Review on History of Hong Kong Garment History: Origins and Developments in Post-WWII period, Issues of US-...
Hong Kong' s garment manufacturing industry started off soon after the war ended. In those days, there were abundant skilled sewers in Hong Kong. Manufacturers put great emphasis on credit and quality. There were also sound financial, communication and transportation systems in support. Meanwhile, industries in the neighbouring Asian countries had not yet started and thus had not become Hong Kong’s rivals yet. All of the above were factors for the rise of the garment manufacturing industry. In the 1950s, garments made in Hong Kong were mainly exported to British colonies in Africa. They were subsequently exported to Britain, the USA and Germany directly, marking the bloom of the garment manufacturing industry. In the early 1970s, the USA imposed the quota system on Hong Kong-made garments. At first, the Hong Kong Government then distributed all the quotas among the foreign trading companies, which threw Chinese manufacturers into a plight. SK Chan, then Chairman of the Garment Manufacturing Group under Federation of Hong Kong Industries, alongside other representatives of the industry including Chow Chung Kai and Lam Kan-shing, individually tried to persuade government officials and legislative councilors with every reason. The final outcome was the even distribution of quotas between foreign trading companies and Chinese manufacturers. SK Chan’s meetings with the upper management of Federation of Hong Kong Industries were normally conducted in English, as most attendants were Western businessmen. This was a big problem for the Chinese manufacturers. SK Chan then demanded that the meetings be conducted in Cantonese, and succeeded in winning the Western businessmen over to the demand of the Chinese manufacturers. Now SK Chan was still taking delight in talking about this. The garment manufacturers, having gained half the quotas, distributed the quotas among themselves according to production volume. They were also eligible to re-sell quotas to those manufacturers who had received no quota at all. SK Chan thought that with half the quotas on hand, the manufacturers’ bargaining power was lifted, and foreign trading companies could no longer offer sky-high prices. Local garment manufacturing factories thus had larger space for survival, facilitating the boom of Hong Kong’s garment manufacturing industry. The late 1970s was the heyday of Hong Kong’s garment manufacturing industry. Workers employed by garment manufacturers accounted for 40% of the labour force in the manufacturing industry. The gross export value of locally made garments amounted to 40% of that of all products made in Hong Kong. As the USA imposed the quota system, quite a number of Hong Kong manufacturers moved their factories to countries in South East Asia and South Asia, taking advantage of the absence of quota restrictions over there. However, Hong Kong manufacturers had always to adapt to the different policies and cultures existing in other countries when running their factories. The 1980s was a period in which local wages surged and the mainland opened her door for foreign investments. Many Hong Kong manufacturers moved their factories to the mainland, resulting in a gradual shrinkage of local garment production, which now has almost vanished. In recent years, the conditions for factory operation have been worsening. The government there has enacted the minimum wage law. Workers who received lower wages had to be given a pay rise. Seeing pay rises given to lower-paid worker, skilled workers naturally demanded the same treatment from the factory. As a result, labour cost has surged. SK Chan lamented that wage problems devastated the Hong Kong manufacturers. What’s more, SK Chan always complied with the law when running his factories on the mainland. Foreign companies with big brand names put great emphasis on human rights, and would send inspectors to the factories from time to time. YGM Manufacturing paid its workers for any overtime work performed as required by law, unlike some of its mainland counterparts who embezzled wages. The cost of running factories on the mainland for Hong Kong manufacturers kept rising every year, and foreign clients might not accept any increase in price, and so SK Chan thought that Hong Kong manufacturers’ future on the mainland was dim.
The rise of Hong Kong Garment Industry in Post-WWII Period (1): Brands of ships, Markets of Export
Small-scale garment manufacturing factories were scarce in pre-war Hong Kong. Those hiring more than 30 workers were already regarded as big factories. Garments were mainly for supplied to the local market. In pre-war period, western-style shirts were unpopular among Chinese. They were used to go to a tailor who made Tang suits. Hong Kong’s manufacturing industry sprang up in the early post-war years. Shirts were the major product. Famous labels included Leaf and Crocodile. The garment manufacturing factories gathered up in the streets around Castle Peak Road in Cheung Sha Wan as both workers and cloth factories were abundant there. In the 1950s, the bigger companies included Kwong Hing Tai, Kwong Lung Tai and Crocodile. In the late 1950s, local garments were mainly supplied to British colonies in Africa. Hong Kong companies exported their goods via foreign trading companies. They then expanded into the US and European markets, and exports were ever growing in scale. S.K. Chan founded Yangtzekiang Garment Mfrs in 1949. He rented a site on Castle Peak Road to produce mainly shirts. He even established the DOCTOR brand. More expensive products made of cotton were exported to Singapore, Malaysia and Thailand, while cheaper goods made of chemical fiber were exported to Africa.
