Hong Kong Manufacturing SMEs: Preparing for the Future

65• Having a manufacturing base in Mainland Chinamay make the SME more competitive, as will thecontinued automation of firm processes that arelabour intensive.• Creating loyal customers will pay back duringtough times. Loyal companies may do things likearrange letters of credit for the firm to use tofinance its operation during the short-term.• SMEs must work to understand the needs oftheir partners as well as their customers.• SMEs can develop and maintain a technologicaladvantage by ensuring that their research anddevelopment team is well-trained and thatits skills are regularly updated. Research anddevelopment staff need to be motivated andincentivised just like other staff. Motivationcan come in many forms including throughparticipation in competitions.• SMEs need to plan. They should set strategiesand review them regularly.• Meetings with the senior management teampresent an opportunity for cross-functionalcollaboration between different business units.Such collaborations have the potential to bringabout material improvements in the business.• Teamwork is important. To create a strong team,the firm should treat employees as partners in thebusiness and that the same respect and loyaltyshould be shown to them that one would showto one’s family.• Failure can be a lesson on how the firm canimprove. Although a short-term problem mayaffect short-term profit, a lesson well learned mayhave a greater positive impact on long-term profit.• Focusing on the short-term is often the wrongthing to do. Many of the problems that firmsface are due to attempts to maximise profit ona short-term basis. This can lead to disharmonywith staff, customers, and other importantstakeholders that the business depends on for itslong-term success.• Integrity and reputation are all-important tosuccess in the industry. Both qualities are hardwon and, if lost, are even harder to regain.The Garment IndustryThe garment industry consists of fashion design,apparel manufacturing, clothes wholesale, andretailing. The global garment industry’s totalrevenue in 2006 was US$1,253 billion. This isestimated to reach a value of US$1,782 billion bythe end of 2010. 126China is the largest producer and consumer ofgarments, producing over 50 per cent of the world’stotal in 2008. Guangdong Province is the largestgarment producer in China, accounting for 18.3 percent of total reported Gross Industrial Output (GIO)in garments in China in 2008 (ahead of Zhejiang,Jiangsu, Shandong, and Fujian). It is reportedthat there are over 30,000 garment enterprises inGuangdong in 2009 and about 80 per cent of theseenterprises are mainly export-oriented. 127 The 2009Guangdong Statistical Yearbook reports that thegarment sector in Guangdong accounted for 1.1million workers, GIO of RMB 172.5 billion, exportsof US$23.9 billion, imports of US$823.5 million,and VAT of RMB 5.6 billion in 2008. Garmentmanufacturing is concentrated in the PRD, especiallyin Dongguan, Zhongshan, and Foshan.Hong Kong firms are a leading global force in theindustry. Several of the world’s leading garmentfirms are headquartered in Hong Kong and it hasbeen estimated that Hong Kong firms control onthe order of a quarter or more of world garmenttrade. Hong Kong companies generally look afterstrategy, coordination, marketing, and financefrom Hong Kong, while producing in the Pearl RiverDelta and elsewhere. Hong Kong companies startedmoving production into the PRD in the 1980s andlittle production remains in Hong Kong. The vastmajority of Hong Kong garment companies, largeas well as small, are engaged in OEM productionfor well-known brands and retailers such as Armani,126 www.fashionproducts.com.127 gcontent.nddaily.com.