164
FAR EASTERN ECONOMIC REVIEW
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RUBBER FACTORIES OF HONGKONG
The rising tempo of war preparations in various parts of the world is having its repercussions on Hongkong. Not only is the Colony's position as an entrepot threatened, but its newly won role as an expanding industrial centre is jeopardised. The increasing inter- national political tension and the re- sultant export control imposed by a lengthening list of countries may cut off most of Hongkong's interport trade and furthermore, to stifle its flourishing industries.
In industrial circles, a sense of un- certainty and insecurity is in evidence regarding the future, for Hongkong is not a self-sufficient entity and does not only have no markets of its own for its wide range of products, but also does not produce any of the raw mate- rials required to feed its many indus- tries. Apart from a minimum for local consumption, all the goods produced have to be exported overseas, while all raw materials have to be from foreign countries. With nations in all parts of the world clamping down
on the importation of non-military goods, in which the factories of Hong- kong specialise, and imposing drastic restrictions on the export of supplies of military value, there can be little doubt that trying days are ahead for the manufacturing circles of Hongkong.
imported
Owing to falling market demand on account of high prices, and increasing hardships in procuring raw materials, difficulties facing the local industries are now becoming general. The shrink- ing market and excessive cost of pro- duction have compelled more and more factories to curtail productive activities or to temporarily suspend operations. As most of the manufacturing concerns still have varying amounts of stocks of raw materials laid up and the local market is capable of meeting immedi- ate requirements, an industrial crisis is not foreseen in the near future. The next three to six months, however, will be a decisive period, and if no solution could be found in ensuring market de- mand and raw material supply, a seri- ous situation could hardly be avoidable. Efforts are at present being exerted in both official and private quarters to save Hongkong from the fate of "quarantined" city, and it is generally hoped that these efforts will at least meet with a certain measure of success.
a
Of the different industries of Hong- kong, one of the most heavily affected by the current belligerent temper of the world is the manufacturing of rub- ber products. Difficulties have been mounting steadily since the outbreak of the Korean war as the result of the sharp rise of the price of crude rubber. The prohibitive cost of rubber and re- duced overseas demand have compelled the factories to generally slow down their activities or to suspend work completely.
The rubber manufacturing industry of Hongkong has a history of over 30 years and plays a mojor role in the industrial life of the Colony, being second in scope and importance only In to the postwar textile industry. 1949 the exports of rubber footwear, the chief products of the industry, were valued at $13,001,409, occupying 18.2 percent of the total exports and next only to those of textiles, which claimed 23.8 percent of the total.
The majority of the locally-produced rubber footwear was exported to the United Kingdom and British possessions in all parts of the world. Before the change of government in China, there
also an
active and dependable market in the South China coastal area, and further, large orders were often placed with the local manufacturers by the Chinese army authorities.
was
Until recently, the United Kingdom was one of the best customers of the rubber footwear produced in Hongkong. Owing to the heavy jump in rubber prices following the outbreak of the Korean conflict, demand from this direction has fallen off considerably. Local manufacturing circles, however, are not too concerned with the heavy drop in business and regard the present void as only natural. It is explained that with rubber prices having soared so steeply, neither producers nor merchants are certain of the future and prefer not to make any unnecessary commitments until the situation has cleared up and the rubber market has become more stabilised.
The price of crude rubber, which now stands at about $500 per picul, has soared 30 percent or more from the level prevailing in the first half of this year. On the other hand, the marken prices of finished products have in- creased by only 20 to 50 percent. This is one of the chief reasons why opera- tions under the present condition are so difficult and why so many producers, unable to meet the cost of production, are left with no choice except to wait for a more opportune time to resume normal production when either the price of rubber has declined or the prices of rubber goods have caught up with the abnormal rise of the raw material. At present no signs of either are in sight.
First indication of serious trouble being encountered by the industry came last August 9, when the Fung Keong Rubber Mfy. Ltd., one of the largest and best known in the business, sud- denly announced suspension of work, throwing more than 1,700 workers out of employment. Explanations given by the factory management for the deci- sion were that the dislocation of the prices of raw and finished products had
firm was
1
February 8
caused serious losses to the company, and that to prevent further losses the work compelled to lay up temporarily. After nearly five months of suspension, this manufactory is now reported to have started preparations to resume operation early next Jan- uary. This should indicate a change for the better in the general situation and should create a greater degree of confidence among the industry.
Meanwhile another enterprise, the United Rubber Works Co., Ltd., with factory located in Hing Wah Street, Castle Peak Road, Kowloon, and pro- ducing rubber shoes and boots, bicycle tubes and rubber bands and balls, an- nounced liquidation on December 15 after having ceased operating for about half
This closure has not year. created any pessimistic feelings in the trade as it is expressly pointed out that the liquidation is voluntary and has not been caused by business losses.
a
Looking at the situation as a whole, the present trouble of the industry lies in the excessive cost of crude rubber. Factories with raw rubber stocks were reported some time ago to be disposing of such stocks in the market, as by so doing they were able to realise greater returns than from continuing produc- tion. It is quite plain that as long as the present international tension con- tinues and the world persists in scram- bling for supplies to build up stockpiles for military purposes, the price of rub- ber will be kept at a high level and civilian consumers will have little chance of obtaining the material at a low cost.
*
There are at present 43 registered rubber factories in Hongkong. Of this number only six are established on a comparatively large scale and each em- ploys more than 200 workers, Appro- ximately 75 percent of these plants produce rubber footwear, including rubber shoes, boots, sandals, slippers. soles and heels.
Many of these also turn out on the side such products as rubber toys, bicycle tubes, ball blad- ders, bands and balls. The larger fac- tories produce from 200,000 to 450,000 pairs of rubber shoes a month while the smaller ones have a monthly output of 30,000 to 60,000 pairs.
a
A total of 17 out of the 43 factories produce rubber toys, either exclusively or in conjunction with other rubber goods. Rubber toys are a comparatively new introduction in Hongkong, and be- cause of their novelty they are finding relatively good market today. In addition to Hongkong itself, orders for these toys are received chiefly from Africa and South America. These toys comprise a fairly large variety, and those which are having the widest re- ception are toy balloons and inflatable animals. Good demand for them from overseas countries is enabling the makers to carry on production satisfac-. torily.