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Spectacles Industry in Hong Kong

  • Hong Kong's spectacles companies specialise in making medium to high-end frames. They mainly produce for overseas buyers and renowned international brands on an OEM and/or ODM basis with their manufacturing bases on the Chinese mainland.
  • Hong Kong was the world’s third largest exporter of spectacles and frames after the Chinese mainland and Italy in 2016. In the first half of 2018, Hong Kong’s total exports of spectacles, lens and frames slid by 2% year-on-year to HK$10.4 billion. The EU and the US, accounting for more than 60% of the total, were the two biggest markets.
  • Facing keen competition from indigenous Chinese companies, Hong Kong companies strive to improve their quality and design by using advanced technology to uphold competitiveness. Technological advancement allows the use of lighter, more durable and environmentally-friendlier materials.
  • Fashion and designer labels often promote their collection of spectacles and frames as fashion-forward accessories. Frames featuring floating big logos at temples and accents with crystals, colour stones, metal and diamonds are a prime source of added style.

Industry Features

Hong Kong's spectacles makers specialise in making medium to high-end frames. They are able to cope with small orders and offer an extensive range of frame designs. Hong Kong companies are traditionally strong in making plastic spectacles frames, which include hand-made cellulose acetate frames, rimless nylon frames, and injection-moulded frames. They also produce metal frames made of rolled gold, aluminium alloy, brass, stainless steel, silver, titanium and mixtures of metals.

The majority of Hong Kong's spectacles companies are engaged in the production or trading on an OEM and/or ODM basis for overseas buyers and international brands. This labour intensive industry is characterised by short life cycle, fast changing design and small order sizes. In this regard, a few Hong Kong companies such as STELUX Holdings International Limited have diversified their business from manufacturing to distribution and retail of brand-name products on the Chinese mainland and overseas, with some even developing and producing their own brands.

Hong Kong's spectacles companies are facing keen competition from their counterparts in nearby regions, particularly from Wenzhou and Danyang of the Chinese mainland. Nonetheless, competition is confined to the lower-end sector. The leading Italian companies still prefer to engage with Hong Kong sub-contractors because of their quality, business integrity and long established relationship.

In order to reduce operation costs and stay competitive, many spectacles makers have relocated their factories to the Chinese mainland, particularly in Shenzhen and Dongguan, where labour and land costs are lower than that in Hong Kong. On the other hand, high value-added activities, including marketing, management, finance and accounts, are still carried out in Hong Kong.

Technological investments such as advanced machinery and information technology are substantial for large-scale manufacturers in improving their production efficiency and product design. They are equipped with 3D CAD/CAM technologies and computer numerically controlled (CNC) production lines to enhance their design and streamline the production process. For instance, 3D Head Mold and design database can customise spectacles which fit in with Asian face.

The industry is well supported by ancillary industries, including the production of cellulose acetate sheets for plastic frame production, optical parts including spring hinges, nose bridges and temples, as well as other industrial supports such as electroplating and mould-making.

Performance of Hong Kong Spectacles Exports [1]

Table: Performance of Hong Kong Spectacles Exports
Table: Performance of Hong Kong Spectacles Exports
Table: Performance of Hong Kong Spectacles Exports (by Major Market)
Table: Performance of Hong Kong Spectacles Exports (by Major Market)
Table: Performance of Hong Kong Spectacles Exports (by Major Category)
Table: Performance of Hong Kong Spectacles Exports (by Major Category)

Source: Hong Kong Trade Statistics, Census and Statistics Department

Hong Kong was the world’s third largest exporter of spectacles and frames after the Chinese mainland and Italy in 2016, according to the latest available data. In the first half of 2018, Hong Kong’s total exports of spectacles, lens and frames decreased 2% year-on-year to HK$10.4 billion. During the period, exports to the EU and the US, the two largest markets with a combined share of more than 60%, while the former fell by 1% and the latter rose by 3% year-on-year, respectively. However, exports to the Chinese mainland and Australia, the next two major markets, showed a slide of 26% and a surge of 43%, respectively, in January-June 2018.

By major category, spectacles and goggles, and frames and mountings, took up the largest share to account for a total of 84% in the first six months of 2018. On the other hand, the next two major categories, lenses and parts for frames and mountings, saw a 16% slide and a 14% growth, respectively, in January-June 2018.

