U.S. Buyers a Common Sight at Hong Kong Fashion Week

HONG KONG—The buzz at Hong Kong Fashion Week, held July 5–8, was that U.S. buyers had come out of hiding but European buyers were hibernating.

Up and down the voluminous halls that make up the Hong Kong Convention and Exhibition Centre, factory owners at the show marveled that U.S. importers and retailers seemed to be everywhere, prowling the booths for new sourcing partnerships or visiting old business contacts shelved during the economic downturn. Budgets were also bolstered by consumers tired of reworking their closets and enthused about shopping again.

“We are seeing many buyers from North America and Canada,” said Jigar Dewan, a vice president at Ma’am Arts, an apparel company in Jaipur, India, that makes dresses and tops. “The show has been good. I think we are getting the old customers back. It is better than last July.”

Retail sales in the United States have been steadily crawling out of the dumps. The U.S. Commerce Department reported that department store sales in June posted a 1.1 percent gain. Some stores did better than others.

In June, Nordstrom Inc. reported its same-store sales were up 14.1 percent, and Macy’s showed a 6.5 percent uptick.

Those positive numbers were bolstering buyers such as Sarah Wilsterman of Los Angeles, whose contemporary label, Wilster, launched in 2006 at stores such as Barneys New York. The former Guess? Inc. designer creates a variety of looks out of her office at the Cooper Design Space. Sitting at a Chinese factory’s booth, eyeing fabrics and clothing, she said her budget this year had grown by 30 percent.

Likewise, Jakob Separzadeh, whose Los Angeles label of sweaters and coats is called Radzoli, was working with a budget that was 20 percent higher than last year. “Last year, when we were showing Fall items, our customers wanted it, but they didn’t have the confidence to leave orders,” Separzadeh said. “This year, they haven’t purchased enough merchandise or they have more confidence.” More on the floor

Even exhibitor attendance at the biannual show, held every January and July, saw a slight improvement. Some 1,294 exhibitors, primarily from China and Hong Kong, filled the convention center’s halls, compared with 1,164 last year.

But a tiny rain cloud was hanging over increased budgets and consumer confidence. Raw-material costs are up at least 20 percent over last year, and factory workers’ salaries in China have risen by the same percentage.

A yawning labor shortage has Chinese apparel factories scrambling for workers who have opted to return to their villages to work in jobs created by new retail opportunities, the service industry, and the Chinese government’s push to build more highways and railways.

Vincent Fang, chief executive of The Toppy Group, a company with 800 stores worldwide and an apparel manufacturer with a large factory in China, said his 5,000-strong workforce shrunk to 3,500 this year. “I didn’t have to lay them off. They just went away,” he said.

The only way Chinese manufacturers can survive these cost increases is to cut margins because U.S. retailers are reluctant to raise prices, Fang said.

But some manufacturers are gambling and boosting prices by as much as 20 percent. Ma’am Arts’ Dewan said cotton price increases of 15 percent to 25 percent led him to raise his wholesale prices as much.

The same was true at Trimex International Sourcing in Shanghai. Showway Chen, the company’s president, said he saw no other alternative than to hike prices by 20 percent for its dresses, skirts and blouses. “We are focusing on the middle to higher market now,” Chen said. “The Americans are still buying because no other country can replace China at the moment for its efficiency and skill.”

The factory labor shortage is leading to another problem. Apparel importers are seeing long delays in delivery times, catching many importers off guard. “Nobody can get anything out on time,” said Wilster’s Wilsterman.

Some factories were taking as long as six extra weeks to get goods out the door. Radzoli’s Separzadeh was being cautious by ordering goods extra early. “It’s usually two months’ delivery, and now it is 100 days,” he observed.First-time luck

Despite the concerns surrounding price and delivery, exhibitors at the show were optimistic that the economy is slowly turning around and manufacturing will recover.

The show was a place to introduce new lines. Danny Yang, a Los Angeles–based partner in Alancamp International Ltd. of Taiwan, was seeing some positive reaction to the company’s line of pleated polyester blouses and jackets, which wholesale for $10 to $30. One customer from New York asked for samples of five different styles. “That is a good start,” Yang said.

Saivana, a New York–based label with a factory in India, was also attending the show for the first time and had already picked up orders from retailers in Australia and Japan even though the company’s prices are higher than most. Silk chiffon tops wholesale for $59 to $79, and embroidered dresses go for $99.

“We are very happy. It has definitely been good to pick up those new markets,” said Rosie Tisch, a Saivana sales representative who works out of Los Angeles. “We’ve done what we planned.”