The rise of Hong Kong Garment Industry in Post-WWII Period (2): Key Manufacturers, Mainstream Products
In the early post-war period, major garment manufacturing companies in Hong Kong included Lai Sun Garment, TAL, Lo’s Mee Kwong Garment, Bossini, Johnson Garment, Wing Tai Garment, Kwong Hing Tai and Kwong Loong Tai. Johnson Garment was run by the Wangs family. Its primarily business involved electrical machinery but it also made garments. Wing Tai was run by the Chengs family, whose business has changed to real estate. In those years, people like Kenneth Fang, Lam Kan-shing and Lim Por Yen were veterans in the garment manufacturing industry. A budding young talent was Charles Yeung. SK Chan regarded Kwong Hing Tai and Kwong Loong Tai as model factories, which were run by the Tse brothers. They established a single-block factory at Castle Peak Road around 1951. In its early years, YGM Manufacturing made cheap shirts to be exported to British colonies in Africa via an Indian trading company, but it lasted for only few years. After that, mid-range and high-end garments became its mainstream products. In the early 1950s, Kwong Hing Tai and Kwong Loong Tai made raincoats which monopolized the market. YGM dabbled in raincoat for a short period time but then gave up on it due to technical problems. YGM had always been making trousers. In the 1970s, denim jeans flourished and the company acting as an agent for Wrangler, an American brand. But due to different production equipment required by the production of the two kinds of garments, YGM did not go into massive production of jeans. It focused on just the trading of jeans. Now YGM produces pants including trousers, casual pants and sweatpants.
The Four Stages of Development of Post-War Hong Kong Garment Industry
SK Chan thought that the garment industry in post-war times falls in four stages: (1) Export to British colonies. (2) Export to Europe and the USA. (3) Setting up factories in undeveloped Asian countries. (4) Setting up factories on the mainland. In the 1950s, Hong Kong products were mainly exported to nations of the Commonwealth (Britain, Southeast Asia and Africa), and the majority of them were cheap garments. In the 1960s, Hong Kong garments began their journey to Europe and the USA, of which the USA were the biggest market. Those garments exported to the USA were more varied in terms of types and grades. The gross export value for the USA also far exceeded that for the Commonwealth. The bloom of the garment manufacturing industry set in. In the 1970s, the US government imposed quota restrictions on emerging exporters such as Hong Kong for the sake of her local industries. At the beginning such restrictions applied only to garments made of cotton, later it extended to polyester and chemical fabrics. When the Hong Kong government was in negotiations with the US government about the quota on polyester garments, SK Chan was a consultant of the Textile Advisory Board. He and another dozen local garment manufacturers, who were members of the Board, attended meetings in the USA alongside some high officials of the then Hong Kong government such as Jack Cater. Only the government officials could attend the meetings. SK Chan and other manufacturers waited for news in a hotel. The officials informed them of the results of the meeting of the day, and then sought their opinions. In that year, the Japanese representatives surrendered to the US government. With the situation taking a sudden turn to the worse, the officials of the then Hong Kong government woke up all the manufacturers at the dead hour of 4 am to convene an emergency meeting. It turned out at last the Hong Kong party submitted themselves to the quota arrangements of the USA. After the implementation of the US quotas, Hong Kong manufacturers set up factories in Southeast and South Asian countries unrestricted by quota, taking advantage of the ample yet cheap labours and lands there at the same time. For instance, YGM had factories in Sri Lanka, Burma, Cambodia and Bangladesh. SK Chan thought that the government had provided little support to Hong Kong manufacturers setting up factories outside Hong Kong. For the most part, the companies sent their own men out for on-site inspection. After an appropriate site was located, the management would be stationed.
