cotton spinning sector could continue to make a slight profit of about 2.5%. The cotton weaving, made-ups and woven garments sectors could be expected to lose this trade altogether, since they could continue only at a loss.
These are of course average figures, but they have been calculated on the basis that the cheapest (in some cases non-Commonwealth) raw materials would
be used."
The Governor goes on to make some comparisons between Hong Kong landed prices in Britain (with Commonwealth Preference) and landed prices for her competitors in Asia and for EFTA suppliers. He concludes that the position in 1968 was as follows:
>
(a) Yarns
Portuguese landed prices were lower than Hong Kong's as were those for our Asian competitors except Japan.
(b) Grey piecegoods
Hong Kong prices were lower than Portugal's (principal E.F.T.A. supplier) but not sufficiently so to absorb the tariff; Japan's and South Korea's prices were slightly higher than Hong Kong's, but the tariff would also push our prices higher than those of Japan and South Korea.
(c) Finished piecegoods
Hong Kong prices were lower than Portugal's but insufficiently so to absorb the tariff; our prices were higher than all other Asian suppliers except Japan.
(a)
Cotton garments
It was not possible to obtain information.
This survey has shown how vulnerable is the sector of the trade that has for many years concentrated on the British market which, in a large number of cases, accounts for some three-quarters of their trade.
This represents something of a volte face on the part of Hong Kong. When Mr Carey visited the Colony in April 1970, industrialists (who, incidentally, appeared to be remarkably prosperous considering the low profit margins they are alleged to earn) took the line that the Textile Council and HMG had seriously underestimated Hong Kong's competitiveness; and that the tariff decision would not work in the way Lancashire hoped, because following liberalisation Hong Kong would have no difficulty in rapidly expanding her exports to the U.K., over the tariff.
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