RAPAPORT... Increasingly, Hong Kong is experiencing a changing of the guard as the city morphs into a service center for Chinese production.
Never content to stay still, the city of Hong Kong has made its reputation and fortune by moving with the times. As a colonial possession of Great Britain, the small territory flourished, building its government and infrastructure, attracting investments and business from all over the world.
When Britain made it known that it planned to hand the territory back to China in 1997, many residents scurried to obtain foreign passports and thousands relocated to other countries. Those who stuck it out, however, found new opportunities to expand their production facilities into the Mainland and have thrived. Today, the majority of manufacturing in jewelry, apparel, electronics, toys and hundreds of other products has left Hong Kong and moved to the Mainland, where there is a virtually limitless supply of cheap labor.
As recently as 15 to 20 years ago, the size of most Hong Kong jewelry factories was small. In fact, there were just a handful of manufacturers with 100 or more employees. Today, these big companies, as well as many smaller ones, employ hundreds — in some cases, thousands — of workers in a number of newly built industrial complexes just over the border on the Mainland. While the government has no definitive production figures, the great majority of Hong Kong’s jewelry manufacturing firms now have facilities on the Mainland, in neighboring Shenzhen and Guangdong.
JEWELRY CENTRALPreviously, jewelry production was centered in an area called Hung Hom, a drab industrial part of the city where jewelry, apparel and many other consumer products were manufactured. Major suppliers such as Continental, Tse Sui Luen and Myer had large factories, as well as retail showrooms that they opened to tourists and the public. Today, while some of the showrooms are still open, production facilities have shrunk to just a handful of workers. Most of the work done now involves marketing, shipping, billing and auxiliary services.
At the very beginning of the “Back to China” boom, newly hired Mainland workers were entrusted with just the most basic of tasks: casting, diamond setting and polishing. The more precise work was still done in Hong Kong. But now, after more than a decade of experience, much of the more detailed work and the creation of important pieces is done in China rather than Hong Kong.
Like New York — and many other world centers that have become too expensive for large-scale production — Hong Kong still is home to some of the country’s top artisans, who are employed in small workshops or on a freelance basis to jewelers. E & V Jewellery Ltd., a growing brand that specializes in intricate colored gemstone, diamond, crystal and porcelain combinations, does most of the work in its Mainland factory. Some of the finer designs that require more handwork, however, are still done in its small Hong Kong shop, says Vivian Chan, chief designer.
Another design firm that maintains a small workshop in Hong Kong is Baerjewels, known for innovative, one-of-a-kind pieces of diamonds, jade and pearls. Baer, which operates an upstairs boutique in Central and wholesales part of its production to a handful of upscale jewelers, says it is necessary to use top Hong Kong artisans for the meticulous handwork and finishing required for its jewelry.
NEW GENERATIONThe new generation of jewelry manufacturers, such as Waddy Jewellery Group, established in 1988, has always used factories on the Mainland. “Our new factory has 500 workers and we expect to double in size this year,” says Parco Lam, senior sales manager. This fast-growing firm has a unique formula for product development and sales. Managers meet on a bimonthly basis to focus on specific product and merchandising needs for each of the company’s different markets, which include North America, the Middle East and Europe. The main products from Waddy include machine-made diamond jewelry with invisible settings and micropavé.
One of the giants in Hong Kong production, Continental Jewellery Co., moved its operation to the Mainland about 15 years ago, says Vicki Chan, general manager. “We still maintain a minimal workshop in Hong Kong, but most of our manufacturing, diamond cutting and design is done in our Mainland factory that employs 3,000 workers,” she says.
Goldiaq Creation Ltd. does “some manufacturing in Hong Kong, but the majority of work is done in China,” says Bronia Yip, managing director. Most of this company’s production is sold in Europe, and consists of colored gemstone jewelry accented with diamonds. Its newest products use brown and black diamonds that contrast with white diamonds and colored gemstones.
According to nonChinese manufacturers, there are lots of restrictions that prohibit foreign firms from setting up factories or selling in China. For example, some cutting factories don’t sell their product there, just do the work, such as KGK Jewellery Mfg., Ltd., which cuts all its diamonds in Panyu, but cannot sell its merchandise in China.
For manufacturers already working in China, or for those who wish to streamline their business, there is a new center under development called Worldmart Jewelry & Gems Emporium, Ltd. According to K.K. Yeung, vice chairman and chief executive officer (CEO), this facility, located in Panyu in the Guangzhou province, will include factories, living quarters, production facilities, schools, shipping and customs services for member manufacturers.
Currently seeking members for this new concept, Worldmart is poised to go public within a short time. The stated intention of the facility is to “properly organize the supply chain” of jewelry. “We intend to run it like a stock exchange, with movement of merchandise to factories,” says Yeung. In recent years, he says, there has been a shift of responsibility from Hong Kong to China; it has been gradual, but is not yet complete.
Article from the Rapaport Magazine - April 2007. To subscribe click here.