to the drastic reduction in training levy.

 
Kenneth K.K. Wang
Chairman