Countermeasures of knitting factory owners after textile industry going to decline, Two unsuccessful attempt to start a factory in the Mainland (2)

After the Beijing pro-democracy movement in 1989, there was braver steps by the government to implement economic reforms and a faster pace to open up China’s markets. This had accelerated the movement of local garment and dyeing factories’ from Hong Kong to the mainland. In the past, smaller garment factories in Sham Shui Po carried out their production and sales activities upstairs in their workshops in residential buildings. When small factories’ production lines moved to the mainland, only the wholesale section remained in Hong Kong. At present, less than ten garment factories remained in Hong Kong. When the government required manufacturers to adopt sewage treatment measures in the 1990s, the local dyeing factories faced a lot of restrictions. This in turn prompted the northward relocation of the bleaching and dyeing industry. With the disappearance of local garment and dyeing factories, the knitting manufacturers which relied on them found it harder to survive after 1997. Faced with the trend of northward relocation, Au Kwan Cheung lost up to 90% of his customer base. At present, only around ten knitting factories remained in Hong Kong.
Steadily losing customers, Tai Hing Knitting Factory reduced its labour force and stopped purchasing new machines. Au Kwan Cheung was finally forced to follow the trend and set up operations in China in the 1990s. Following the introduction of a business friend, Au Kwan Cheung’s first attempt was a joint venture factory in Zhongshan with a local entity. Due to differences of opinion with the local partner, Au Kwan Cheung gave up a year later as he felt the business was not profitable. He subsequently set up a wholly-owned factory in Foshan, renting a 10,000-square-foot plant and moving some machines from Hong Kong to there. While the bulk of Tai Hing’s manufacturing moved northward, the company still maintained some production in Hong Kong. As Au Kwan Cheung still had to take care of these Hong Kong operations, he was unable to manage both factories, finally closing the operation in Foshan. Requiring a hands-on approach to manage his investments in the mainland, rather than delegating the work to others, Au Kwan Cheung found it difficult to adopt Hong Kong style of management in China’s environment. After cutting the business in the mainland, his Hong Kong factory gradually shrank in size as he sold the machines off one by one. Even when his workforce was cut down to just three workers, Au Kwan Cheung still found it difficult for the operation to survive.
At the time of interview, Au Kwan Cheung’s knitting factory continued with a small volume of production, producing fabrics only for local demand. This generally involved fabric samples in small quantities and urgent orders for under-layer and inner-layer fabrics, for example. As mainland knitting factories focused on mass production, they would not take up these small orders, leaving one last tiny survival space for local factories. In recent years, Au Kwan Cheung had stopped developing new fabrics. Lacking advanced machinery, it was difficult for him to produce these new products in larger quantity. South Korea and Taiwan produced a large number of new products and their exports to Hong Kong put added pressure onto local manufacturers. Lacking sources of raw material, Hong Kong could not compete with the imports from these countries. In addition, even if new fabrics were successfully developed, their design might also be copied for production in China. Even though he had launched several new fabrics, Au Kwan Cheung was unable to attract a good size of orders. At present, he just waited for fabric samples from customers, taking orders within his ability. In addition to maintaining a small production business, Au Kwan Cheung also provided intermediary services for the garment factories that had moved northward by liaising with mainland’s knitting manufacturers on their behalf for processing yarns into cloths.

Company Yick Sun Knitting Company
Subject Industry
Duration 17m4s
Language Cantonese
Material Type
Source Hong Kong Memory Project Oral History Interview
Repository Hong Kong Memory Project
Note to Copyright Copyright owned by Hong Kong Memory Project
Accession No. LKF-ACC-SEG-015
Share Share