Garment factories in Hong Kong: those produced for ”export” and those produced for local market
In Hong Kong, garment factories could be categorized in two types: those produced for ”export” and those produced for local market. The export factories were more formal, they usually operated with a license and strictly observed local labour laws and fire prevention regulations. The quality of the garments made for export complied with clients’ requirements closely. A QC (Quality Control inspector) would examine the products to ensure that they met the size specifications. Garments of exquisite handcraft generally passed the inspection even if they did not exactly meet the size specifications. Most garment factories which manufacture ‘local’ goods were home factories run in old tenement houses. Most workshops operated in a premise of 1000 sq. ft. with 10 sewing machines, carrying out simple pressing and cutting tasks. A home factory had only 10 workers with unclear division of tasks. Many factories which produced goods for local sale operated on Prince Edward Road. They manufactured suits and one-piece. In those days, the local sales were good because the economy was good in Hong Kong. There was a great demand for local cutting masters because they were all very skillful. Most masters preferred to work in the home factories because they enjoyed much autonomy in the sizing of cut-and-sewn garment. The first home garment factory To Sui Wan worked for occupied two storeys of a building. The cutting workshop was set up on the rooftop, and sewing and pressing workshops were on the 3rd floor. The sewing machine operators were responsible for manufacturing all parts of the garment. The blindstitching and button attaching were done by hand. After pressing, the products would be ready for delivery. The home factory would first design the apparel, and then make the samples and do the promotion. A home factory usually would not keep any goods in stock and produce when an order was received. It also consigned goods for sale. The proprietor of a home factory must keep abreast of the trends. If the factory could supply popular products, it would receive orders more than it could handle, especially during change of season. Foreach design, a home factory might receive orders ranging from several dozens to several hundred. To maximize revenue, the cutting room had to know how to make the most of the fabric. Sometimes, the factory received no order during off seasons, so it might have no income for one or two months. When this happened, the male workers would leave for the export factories. When To Sui Wan first joined the trade, she did blindstitiching and overlocking. Because she had learnt the pedal model sewing machine previously and had knitted for years, she had no difficulty with sewing garments. In the home factories, her workmates taught her all they knew and she was willing to learn modestly so she mastered a lot of skills in a very short time.
Modes of departmentalization of local garment manufacturers
Local garment manufacturers adopted two modes of departmentalization: a fine mode and a broad mode. If a fine mode of departmentalization was adopted, the factory would be composed of 20 to 30 departments. If a broad mode was adopted, there were fewer departments and one worker might work for 2 to 3 departments (work steps). How fine the departmentalization was depended on how complicated a dress was made. Large-scale factories preferred fine departmentalization of tasks. To Sui Wan thought this mode was suitable for apprentices and new workers because these inexperienced workers could start with the most simple tasks. To Sui Wan preferred apprentices who had no previous knowledge about sewing so that she could teach them the most basics. She did not like those who had some initial knowledge but had developed some bad habits. Tat Lok Mei was composed of 8 to 10 departments and adopted the mode of broad division. Tat Lok Mei compartmentalized the tasks by the constituting parts of a clothes such as the sleeves, collar, lining, pressing, blindstitching and overlocking. The principle of the choice of the mode of departmentalization was profit. A good design of departmentalization enabled the most efficient production and motivated workers to work hard for better income The mode of departmentalization in Tat Lok Mei was different from an ordinary shirt manufacturer because Tat Lok Mei produced fashionable dresses, blouses, coats and trousers. Although the workers belonged to different departments, they must be able to produce the entire garment on his own. A new worker must learn different skills of sewing and know well every step of sewing a garment. In the sample department of Tat Lok Mei, there were several skilled workers and four sewing machines. A European client always complained Tat Lok Mei’s quotes were too high and they would ask for quotations from other factories for comparison. However, the client would eventually place orders with Tat Lok Mei because they had confidence in the quality of Tat Lok Mei’s product and they were willing to pay more. Hero’s departmentalization was based on the types of garment. In the factory, garment production and weaving were two different departments because they used different machines. The factory had no female supervisor to supervise and coordinate the making of a sample garment. A sewer must be able to produce the entire garment, including night gown and pajamas, knitwear, coat, skirt, swimming suits and sequin dresses. Hero had a rather big sample office with more than 10 skillful workers. After it was listed, it had more than 50 skillful workers and more than 70 sample makers.
