TNAG-0939-FCO40-1158-Visit-of-John-Nott--Secretary-of-State-for-Trade--to-Hong-Ko-1981 — Page 62

5 The members of the mission were already aware that there were two quite separate markets in Hong Kong, viz:

(1) The higher quality domestic and Tourist market of rather small volume and

(2) The bulk export market.

6 While the UK holds a position in the domestic and Tourist market, there is no doubt that this could be improved if the UK companies concerned would be prepared to make greater sales efforts and look more closely at the quality and ability of their agents and representatives. Regular visits of the principals are necessary; although the cost of such visits cannot be ignored, particularly when the size of the market and potential level of sales is taken into account. Visits should be timed to coincide with the buying periods in Hong Kong for the products concerned. (See paragraphs 24 and 25 in the Annex to this Report.)

7 The more important issue, however, is the prospect of participation in the Hong Kong clothing export market; and the action which would need to be taken to achieve a favourable result. If there is to be sourcing of fabric from the UK, then it is essential to persuade the larger UK retailer/importer that there would be some advantages by doing so particularly as it would help to ensure the future of the UK textile industry, which is still necessary to the retailer in order to continue to present a balanced range of merchandise.

8 The Germans have in fact achieved some success in this field through the German retailers and importers but the German retailer/importer is more receptive to this procedure than their British counterpart.

9 It is also important to bear in mind that Hong Kong clothing manufacturers own subsidiary operations in the region, and also as far away as Mauritius and West Africa, with fabric purchasing decided in Hong Kong. Also, from Hong Kong, British firms can study changing Chinese trading methods and develop co-operation with local firms to exploit the rapidly growing textile and garment industries in China.

10 Two specific points emerged during the mission visit which could be of considerable significance in the approaches which will need to be made to the UK retailer/importer:

(1) Labelling of garments

It was suggested that some benefits might accrue to the garment manufacturers and thus to the UK textile industry if garments bore a marking saying that they were made from British fabric. The Department of Trade has since confirmed that the Origin Marking Order, shortly to be laid before Parliament, would not preclude this provided the statements were accurate.

(2) Duty relief on outward processed goods

There was a feeling among the team that the UK retailer/importer may not be making full use of the duty relief provisions, which are available if fabric is sourced from the UK, and that this might be due to the procedures being too complicated. The Minister undertook to look into this on his return.

As a result it now appears that the scheme, which is an EEC one, is used to a significant extent by various sectors of British industry, including the textile industry. There was a time when the Commission interpreted a Council Directive on ownership rather restrictively but, after negotiations by the UK Departments concerned, the Commission has recently confirmed to HM Customs & Excise that a more liberal interpretation can be put into effect.

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