The use of offshore production by the Hong Kong clothing industry

The paper presents the views of an experienced merchandiser on the changes in production locations forced upon the Hong Kong clothing industry by such factors as right labour costs. It explores the use made of the offshore production option in China by means of a questionnaire survey carried out in the Hong Kong clothing industry. The paper examines the motives for offshore production and the problems encountered in its use. It examines the responses made by Hong Kong manufacturers to these problems and draws conclusions as to the future of offshore production in the strategic plans of the industry. As such it may have lessons for all companies planning to engage in offshore activities and, in particular, for those planning to set up facilities in China. In particular, significant hidden costs are uncovered, while the cultural problems encountered even between Hong Kong entrepreneurs and mainland Chinese are surprisingly severe.