TNAG-0939-FCO40-1158-Visit-of-John-Nott--Secretary-of-State-for-Trade--to-Hong-Ko-1981 — Page 14

Reference

CODE 18-77

CS 8/78

whether HK manufacturers were interested in 45" and 48" widths of fabric as well as 60", and Mr King confirmed that this was so. Mr Nightingale commented that a number of British companies produced textured polyester fabric - for classic trousers rather than jeans. Mr King said that demand for this fabric, as for polyester viscose, was low; Mr Cheng added that consumer preference was moving away from these fabrics. Mr Nightingale commented that US manufacturers of jeans had very stringent quality requirements for the denim and cord they purchased, and wondered if similar standards prevailed in HK. Mr King assured him that they did; indeed, many US-branded jeans were actually made in HK. Mr Cheong suggested that stretch fabrics might be an important growth area in the market. Mr Knightingale replied that the industry was still divided on this question: there was still a fairly high premium on stretch fabrics, which some thought were suitable for women's clothing but not for men's. Mrs Tong said that stretch seersucker may be exclusively for women but stretch denim and cord had unisex appeal. Mr Cheong said that the popularity of stretch fabrics particularly in the FRG- increasing as the premium came down. Mr Tang added that warp stretch fabrics were currently being sourced from the FRG at a very high premium, and the HK industry was now moving to web stretch fabrics. Price was not a critical factor for these fabrics, which were only used at the higher end of the market. He added that although the HK industry did not itself use much polyester (whether textured or viscose) the industry had many subsidiaries in other countries throughout the region (and further afield) which did, and whose buying decisions were made in HK. Mr Wilson commented that one of the most recent developments in the stretch fabric field was stretch wool: it was fairly expensive but opened up some interesting possibilities.

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4 Miss Wong, representing the quality fashion industry, said that the industry was very diverse and her remarks could only be general. The quality of UK fabrics was undoubtedly consistently high, and price was no obstacle. The main reasons the UK did not sell more fabric to HK were, first, a slow response to request for information, samples, etc because of the lack of local representation; secondly, a lack of flexibility in responding to rapidly changing fashion requirements; and thirdly, that some prestigious fabrics, very much in demand in HK, were produced only in very limited quantities, and very little was sold to HK - Viyella was an instance of a fabric which could sell in very much greater quantities than at present in HK. Mr Regan explained that the Viyella trademark was franchised throughout the world, and that it would be a breach of those franchise agreements if CV were to sell the fabric to HK for making up and re-export. There was no reluctance, as Miss Wong had suggested, on the part of CV to increase production: after all, factories in the UK were on short time. Miss Wong said that her point had been more general; and in the case of Viyella the name was not crucial if cloth of similar quality could be provided. In answer to a question from Mr Nightingale, Miss Wong said that the buying seasons were not clear-cut because of the diversity of the industry; but in general the spring selections were manufactured during March-April and the winter selections during September-October.

5 Mr Chow, representing the outerwear sector, said that because of the heterogeneous nature of the industry he would confine his remarks to the higher- quality end of the market. HK imported some 20m sq m pa of quality outerwear fabrics (terylene/cotton, nylon, etc) largely from Japan, for reasons of proximity, but also from the USA and the FRG. He assumed that the UK also pro- duced these fabrics and saw no reason why the UK should not export them to HK. Mr Nightingale asked to what extent the end-buyer of a garment specified the fabric to be used. Mr Cheong replied that end-buyers frequently specified quality standards for the fabric but only rarely specified a country of origin. Very little use was made of the duty drawback for outward processed goods. Mr Gibson pointed out that, on a strict interpretation of the regulations, the export of uncut cloth for making up into garments for re-import did not qualify as outward processing (because the regulations specified "a single process" to be performed before re-import); but because of quota restrictions this strict interpretation was not

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