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Fur Industry in Hong Kong

Overview

  • The mainland and Hong Kong agreed in October 2005 to further liberalise the mainland market for Hong Kong companies under the third phase of CEPA III. Under CEPA III, the mainland agreed to give all products of Hong Kong origin, including fur items, tariff-free treatment starting from 1 January 2006.
  • Hong Kong, claiming the world’s third largest fur clothing exporter, is one of the world's major sources of quality fur garments and accessories. The majority of Hong Kong's furriers have set up production facilities on the Chinese mainland amid higher production costs in Hong Kong. Still, many major sub-sectors of the fur industry, particularly sales and distribution remain in Hong Kong.
  • Hong Kong’s fur clothing exports slid by 11% in the first five months of 2017, after a 34% decrease in 2016. Re-exports, accounting for nearly all fur clothing exports from Hong Kong, fell by 11% during January-May 2017, whereas domestic exports fell by 95%.
  • The Chinese mainland is the largest market for Hong Kong's exports of furskins, accounting for 48% of the total exports in the first five months of 2017. A large proportion of Hong Kong's furskin exports are re-exports from overseas countries to the Chinese mainland for fur clothing production there.

Industry Features

Table: Industry features of fur industry
Table: Industry features of fur industry

On the back of higher production costs and stringent environmental regulations in Hong Kong, most of Hong Kong's furriers have set up offshore production facilities on the Chinese mainland, leading to a decline in the number of manufacturing establishments in Hong Kong. While there is insignificant presence of manufacturing establishments, fur traders remain very active in Hong Kong, specialising in trade-related services such as sales and marketing, quality control, logistic arrangement and fur design.

Performance of Hong Kong’s Fur Exports [1]

After a decrease of 34% in 2016, Hong Kong’s fur clothing exports slid by another 11% in the first five months of 2017. Re-exports, accounting for almost all fur clothing exports from Hong Kong, fell by 11%, while domestic exports decreased by 95%.

Taking up more than 62% of Hong Kong's fur clothing exports in the first five months of 2017, the EU, the US and Canada were the three leading export markets of Hong Kong's fur clothing. During this period, Hong Kong's exports of fur clothing to the EU decreased by 23%, where sales to Greece and Italy both fell by 36% but those to Germany and France both edged up by 2%. In the meantime, exports to the Canada fell by 30%, while the US market saw a 10% growth.

A large proportion of fur produced by Hong Kong furriers in their factories on the Chinese mainland is not shipped out from Hong Kong. Some of them are shipped via the ports on the Chinese mainland. For instance, certain Hong Kong furriers deliver products from their factories on the Chinese mainland to Russia – a prime market for fur – by land transport. Transactions under such mode of transport are not fully recorded by the trade statistics.

On the other hand, Hong Kong's exports of furskins amounted to HK$0.37 billion during January-May 2017, increasing by 1% from last year. The Chinese mainland is the dominant market for Hong Kong's exports of furskins, accounting for 48% in the first five months of 2017. Indeed, most of Hong Kong's furskin exports are re-exports from overseas countries to the Chinese mainland – the world’s biggest fur trade, production and processing base – for the purpose of fur clothing production there.

Performance of Hong Kong’s Exports of Fur Clothing and Furskins [1]

Table: Performance of Hong Kong exports of fur clothing
Table: Performance of Hong Kong exports of fur clothing
Table: Performance of Hong Kong exports of fur clothing (by markets)
Table: Performance of Hong Kong exports of fur clothing (by markets)
Table: Performance of Hong Kong Exports of fur clothing (by categories)
Table: Performance of Hong Kong Exports of fur clothing (by categories)
Table: Performance of Hong Kong exports of furskins
Table: Performance of Hong Kong exports of furskins

Sales Channels

An overwhelming majority of fur clothing produced in Hong Kong and/or their plants on the Chinese mainland is catering to the demand in overseas markets. Most Hong Kong furriers are OEM manufacturers, which produce high-quality apparel for renowned brand names. However, a growing number of furriers have developed their own designs and brand names, such as Rosette Pellicce, Compela, Isubille and Messina. Today, Hong Kong furriers are offering a myriad of fur designs which are modish and wearable, and thus in recent years, the industry has made fast inroads into such emerging markets as Russia, South Korea, the Chinese mainland and Central and Eastern Europe. For example, Asia Fur Company Ltd. has developed its own brands, Altioli and Giuliana Amioli, which target the international markets, including the US, Europe, Russia, Japan and South Korea; Ace Fur Manufacturing Limited has been exporting its fur products to over 30 countries under its brand “Symétrie”.

