them to call a meeting of the manufacturers and seek a voluntary agreement to limit their exports to Britain as the committee had recommended." This was not an easy matter. If the industry in Hong Kong had been established by Jardine Matheson, Swire or one of the other leading British trading firms, the governor could have spoken personally to the directors and appealed for restraint; but the rubber shoe manufacturers were small Chinese firms which were most reluctant to co-operate." Before they would agree to limit their exports they demanded guarantees that the quota would be large enough to keep their factories operating at a profit; that no new footwear firms should be allowed to open in Hong Kong; and that there should be a comprehensive agreement between Canadian, British, Singapore and Hong Kong manufacturers to divide up the British market and exclude any new entrants from India or elsewhere. The British manufacturers suggested a quota for Hong Kong of 1,500,000 pairs. Hong Kong said this was far below the current rate of exports to Britain, and asked for at least 2,500,000 pairs. Negotiations between the British and Canadian manufacturers to divide up the British and Canadian markets between them broke down when one of the largest firms, Bata, refused to join the cartel.
This failure left Hong Kong manufacturers free to expand their exports to Britain without a limit. The largest manufacturer in Singapore went bankrupt in 1935, enabling Hong Kong firms to penetrate further the British market. They exported 2,403,900 pairs of canvas and rubber shoes to Britain in 1935, 3,309,088 pairs in 1936, 4,849,324 pairs in 1937 and 7,007,604 pairs in 1938. These figures do not include exports to British colonies, which were also substantial. In 1939 a representative of the British manufacturers went out to Hong Kong to negotiate directly with the Chinese firms before going on to Canada. Agreement was reached for Hong Kong to have a quota of 6,600,000 pairs in the British market provided that the colony agreed to raise its prices to British levels. The Hong Kong government foresaw considerable administrative difficulties in implementing such an agreement. Legislation would need to be enacted to licence factories and to regulate exports, which would be extremely unpopular. The outbreak of war in September 1939 caused the agreement to be suspended indefinitely.
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IV
The imperial preferences agreed at Ottawa and the additional specific duties on footwear, hosiery and textiles failed to achieve their intended objective of excluding Japanese competition and leaving the colonial markets free for British and Canadian textile manufacturers. The Japanese had little difficulty in absorbing these additional costs and undercutting British and
13
them to call a meeting of the manufacturers and seek a voluntary agreement to limit their exports to Britain as the committee had recommended." This was not an easy matter. If the industry in Hong Kong had been established by Jardine Matheson, Swire or one of the other leading British trading firms, the governor could have spoken personally to the directors and appealed for restraint; but the rubber shoe manufacturers were small Chinese firms which were most reluctant to co-operate." Before they would agree to limit their exports they demanded guarantees that the quota would be large enough to keep their factories operating at a profit; that no new footwear firms should be allowed to open in Hong Kong; and that there should be a comprehensive agreement between Canadian, British, Singapore and Hong Kong manufacturers to divide up the British market and exclude any new entrants from India or elsewhere. The British manufacturers suggested a quota for Hong Kong of 1,500,000 pairs. Hong Kong said this was far below the current rate of exports to Britain, and asked for at least 2,500,000 pairs. Negotiations between the British and Canadian manufacturers to divide up the British and Canadian markets between them broke down when one of the largest firms, Bata, refused to join the cartel.“
This failure left Hong Kong manufacturers free to expand their exports to Britain without a limit. The largest manufacturer in Singapore went bankrupt in 1935, enabling Hong Kong firms to penetrate further the British market. They exported 2,403,900 pairs of canvas and rubber shoes to Britain in 1935, 3,309,088 pairs in 1936, 4,849,324 pairs in 1937 and 7,007,604 pairs in 1938. These figures do not include exports to British colonies, which were also substantial. In 1939 a representative of the British manufacturers went out to Hong Kong to negotiate directly with the Chinese firms before going on to Canada. Agreement was reached for Hong Kong to have a quota of 6,600,000 pairs in the British market provided that the colony agreed to raise its prices to British levels. The Hong Kong government foresaw
foresaw considerable administrative difficulties in implementing such an agreement. Legislation would need to be enacted to licence factories and to regulate exports, which would be extremely unpopular. The outbreak of war in September 1939 caused the agreement to be suspended indefinitely,
50
..
IV
The imperial preferences agreed at Ottawa and the additional specific duties on footwear, hosiery and textiles failed to achieve their intended objective of excluding Japanese competition and leaving the colonial markets free for British and Canadian textile manufacturers. The Japanese had little difficulty in absorbing these additional costs and undercutting British and
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