Sales Channels

On the retail side, most of the sales are done by chain stores and mass merchants worldwide. Many manufacturers deal with overseas buyers directly, including large retail chains. There are a growing number of Hong Kong exporters that produce house or international designer brands under licensing agreement. Some Hong Kong exporters have formed strategic alliance with overseas companies and brand license to consolidate long-term relationship and explore overseas market opportunities. Hong Kong manufacturers are also engaged in OBM, developing their house brands for other markets, particularly in Southeast Asia and the Chinese mainland. Some larger companies such as STELUX Holdings International Limited, which introduced the eGG Optical Boutique in 2011, have diversified into distribution business by setting up retail chain stores on the Chinese mainland, while some of them even have established distributors throughout Europe, North America and Asia.

Attending international optical trade fairs is an effective way to increase the exposure in overseas market. Below is a list of some major trade fairs:

Table: List of Some Major Trade Fairs (Spectacles)
Table: List of Some Major Trade Fairs (Spectacles)

Industry Trends

Offshore outsourcing: Facing stiff price competition from Hong Kong and Chinese suppliers, spectacles manufacturers overseas have been shifting their focus from production to design and brand management. A few of them, as brand or license holders, have outsourced production to lower-cost areas under licensing agreement, including the making of parts and processing into finished spectacles. More of their resources are instead used in marketing and brand building. Some Hong Kong manufacturers benefit from this trend as they enter into licensing arrangements to design, manufacture and market frames for fashion brands and cartoon characters. This trend of offshore outsourcing is particularly prominent among European and Japanese companies.

Downstream expansion: Growth is boosted worldwide by continuous investment in distribution business. The strategy involves isolating and exploring opportunities to invest further downstream. With this direction, Hong Kong companies gain important opportunities to control the entire supply chain network and deliver products directly to its end-users. However, backings of internal management and logistics systems as well as improving the speed of operational processes are keys of success for the downstream expansion.

Online retailing: Internet has increasingly become a preferred option for buying spectacles, thanks partly to the prevalence of wearing sunglasses as fashion accessories and online shopping. Consumers are looking for new and innovative products that offer the latest designs, while becoming more knowledgeable about and receptive to fashionable and popular brands that sell only online.

Emphasis on design, innovation and quality: Apart from cost-controlling measures, Hong Kong companies are putting increasing emphasis on design, technological innovations and quality management to stay competitive. Many large Hong Kong manufacturers have attained quality management certification, such as ISO 9000 and/or Q-Mark awarded by the Federation of Hong Kong Industries. To promote and enhance the design and quality of Hong Kong eyewear, an eyewear design competition is held every year.

ODM and OBM trends: Indeed, Hong Kong exporters are facing the challenges of escalating production costs, as higher raw material prices, labour wages and energy prices have fully offset the positive effects of economies of scale. ODM basis of production has helped various Hong Kong companies to increase value-added. In addition, some companies, such as Sun Hing Optical Manufactory Ltd and Arts Optical International Holding Ltd, have also shifted their focus further to OBM – developing their own brand products in order to enhance their competitiveness.

Business opportunities on the Chinese mainland: The optical market is promising, considering a repurchase cycle of three years with an average annual demand of 300 million pairs. Some foreign companies seek for partnership opportunities with Chinese chain stores notwithstanding the fact that existing ones are confined to big cities and are much smaller in scale as compared to their foreign counterparts. Meanwhile, some leading manufacturers, such as the Luxottica Group and HAL Investments (Asia) BV, have entered the Chinese market through acquisition.

Environmental trends: Eco-friendliness and sustainability are becoming progressively important issues in the spectacles industry due to more stringent environmental laws and regulations. To stay compliant and competitive, for example, the Hong Kong Productivity Council (HKPC) has helped Arts Optical International Holdings to develop the ‘Ion Plating Technology’ for electroplating to reduce wastewater discharge and add value with the anti-scratch and abrasion resistant features.

CEPA Provisions

Under the third phase of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA III), the mainland agreed to give all products of Hong Kong origin, including spectacles, tariff-free treatment starting from 1 January 2006. According to the stipulated procedures, products which have no existing CEPA rules of origin, can enjoy tariff-free treatment upon applications by local manufacturers and upon the CEPA rule of origins being agreed and met. Non-Hong Kong made spectacles remain subject to tariff rates of 6-20% when entering the mainland.

The rules of origin for contact lenses and spectacles lenses to benefit from the CEPA's tariff preference are the same as the current rules governing exports to other markets. For contact lenses that are manufactured from polymer, the principal processes namely lathe-cutting and polishing are required to be done in Hong Kong for the purpose of delineating their origin. For spectacles lenses that are manufactured from lens blank, the principal process is grinding/polishing of refractive curvature. Detailed information is available here.