Traditionally, North America, Western Europe, the Nordic countries and Russia are the major markets for fur garments. In recent years, thanks to the growing incomes of consumers in Asia, sales of furs have fast expanded to other markets like the Chinese mainland and South Korea. According to the International Fur Trade Federation (IFTF), the Chinese mainland is currently the world’s largest fur importer, while the largest exporter is Europe. Meanwhile, there has also been a steady growth in demand in developing markets such as the ASEAN countries and the UAE, thanks largely to their growing travel demand to countries of a wintry climate.

Trade fairs and exhibitions remain common places for buyers and suppliers of clothing to congregate, with Copenhagen, Beijing, Hong Kong, Istanbul, Kastoria (Greece), Madrid, Milan, Montreal and Moscow being the major destinations for furriers or fashion boutiques to stay tuned to fur fashions and dyeing techniques. As for Hong Kong, the Hong Kong International Fur & Fashion Fair (HKIFFF), organised by the Hong Kong Fur Federation, is the largest and most prestigious trade event in Asia, attracting about 210 exhibitors from 13 countries in 2017. Overall, the HKIFFF concluded with US$139 million generated in confirmed orders, a growth of 20% over last year. This revival was due in part to the economic recovery in Russia, and in part to the cold winter in the US, Europe and Japan last year. Product-wise, high-end materials such as Sable and other longer-haired, lighter products have become sought-after, while fox has also become more popular for its availability in the form of trim.

Industry Trends

According to a report commissioned by the International Fur Federation (IFF), global fur retail sales are estimated at around US$40 billion, thanks largely to the sustained demand in Asian markets, including the Chinese mainland, Japan and South Korea. Meanwhile, challenges such as volatile pelt prices owing to the slow recovery in demand in excess of stock depletion remain headaches to fur farmers and traders.

Reflecting a general preference among designers such as Marc Jacobs, Mulberry and Gucci in the luxury goods sector, fur continues to be a major design story in fashion shows all over the world. According to HKIFFF, four season designs have seen resurgence from fashions popular in the 50s and 60s, especially with products such as Lambskin, and crossover garments pairing fur with cashmere or knitwear.

Farmed furs are the mainstay of the fur trade, accounting for some 85% of the industry turnover according to IFTF. The most common farmed fur-bearing animals are minks and foxes. Most fur farming takes place in Denmark, followed by China, the Netherlands, the Baltic States and the US. The majority of raw skins produced by fur farmers and trappers are sold through modern international auction houses, often located close to producing areas. The world's largest fur auction houses are in Copenhagen, Helsinki, St. Petersburg, Seattle and Toronto.

Fur can be worked in a range of different ways to make it lighter, suiting the demand for modern fashion and lifestyles. Some of the techniques used by furriers and manufacturers to lighten the garment are shearing, plucking, knitting, leathering and weaving. The most important centres for fur manufacturing include Canada, the Chinese mainland, Greece, Hong Kong and Russia, followed by France, Germany, Italy, Korea, Japan, Spain, Turkey, Ukraine and the US.

As for the ethical row over the fur trade, the fur industry has long been criticised by many environmental groups, such as People for the Ethical Treatment of Animals (PETA), Fur-Bearer Defenders and Respect for Animals. Nowadays, quite a few designers prefer to use fake fur (also referred as faux fur) to highlight their green endeavours. While more and more fashion brands or labels, like Giorgio Armani, Matt & Nat, Uniqlo, H&M, Zara, Abercrombie & Fitch, Paul Frank and Levi’s, have adopted fur-free policies, scientific research into the welfare of farmed fur-bearing animals has been ongoing, particularly in the Netherlands, Russia and the Nordic countries. An example of the fur trade’s commitment to responsible practices is the Agreement on International Humane Trapping Standards (AIHTS).

CEPA Provisions

The mainland and Hong Kong agreed in October 2005 to further liberalise the mainland market for Hong Kong companies under the third phase of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA III). Under CEPA III, the mainland agreed to give all products of Hong Kong origin, including fur items, tariff-free treatment starting from 1 January 2006.

