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Following is the speech by the Secretary for Commerce and Economic Development, Mr Gregory So, at the Prime Source Forum 2014 today (April 1):
Clement (Chairman of the Textile Council of Hong Kong, Mr Clement Chen), distinguished guests, ladies and gentlemen,
Good morning.
It gives me great pleasure to join you all today at the Prime Source Forum 2014. I would like to extend my warmest welcome to everyone here, especially guests from Mainland China and overseas.
The Prime Source Forum is now one of the signature events in the industry. We are glad that it has chosen to meet in Hong Kong every year since 2006. This is a testament to the attractiveness of our city as a preferred destination for prestigious international conferences.
With the presence of some 400 senior executives from over 20 countries representing different levels of the supply chain in the textiles and apparel field, the Forum provides an excellent platform for industry experts to get together and reflect on the opportunities and challenges ahead.
The textiles and clothing industry has long been one of our pillar industries. With the relocation of our production facilities offshore, we have gradually transformed into an international fashion design centre and a global sourcing hub. Today, many companies in Hong Kong are serving as regional headquarters performing the essential decision-making and co-ordination roles.
Hong Kong has a strong history in fashion design. Over the years, we have developed a worldwide reputation as a trend-setter for showcasing the newest fashion collections. Our fashion designers have been gaining worldwide reputation for their professional expertise, sensitivity to current trends and ability to blend commercialism and innovation. Thanks to their dedication and great talents, collections bearing Hong Kong designer labels have successfully tapped into the international market.
All along our government has been providing support for projects that are conducive to the development of fashion design in Hong Kong. In particular, Create Hong Kong has been helping the industry by nurturing talent and supporting small and start-up design companies through the CreateSmart Initiative.
Apart from being an international fashion design centre, Hong Kong is also an important global sourcing hub for garments and accessories. Our successful trade fairs, such as the Hong Kong Fashion Week and the World Boutique, are highly regarded as Asia's premier one-stop sourcing platforms for buyers and suppliers. A number of international trading houses and major retailers have established their buying offices here for sourcing high-quality fashion and accessories. Let me share with you some of our advantages as a global sourcing hub.
The first advantage is our strategic location at the heart of Asia and at the doorstep of Mainland China. This makes us an ideal springboard to reach out to the prosperous markets in our neighbourhood. Half of the world's population can be reached within five hours' flight time from Hong Kong. We also have world-class transport and information technology infrastructure, and one of the world's busiest container ports. Our strong connectivity is particularly relevant to the fashion industry, where the ability to respond timely to market demand is paramount in coping with the rise of "fast fashion".
Apart from excellent hardware, our software, particularly our reliable and professional services as well as our business-friendly environment, also contribute to our supremacy in the sourcing business. Our trade professionals in product sourcing are able to cater for the preferences of a diverse customer base and are acclaimed for speedy delivery within a short lead time. They are also well versed with international rules and documentation requirements for textiles trade.
Moreover, our business-friendly environment is very conducive to sourcing activities. We practise free trade and we do not impose any tariffs or maintain any trade barriers. Regulatory measures are kept to a minimum to ease trade flow. We follow the common law legal system and adopt internationally recognised codes of practices in business and commerce. We have a low and simple tax system with no GST (goods and services tax) or VAT (value-added tax). Together with our traditional strengths of a clean and efficient government and a level playing field for all companies, Hong Kong is well favoured by many international trading houses and buying offices to establish their footholds here.
Well, the list can go on, and these are all positive endorsements of Hong Kong as an international business city. Yet, we should not lose sight of new challenges and opportunities ahead.
The slow recovery of the global economy and the export climate in the US and European markets pose challenges to us. We need to be vigilant and look out for new markets. Fortunately, there are many new opportunities flowing from the rapid economic growth in the Asia-Pacific region, particularly ASEAN (Association of Southeast Asian Nations). We have also benefited from the preferential treatment accorded to us through our unique free trade pact with Mainland China, the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA).
The locomotive of the world's economic growth has been shifting to the East. Today, ASEAN has become our second largest trading partner in merchandise trade. With its huge population and the rise of an affluent middle class, there is a strong demand for trendy fashion and accessories. We are now pursuing a free trade agreement with ASEAN with a view to enhancing co-operation and eliminating trade barriers. We believe that its trade creation effect will result in more business opportunities and stimulate further growth in our region.
I am sure that most of you are well familiar with the advantages offered by CEPA. Specifically, products made in Hong Kong that comply with the CEPA rules of origin can enjoy tariff-free entry to the Mainland China market. Given that other imported apparel is currently subject to average tariff rates of more than 10 per cent, the tariff saving provided by CEPA is quite substantial. This explains why textiles and clothing items have been a major beneficiary under CEPA, with some US$800 million worth of products entering Mainland China tariff-free.
With the insightful inputs from our distinguished experts, I am sure that we can come up with creative ideas to capitalise on the thriving business opportunities emerging in our region. You are encouraged to leverage on our city's unique position in Asia to tap the growing opportunities in the region.
Finally, I wish you all a very fruitful Forum and an enjoyable stay in Hong Kong. Thank you.
Ends/Tuesday, April 1, 2014
Issued at HKT 11:58
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