The co-ordination role of an ''elder sister'' in Hong Kong garment industry
To Sui Wan was the ‘elder sister’ (Editor’s note: the trade jargon of female supervisor) in Tat Lok Mei. She was responsible for arranging overtime work and outsourcing tasks besides acting as a bridge between the factory manager and workers. In those days, workers only worked overtime when the deadline was tight. It was the factory manager who decided whether the workers should work overtime. To Sui Wan always worked extra night shifts when she worked in the woollen knitting factories. Sometimes, she had to work until 11 pm. When no overtime work was needed, she went with her workmates working in other factories to earn additional. Although overtime work brought additional income, the workers might not have the energy doing this. When she arranged overtime work with the factory manager, workers’ income was her top priority as she believed that the extra income would encourage workers to work harder. If they could complete the orders earlier than expected, then the revenue of the factory could be increased by taking more orders. Generally, when the local garment factories outsourced their jobs, the person in charge would deliberately lower the offer to win the employer’s trust. When she worked as a supervisor in Tat Lok Mei, on one occasion she miscalculated the wages and the outsource workers refused to work unless a raise was given. She strongly advised her employer to compensate workers for the wage differences so the order would not be delayed, the loss could be offset in other ways later. The wages of outsource jobs such as sewing and pressing were different. To Sui Wan said the wages were determined based on the experience. She must consider the interests of all parties concerned, that is, she had to secure the profit of the factory and at the same time offer reasonable wages for the workers. Sometimes, a supervisor might have to change the order of the production procedure to prevent the entire production flow from being affected due to the delay in one of the departments.
Downstream development prospect of Hong Kong Industry: Retailing and Branding
Hong Kong counted on the labour-intensive manufacturing industry for her success. The manufacturers rarely invested in high-tech research and development. Nowadays, given the rapid development of manufacturing engineering, the requirement for labours was significantly lowered. Apart from this, a globalised economy had caused capitals to flow to the most cost-effective regions. It would be difficult for Hong Kong to return to mass production, and any thought of reviving local manufacturing industry was deemed impractical. WK Chan stressed that manufacturing activities was not the whole of industry, which had a wide coverage from production of cottons to the retail of garments, as in the case of garment industry. He proposed that Hong Kong’s industry should dig deep down to the lower end with an accent on retail and brand development. Take the garment manufacturing industry as an example. Many local manufacturers tapped into the overseas market in recent years. For instance, KF Chao, Chao Kuang Piu’s son, marketed the Tommy Hilfiger brand, which exerted a rich western style, in the USA. By now the company already went public in the states. Their purchasing office was based in Hong Kong. The Chao family were the best example of Hong Kong manufacturers tapping into the US market. Esprit, a big fashion label in Germany, was jointly run by Hong Kong and Germany businessmen with Hong Kong as their purchasing base. Giordano, a famous Hong Kong brand, focused on Asia for marketing with headquarters in Hong Kong. YGM adopted a strategy of acquiring famous brand names. Few years ago, they bought Aquascutum, an old British brand, and promoted it in Mainland and South East Asia. WK Chan held the view that Hong Kong’s industry had transformed from manufacturing to service, the latter of which was still part of industry. He accented that companies of famous brands need not be headquartered in Hong Kong. Now many companies had moved their headquarters to the Mainland. Should this trend continue, Hong Kong’s future would be adversely affected.
Prospects and Difficulties of Hong Kong Garment Industry after production relocation to China
In the early 1990s, YGM started relocating its production to the Mainland by setting up factories in Panyu and Dongguan one after another. YGM cut down local production lines every year and closed the factories overseas. It only kept the plants in Bangladesh and Burma. The USA lifted her preferential treatment on import quotas from countries such as Cambodia and Burma in the late 1980s. At the same time, Mainland China was undergoing economic reforms, offering wages lower than many of her Asian counterparts. Besides, for S.K. Chan, Mainland workers were more perseverant and smart, so he decided to shift his factories over there. As a matter of fact, many garment manufacturers doubled their labour force after shifting their factories to China. As local production shrank, Hong Kong transformed herself into a remote-controlled, sales-focused hub. Now, 20 years after the manufacturing relocation, the investment conditions are no longer the same as it used to. As S.K. Chan lamented, wages were constantly on the rise due to the 15% yearly increment stipulated by the government's newly enacted minimum wage legislation. Employers are deluged with pay rise demands from well-paid workers, given that their workmates who were receiving lower wages had benefited from the enactment of this legislation. Workers' social security to be contributed by employers also increased every year, with the current contribution amounting to about 10 thousand Renminbi per year per worker. S.K. Chan reckoned that the Mainland government no longer wanted Hong Kong businessmen to run low-tech factories in the Pearl River Delta, and the labour-intensive garment manufacturing had become an unpopular industry in the region. What's more, despite the surge in production costs, overseas buyers did not agree to raise the price of their orders accordingly. As garment manufacturing was not a high-tech industry, many Asian countries were able to produce garments and competed keenly with Hong Kong. He thought that the Hong Kong manufacturers on the Mainland were facing the toughest situation ever, and now were struggling for survival.