Detailed information, including the origin rules for fur clothing and fur skins, is available from the following hyperlink:
http://www.tid.gov.hk/english/cepa/tradegoods/files/mainland_2017.pdf

General Trade Measures Affecting Exports of Fur Clothing

Fur farming is strictly regulated in many countries. In the EU, Council Directive 98/58 sets down rules covering the welfare of all farmed animals, including fur farmed animals, while Regulation (EC) No. 1099/2009 deals with the slaughter and killing of farmed animals including fur animals. In addition, many EU countries have their own specific national legislation on fur farming. For example, Germany has in place since 2006 a regulation on fur farming, specifying the need to increase the minimum cage size and provide sufficient water basins. In the US and Canada, fur farming operators have to follow strict Codes of Practice and conform to the state/provincial or national regulations in respect of animal welfare.

To ensure that consumers can be fully informed of which type of fur they are buying at the point of purchase, IFTF European member associations has introduced a fur-labelling scheme (BFTA Fur Labelling Scheme). Under the scheme, a separate label is prominently secured to the manufacturer or retailer's label, and will identify clearly the species of fur in English/local language with its scientific Latin name.

Starting from 8 May 2012, the regulation on textile labelling, which aims to ensure that consumers can distinguish between real and fake fur and leather products, has become effective in the EU. The regulation requires the presence of non-textile parts of animal origin in textile and clothing products to be indicated by using the phrase "contains non-textile parts of animal origin" on the label or mark of products containing such parts.

In the US, The Truth in Fur Labelling Act of 2010 was signed into law on 18 December 2010, amending the US Fur Products Labelling Act (FPLA) to require labelling of all fur garments, regardless of value. Moreover, furriers are obliged to observe international restrictions on the preservation of endangered species. The Washington Convention (Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES)) restricts or prohibits the trade of certain species as listed in the Appendices, including but not confined to those threatened with extinction.

Product Trends

Along with the slow global economic recovery, simple, elegant and multi-fabricated designs are gaining popularity. Designers focus more on the details of their designs or collections by incorporating more colourful, bold-toned and graphic elements, rather than making use of large pieces of furs to attract the eyeballs of customers. Yet vintage designs such as retro-inspired silhouettes are still prevalent.

Taking into account the long-term impact of the gradually rising temperature brought by global warming, it is important for the fur trend to move from a cold-climate utility into a more metropolitan fashion market. Short fur coats and fur shirts with subtle trimming have become a leading trend. For example, fur boleros, furry vests and short/three quarter/long sleeve cropped jacket are the chic styles prevailing in the market. They are now widely sold at fashion websites such as Polyvore and Furbazaar. On the other hand, the business of fur restyling and alteration has also seen decent growth in recent years, when consumers have tightened their budget and preferred alteration to new purchase.

The popularity of fur accessories increases in line with the availability of new techniques in fur manufacturing. For instance, new techniques allow designers to customise furs into different shapes such as diamond, window and octopus. Nowadays, fur has become increasingly dexterous, durable, soft and versatile, thanks to the new and advanced processing and dyeing techniques. Therefore, fur, as another flexible garment fabric, can be cut into silhouettes and dyed in fashionable colours for designers and manufacturers to work on.

Also noteworthy is the ever-growing consumer consciousness of environmental conservation and animals’ welfare and rights. An increasing number of people want to make sure their purchase comes from a source where ethical standards are in place. Catering to this trend, the fur trade is phasing in a voluntary labelling programme, the Origin Assured Label or OA™, which informs customers the origins of the products and local regulations or standards governing fur production.

Given the further enhancement of the regulations on environmental conservation and animal protection, fur which is biodegradable and less polluted in the production process is increasingly considered a sustainable material. In the meantime, recycling fur has started to grab the attention of producers and consumers. For instance, Canada’s HARRICANA PAR MARIOUCHE has been saving more than 800,000 animals over the past 15 years by recycling old furs, whereas Cash For Fur Coats (CFFC) has been recycling old fur coats into plush toys and pillows.

 


[1] Since offshore trade has not been captured by ordinary trade figures, these numbers do not necessarily reflect the export business managed by Hong Kong companies.

Content provided by Picture: Louis Chan
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