Hong Kong’s footwear makers recently expressed fears that their profits would be affected by the U.S.–China trade war, especially as President Donald Trump has said that he is considering increasing tariffs to 25 percent from 10 percent for Chinese goods worth $200 billion.
The chairmen of two major footwear trade associations in Hong Kong indicated that since orders from the United States make up about 80 percent of their business, Hong Kong’s footwear industry is set to face great challenges. Many Hong Kong footwear companies own factories in China.
While shoes currently aren’t on the list of Chinese goods that the U.S. administration has proposed for the latest round of U.S. tariffs, the industry is anxious after Trump said he was prepared to extend tariffs to all imports from China, roughly valued at $500 billion.
Hong Kong shoe industry representatives recently told local media they expect many factories in China will shut or be forced to move out of China next spring. In addition, 70 percent of shoe manufacturers will have to reduce their scale of operations.
Statistics from the Hong Kong Trade Development Council reveal that most Hong Kong footwear makers have moved production facilities to mainland China in recent years due to rising operating costs in Hong Kong. As of December last year, the number of employees in the footwear industry in Hong Kong has decreased by half year-on-year.
Meanwhile, some shoe manufacturers were classified as import and export businesses after their factories were moved to China. At the end of last year, there were 1,110 import and export footwear enterprises in Hong Kong, representing a drop of 15.2 percent year-on-year. Meanwhile, the total number of employees in this field fell to 5,440, a 17.2 percent decline year-on-year.
According to Ben Cheung, president of the Hong Kong Footwear Association, there are currently about 2,000 Hong Kong-owned shoe factories in mainland China. He told Hong Kong newspaper Oriental Daily News on Aug. 6 that under the current trade war, he believes the number will dwindle.
Cheung also noted that it is risky for Hong Kong footwear manufacturers to take orders from U.S. shoe brands. However, if they receive the orders, they must produce them. The peak period of production runs from August to October, while November is the peak period of shipment. It is expected that shoe exports will decrease in the fourth quarter after Christmas.
Frank Leung, chairman of the Federation of Hong Kong Footwear, also told the newspaper that problems will likely emerge early next year. He estimated that Hong Kong’s footwear exports will fall around Chinese New Year.
Leung is particularly worried that U.S. buyers will reduce or even stop orders altogether, which will harm the livelihood of Hong Kong footwear employees. He said that major investments in China have been suspended and urged association members to invest carefully.
“We don’t know how long the [trade war] will last,” he said. “All might be dead before the end of the war!”