Participation in Asian-European textile. Intriguing experiences of setting up plants in undeveloped regions
In the 1970s, Europe and the USA imposed import quotas on Asian garments. Faced with the impacts on trade caused by quotas, Yangtzekiang Garment Mfrs increased the production of high-end garments and exported suits, which were not restricted by the quota system. At the same time they set up plants in countries unrestricted by quotas. Since the 1970s, Yangtzekiang Garment Mfrs had set up plants in Macau, Singapore, Malaysia, Burma, Sri Lanka, Cambodia, Bangladesh, India, Taiwan, Lesotho, etc. The Chan family had their members stationed in different plants for management. Whenever a quota negotiation was initiated between an Asian and a European country, all the family members would seize the chance to participate in the international trading conference as a consultant for the country they were stationed in. WK Chan jokingly said that the quota negotiations were but their family meetings. In the early 1980s, a conference was convened in Brussels, which Chan Sui Kau, Chan Wing Kee and Chan Wing To attended on behalf of Hong Kong, Macau and Singapore/Malaysia respectively. Cheng Wai Chee and Cheng Wai Keung from Wintech Textiles Ltd. also attended as representatives of Hong Kong and Singapore/Malaysia respectively. In those days many of the manufacturers were Shanghaies who loved hairy crabs. Hairy crabs were then introduced in Brussels. The quota problem had been relieved since WTO replaced GATT in the early 1990s, the latter of which was a conference organization in the period from the 1970s and 1980s. Yangtzekiang Garment Mfrs’ prime concerns were transport network, labour supply and transparency of the legal system when setting plants outside Hong Kong. Given that Hong Kong was a British colony, it preferred setting up plants in areas with much US or British influence to take advantage of their parallel and comprehensible legal systems. They once invested in former British colonies such as Singapore, Malaysia, Burma, Sri Lanka, India and Bangladesh, and visited Central South America, which was under US control, to conduct inspections. The company gathered investment information from different agents such as TDC, KPMG and British banks. Banks played a particularly important role for them. For instance, assistance was rendered by British banks when the company set up plants in Bangladesh. Thanks to British colonisation, British banks such as HSBC and Standard Chartered Bank had extensive networks in British colonies or overseas territories. They could refer potential local partners to Hong Kong manufacturers, which, upon successful referrals, brought tremendous businesses to the banks. To WK Chan, TDC was important for the company in expanding their business. An expatriate staff member of TDC’s Italy office had been employed by Yangtzekiang Garment Mfrs. He had worked in Yangtzekiang Garment Mfrs’s office in Italy and their plant in Sri Lanka. WK Chan once looked for sites for setting up plants for the company all around the world. Many undeveloped countries became his eye-openers. He said that such experiences were intriguing and memorable ones. He once travelled to India for negotiations on plant setup, and was planning to have an inspection in a small town on the Indian-Pakistani border called Lydia. On the way, he stayed overnight in a small town called Bujj, where city walls were still erected. The inn he stayed in had a stable on the ground floor. WK Chan sighed that it was like going back to the times of the Bible to do business in remote towns. In the 1980s, he went for an inspection in Costa Rica. Her neighbouring country, Nicaragua, was suffering from a civil war. Leftist guerrilla groups were everywhere and WK Chan was constantly threatened by kidnapping. He had had all sorts of hardships when setting up plants in Mainland. At that time, the Chan family were already running a plant in Taiwan. They did not want the Taiwanese authorities to smell their investments in Mainland. So, WK Chan had to first leave Hong Kong for Macau, where he crossed the border onto the Mainland and arrived at Wuxi via Guangzhou and Shanghai. The roundabout single trip took 3 nights and 4 days, which was the same for the return trip. Transport in Mainland was undeveloped in the early years. Even a trip to attend the Canton Fair (China Import and Export Fair) in Guangzhou would mean exhausting travelling and poor living conditions. He missed Shiqi’s and Daliang’s delicacies though. The trips he made in his young days were his sweetest memories.