General Trade Measures Affecting Spectacles Exports

Spectacles are generally not subject to prohibitive import tariffs or non-tariff barriers in the developed markets including the US, the EU and Japan. Tariff preferences under the GSP Regulation for China-made optical goods imported into the EU have also been removed completely since May 2004.

Spectacles exports are required to comply with certain safety and quality requirements. An EU Directive (89/686/EEC) that is currently in force stipulates that personal protection equipment must meet specified safety requirements and bear a CE mark when being sold in the EU market. Since December 1999, the EU has set requirements for nickel in products that come into contact with skin. In the US, spectacles/sunglasses must comply with impact-resistant lens regulation. Another regulation – ANSI Z80.3 – is further developed by the American National Standard Institute (ANSI) to govern non-prescription sunglasses and fashion eyewear.

Product Trends

Lightweight materials and new mixes: Customers prefer lightweight and durable frames. Popular frame materials include laminated zyl that has layered colours, blended nylon which is especially good for sports and performance frames, as well as monel (a mixture of a broad range of metals) which is increasingly used as it is malleable and corrosion resistant. Titanium frames are always popular while Beryllium, a steel-gray metal, is a lower-cost alternative. Besides plastics and metal, materials such as wood, bone and buffalo horn are sometimes used for fashionable and interesting designs.

Fashion and designer labels: Apart from being a medical device or a vision necessity, eyewear has also become a fashion accessory, a fashion statement, to go with clothes. Many fashion and designer labels promote their collection of spectacles and frames as fashion-forward accessories. Indeed, many fashion brands have granted licenses to spectacles manufacturers. For example, Luxottica Group has been producing and distributing the brand eyewear of Chanel, Burberry and D&G, etc. under license agreements with the respective brands. The increasing emphasis on design, not only for women but for men as well, has also successfully changed the previous perception towards glasses relating to aging.

Frame styles: Frames featuring floating big logos at temples and even the hinges are common among the brand named eyewear. The temples are getting lower to give a trendy look. Spring hinges allowing temples to flex backward and forward are widely used. Some frames are screwless and feature a patent-pending flex-hinge design that allows customers to quickly make repair by hand without costly parts or tools. Handcrafted frames that are durable, comfortable and easy to adjust are also gaining a following. The top brow and the temple of a frame are a prime source of added style, for example, accents with crystals, metal, colour stones and diamonds. Narrow rectangle shape dominates the style. Sport also continues to influence frame styles. Large wraparounds and oversized styles are particularly popular.

Role of lenses: In recent years, people tend to spend more money on the lenses (costing on average more than 50% of the price of the spectacles) than on the frames owing to the more important role of lenses in fashion. Also some are more willing to keep their old frames while buying new lenses. Nowadays with technology advancements, lenses provide more special functions beyond eyesight correction and protection, such as anti-reflective, anti-scratch and anti-glare. There is a considerable amount of research and development being done in these areas, with results such as an in-the-lens telescope to help people with more severe visual impairments to drive and adjustable strength lenses for the presbyopic market.

Rise of demand for presbyopic glasses: In 2017, there are 962 million people worldwide aged 60 and older, making up 13% of the global population, according to the United Nations. This ratio is higher in developed countries. Riding on the aging population, a rising demand for presbyopic glasses is expected. However, at the same time, presbyopes who have just turned 40s can be in denial of their eyesight degeneration. Over the counter glasses therefore become popular, as they can be the first step towards prescription glasses.

Rising popularity of sports eyewear: Polycarbonate and acrylic material technology have been boosting the sports eyewear sector. With the help of continued advancement in technology, new super light-weight and strong materials appear and support the sports eyewear sector. Growing health consciousness and increased popularity of sports will lead to a greater demand for sports eyewear. In addition, eyewear, especially sports eyewear, is expected to fulfil the international standard of UV-400.

Increased demand for sunglasses: Sunglasses production shows the fastest growth among all sectors in spectacle industry, especially in Italy, Spain, South Korea and China. The trend of global warming can be one of the reasons. The purchase of sunglasses from women can be lasting throughout the whole year as they concern fashion and style more. For men, it is usually more seasonal. Celebrities can show a leading trend for sunglasses, as they are considered symbol of fashion by their fans.

Rise of vintage trend: Thanks to the success of Korean fashion in recent years, vintage glasses such as round and wire-rimmed glasses are fast gaining popularity. A well-known Taiwanese online shop “momoshop”, for example, saw their sales of round eyeglasses doubled in 2016, while some internationally renowned brands have created famous collections of classical and vintage spectacles like Lunor’s “Classic Round”, Lotos’s “Retro” and Moscot’s “Classiconic”.

[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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