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Fur Industry in Hong Kong

Overview

  • 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 in mainland China and/or Southeast Asian countries. Still, many major sub-sectors of the fur industry, particularly sales and distribution, remain in Hong Kong.
  • Hong Kong’s fur clothing exports, despite the tit-for-tat tariffs on fur imposed by both the US and mainland China, soared by 13% in the first half of 2019, after a 12% growth in 2018 and a 7% growth in 2017. Re-exports, accounting for nearly all fur clothing exports from Hong Kong, also rose by 13% for the same period.
  • Mainland China is the largest market for Hong Kong's exports of furskins, accounting for 67% of the total exports in January-June 2019. A large proportion of Hong Kong's furskin exports are re-exports from overseas countries to the mainland for fur clothing production there.
  • 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. 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.

Industry Features

Table: Industry Features (Fur Industry)
Table: Industry Features (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 in mainland China, 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]

Table: Performance of Hong Kong Fur Exports
Table: Performance of Hong Kong Fur Exports
Table: Performance of Hong Kong Fur Exports (by markets)
Table: Performance of Hong Kong Fur Exports (by markets)
Table: Performance of Hong Kong Fur Exports (by Categories)
Table: Performance of Hong Kong Fur Exports (by Categories)
Table: Performance of Hong Kong Fur Exports (Furskins))
Table: Performance of Hong Kong Fur Exports (Furskins))

Hong Kong’s fur clothing exports expanded further by 13% in the first half of 2019, after growing 7% and 12% in 2017 and 2018, respectively. Re-exports, accounting for almost all fur clothing exports from Hong Kong, also rose by 13%. Domestic exports also soared by 32%.

Taking up 60% of Hong Kong's fur clothing exports in the first six months of 2019, Canada, the EU and South Korea were the three leading export markets of Hong Kong's fur clothing. The 213% year-on-year surge in sales in January-June 2019 made Canada the largest export market of Hong Kong’s fur clothing, while the staggering sales jump of more than 1,000% in Vietnam is likely a result of the subsequent supply chain adjustments in tandem with the ongoing Sino-US trade disputes.

A large proportion of fur produced by Hong Kong furriers in their factories in mainland China is not shipped out from Hong Kong. Some of them are shipped via the ports on the mainland. For instance, certain Hong Kong furriers deliver products from their mainland factories 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 decreased by half to HK$205 million during January-June 2019. Mainland China is the dominant market for Hong Kong's exports of furskins, accounting for 67% in the first six months of 2019. Indeed, most of Hong Kong's furskin exports are re-exports from overseas countries to the mainland – the world’s biggest fur trade, production and processing base – for the purpose of fur clothing production there.

Sales Channels

An overwhelming majority of fur clothing produced in Hong Kong and/or their plants on the 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, mainland China and Central and Eastern Europe. For example, Asia Fur Company Ltd. has developed its own brands, Altioli, 5th Season and Furever, 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”.

Trade fairs and exhibitions remain common places for buyers and suppliers of clothing to congregate, with Beijing, Frankfurt, Hong Kong, Istanbul, Kastoria, 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 one of the most important fur trade events, attracting over 180 exhibitors from 10 countries and regions and buyers from over 30 countries to confirm a total order of more than US$80 million in 2019. This compared with US$58 million in 2018, thanks largely to the 97% robust growth of Chinese orders underpinned by the emergence of a new consumer community comprising the upper middle class, affluent class, new-generation consumers and online buyers.
Industry Trends

Farmed furs are the mainstay of the fur trade and the most common farmed fur-bearing animals are minks and foxes. Most fur farming activities take place in mainland China, Denmark, Poland, the Netherlands, Finland, the US and Canada. The majority of raw skins produced by fur farmers and trappers are then sold through modern international auction houses, often located close to producing areas. The world's largest fur auction houses are in Copenhagen, Helsinki, Oslo, 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, mainland China, Greece, Hong Kong and Russia, followed by France, Germany, Italy, Korea, Japan, Spain, Turkey, Ukraine and the US.

According to the latest report commissioned by the International Fur Federation (IFF), global fur retail sales are estimated at around US$23.5 billion in 2017, with mainland China and Europe being the largest markets. However, challenges such as volatile pelt prices owing to the slow recovery in demand in excess of stock depletion and the rise of anti-fur movement by animal rights campaigners and fur-free branding by designers and retailers remain headaches to fur farmers and traders.

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 such as Chanel, Giorgio Armani, Prada Group, Versace, Gucci, Furla, Mulberry, Coach, DKNY, Paul Frank, Michael Kors, Calvin Klein, Vivienne Westwood, Ralph Lauren, Hugo Boss, Tommy Hilfiger, Uniqlo, H&M, Zara, Abercrombie & Fitch, Matt & Nat 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 here.

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. In the US and Canada, fur farming operators have to follow strict code of practice and conform to the state/provincial or national regulations in respect of animal welfare.

In order to improve animal welfare on European fur farms, Fur Europe (a Brussels-based umbrella organisation representing the entire value chain of the fur sector in Europe) initiated in 2009 WelFur, an animal welfare assessment programme evaluating the level of animal welfare on farms. Fur farms that are not WelFur-certified by 2020 will be unable to sell their skins through the international fur auction houses, effectively driving the non-certified fur farms out of business.

In order to ensure that consumers can distinguish between real and fake fur and leather products, Regulation (EU) No 1007/2011 has become effective since 8 May 2012 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, with certain information, such as the animal’s name, the name of the manufacturer, and the garment’s country of origin.

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

Despite global economic uncertainty, fashionable or casual lightweight designs are gaining popularity among younger customers. Fur industry is offering more diversified products, such as presenting refreshing looks incorporating elements of a down or fur jacket. Bold pop art was combined with traditional craftsmanship to create a playful look, while a creative palette gave the material a chic twist.

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: Charlotte Man
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