Strategic Responses by Hong Kong Textile and Clothing Firms toward the MFA

Abstract

The present paper constitutes the first part of the Research Project on ‘Hong Kong Textile and Clothing Industrialists’ Strategic Responses toward the MFA'. It was the authors' intention to examine how the textile and clothing industrialists in Hong Kong have managed to cope with the Multi-fibre Arrangement (MFA) issues during the last two decades. The study was composed of three parts. First, a thorough review of the literature was conducted on issues related to the MFA and the Hong Kong textile and clothing industry. Second, a list of ten strategic actions was initially developed by the authors to be used to conduct in-depth interviews with fifteen professionals in the textile and clothing industries in Hong Kong, including industrialists, managers, and academics. Seven categories of strategic actions were identified to be adopted by the textile and clothing firms in response to MFA issues: (a) switching to production of non-quota items; (b) increasing focus on value-added items; (c) implementing new technology; (d) switching production to low-cost countries with quota advantages; (e) venturing into non-quota markets; (f) diversifying into retailing and other businesses; and (g) investing directly in developed importing countries. Third, on the basis of these seven strategic actions, the authors conducted in-depth interviews with top managers of 41 local clothing firms that had exported clothing products to countries with quota restrictions. The results indicated that four of the seven strategies were adopted by the majority of clothing firms in Hong Kong.

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