Business: Invasion from Hong Kong

The textile experts said it was folly: garment factories could never flourish in Hong Kong because of lack of water and trained workers. Besides, there was the powerful new force of Japanese competition. But Chen Che Lee, a wealthy young Shanghai cotton manufacturer, fooled the experts. In 1946, with $1,500,000 borrowed from friends, Lee established South China Textile, Ltd., the first major textile mill in Hong Kong. Over the past decade, problems have been over come, and from Lee’s daring example has grown an industry that this year will ex port $110 million worth of garments. So successful is Hong Kong as a garment center that U.S. manufacturers and labor unions now want restrictions on cotton exports to the U.S. Last week Industry Leader C. C. Lee was again hard at work. His association of the most poweful exporters to the U.S. was working out a plan to diversify, set up self-imposed export quotas that will satisfy the U.S.

Hong Kong has been greatly helped by U.S. opposition to low-priced Japanese cotton imports. When the Japanese were forced to diversify and impose voluntary quotas, many big U.S. department-and variety-store buyers took their business to Hong Kong. The British colony’s factories and sweatshops have tripled to an estimated 500 in the past four years, boosted the number of workers from 4,000 to 50,000. To compete in the cut throat world textile market, the Hong Kong garmentmakers’ chief weapon has been cheap labor; the average daily wage is $1.77 for a ten-to twelve-hour day.

Three Shifts. While the bulk of the goods is still produced by industrious Chinese pieceworkers in cramped cubby holes and back rooms, more and more are coming from new, modern factories such as Lee’s. He employs 5,000 workers, v. 150 when he started, has one factory running three full shifts a day, spinning, weaving, dyeing, cutting and sewing cot ton garments for export. Last August he added a new factory to weave 1,000,000 yds. of cloth per month, cut 60,000 gar ments a day. His own garment exports to the U.S., 15% of the crown colony’s, have risen from $1,000,000 in 1956 to $12 million this year.

Others have prospered along with Lee, and the Hong Kong garment industry to day has estimated assets worth $200 million. Exports to the U.S. (chiefly brassières, nightgowns, pajamas, blouses and men’s slacks and shirts) are expected to be more than $80 million this year, a 140% increase over last year. Though still less than 3% of total U.S. consumption, it is the concentration of items in particular areas that has most aroused U.S. industry and labor opposition. In the field of brassieres alone, Hong Kong imports account for an estimated 40% of the U.S. market.

Discipline. To see what could be done, U.S. Assistant Secretary of Commerce Henry Kearns journeyed to Hong Kong fortnight ago. Said Kearns to a meeting of Hong Kong garment leaders for the second time in a year: “Don’t reduce your exports. Just don’t ship unduly heavy quantities which would wreck a specific American industry.” To many a successful Hong Kong Chinese garmentmaker, voluntary curbs seem to be a high price to pay for a success built with little U.S. aid in the face of stiff Japanese and European competition. Many are balking, though Lee argues that the industry “has grown too fast, must discipline itself” for the long-term benefit.