Defending Hong Kong’s Sourcing Castle

Like many of you, I’m frequently questioned about Hong Kong’s status as a centre point for global sourcing across the fashion and non-fashion industries. The agreeable consensus on where the city stands is as “stable (relatively) for a 5-year time frame”. Looking beyond 5 years or even 2 years at this current point in time is especially challenging.

                                                                                                   Spire Exec Illustrations Ltd.

My bias is with Hong Kong continuing its stalwart status having been born in the city some 29 years ago. Much has changed since that time, but Hong Kong’s response (community & government) to this year combined with the global context has only solidified its positioning. Let’s take a look at the castle’s defences and external pressures.

Those Crocs Defending Moat

Supply Proximity
Hong Kong’s ability to tap into both China and other key Asian production supply chains is unrivaled. As containment in Asia begins to open up regulated international travel within the region, the reliance of head offices in both the US & the EU on teams in Hong Kong increases.

When the travel beltn loosens up a few notches we’re going to see massive collaboration acceleration, sourcing organisations already running strong vendor empowerment programs will deepen integration with suppliers and teams will run extensive auditing based around scenario planning for multiple outcomes that could take place in 2021. The ongoing materials supply chain chaos from 2 months ago is case and point.

Culture
Hong Kong’s collaborative identity and ecosystem culture is unquantifiable, but if you were to put a price tag on the city’s cultural value towards the sourcing ecosystem then you’d be counting the 0s for a long time. As cliché as it sounds the city has a magic to it, the values and norms give Hong Kong structure + efficiency. The city’s productivity shines in today’s world where everyday work has become a massive challenge.

Financial Infrastructure
Goes without saying.

Physical landscape
Two Wednesdays ago I spent the morning in Lai Chi Kok, nipped back to the Island followed by a meet in Kwun Tong. I then went to Tsuen Wan to pick up our new pup (picture for newsletter subscribers only…).  Not many cities in the world can replicate this connective efficiency, video meeting platforms fill in a lock down void and have taken away some “market share” from physical distancing. But a real threat to societies and businesses in the future is a western “work from home” hemisphere matching with an eastern “in the office” mismatch. Collaboration in health secure countries will accelerate at a faster pace than virtual workforces. Just look that work teams in Hong Kong are going to inherit as a result of further European lockdowns.

Talent
The city’s talent continuously amazes. The 852 is known for efficiency, resilience, knowledge as an asset, some of the best universities worldwide as well as international talent pools.

For decades foreign managers have been imparting experience with teams in Hong Kong and this exchange is ongoing coupled with labour laws are overly employer friendly here you get a slight advantage towards unlocking change and transformation. China and neighboring production countries closer to supply have been upskilling talent pools, but talent combined with culture gives Hong Kong a distinctive advantage.

The Foes Trying to Cross the Water

Talent as a threat
The city is lacking the “injection” of young talent into the ranks resulting in supply chains losing out to other industry verticals. The talent pools in the city are missing critical newness in a period of digital disruption and below the surface unemployment numbers will no doubt tell the story of many jobs/positions in Hong Kong going into extinction in there near future.

If Hong Kong wants to retain its talent elite status it needs to lead the way in pioneering “new old” technologies. Hypespace: The government needs champion reemployment in order to protect the employability of those who’ve been let go from jobs that’ll never return. Subsidised tuition or free tuition altogether for 3D fashion software courses where individuals qualify because of previous industry experience. Browzwear or CLO Virtual Fashion have the opportunity to generate a future pipeline of business users by entering in collaboration with the Government giving away tuition licenses. 

When the floodgates of globalisation do open up again retailers will be finalising due diligence on their regional resources vs alternatives in Asia. Access to talent and quality of talent are two critical factors in the decision-making criteria and an ecosystem of organisations motivated by the purpose of progressing the sourcing talent pool into the future will help the city maintain its elite status.

Retreating Alternative Hubs
The regional hub debate has garnered a significant amount of attention and like any success story it rarely takes place overnight, but with global migration at a halt the often lauded Singapore vs Hong kong debate has stalled. Risk management in 2020 has meant a significant amount of due diligence exercises on the island state’s feasibility vs Hong Kong’s positioning, but these “exercises” seem to be the equivalent of training for a marathon without a start date.

Technology
The buzzword laden space has moved from fringe conversation status across organisations towards a necessity nature. Most technological disruption to the industry comes away from supply chain geographies and close to market headquarters. With most capital invested into technologies outside of Asia the city potentially loses out on protecting its foothold when we move to an era of rationalised travel. Leading to our next point and the largest threat.

Offshore Capabilities
Production countries have been going through massive advancement with talent, technologies and societal gains. Leadership roles might be redistributed in order to foster a more reactive and collaborative supply chain, earlier this year we surveyed 50s leaders with the question “If not Hong Kong, where else?” 50% of our partners indicated a redistribution to production countries. Hong Kong’s sourcing role could become the equivalent to the Centres of Excellence that businesses like Starbucks runs regionally to support its franchise partners.

Li & Fung’s Privatisation
As much as the business has dipped out of the spotlight in recent times they pioneered the supply chain industry and its connection to retailers worldwide. The access set forward a chain of events that formalised sourcing, with their current downscaling new opportunities no doubt arise, but in parallel the business’ lessening impact creates a vacuum of thought leadership to the industry. Their ties with policymakers no doubt pushed the agenda for Trading and Sourcing in Hong Kong. 

Their early mover position into the “digital supply chain” also sparked the dialogue of technological advancement. Regardless of transformation outcomes, dialogue created from heavyweights spurs action from other ecosystem players. The same goes for sustainability.

Donne’s Dime
Hong Kong’s rock-solid for now, but we’re living on shortened lockdown horizons. The city has the opportunity to solidify its foundation, supply chain organisations need to continue lobbying for value-added services closer to source like design, digital product content etc. Fresh representation of the supply chain and sourcing industry with key political bodies and the rapid upskilling of talent into “new” old technologies will help the city keep up with rate of change and evolve into whatever the future may represent