hktdc.com - Giftware

Overview

Hong Kong is an important world-renowned sourcing centre for giftware. A wide spectrum of gift items can be sourced here, ranging from basic to sophisticated, high-valued merchandise. Hong Kong exporters are sensitive to changing market needs, and are known for quality, quick response, efficiency and reliability.
Hong Kong's giftware industry is supported by a strong network of competent ancillary industries. Sectors such as toys and figurine candles are well served by the mould-making industry. Timepiece manufacturing, for its part, is supported by the metal products industry in casings, bands and precision components.
The coming Beijing Summer Olympic Games 2008 will provide considerable business opportunities for giftware makers and distributors. The event is expected to cheer up a buying spree for souvenirs, festive items and related goods.

Industry Features

Giftware covers a wide spectrum of light consumer products in this profile, ranging from basic to more sophisticated, higher-valued goods such as toys, timepieces, jewel, silverware, kitchenware and clothing accessories. Other gift items include stationery, photo frames, jewellery boxes, artificial flowers, candles, soaps and works of art. This profile also takes in promotional items for corporate or the so-called premiums market.

Hong Kong's giftware exports are mainly targeted at the middle-to-high-end market, with competitive edges in product design and low production costs. Many Hong Kong companies have their own designers, and are shifting their business focus from original equipment manufacturing (OEM) to original design manufacturing (ODM), in order to acquire competitiveness and so as a higher profit margin. Some firms have even started to create and market their own brand by engaging in own brand manufacturing (OBM). According to a TDC survey conducted in 2007, 92% of respondents in the giftware/premiums industry were involved in OEM business, while 72% were in ODM and 44% were in OBM.

Hong Kong exporters are capable of delivering a large number of price-competitive products for the premium and give-away markets (including cotton T-shirts, baseball caps, ball-point pens, key chains, plastic watches and electronic gadgets), although a variety of middle-to-high-end gift items (such as porcelain dolls, silverware, brass and leather stationery, and jewellery sets) are also available. They are sensitive to changing market needs, and are known for quality, quick response, efficiency and reliability.

Hong Kong's giftware industry is supported by a strong network of competent ancillary industries. Sectors such as toys and figurine candles are well served by the mould-making industry. Timepiece manufacturing, for its part, is supported by the metal products industry in casings, bands and precision components.

Performance of Hong Kong's Exports of Giftware and Premiums^

-	2005		2006		2007
-	Value (HK$mn)	Growth (%)	Value (HK$mn)	Growth (%)	Value (HK$mn)	Growth (%)
Domestic Exports	10,459	+10	9,912	-5	10,951	+11
Re-Exports	154,719	+2	153,354	-1	155,452	+1
Of Chinese Mainland Origin	129,007	+2	127,807	-1	128,345	*
Total Exports	165,178	+3	163,266	-1	166,403	+2

by Market	2005		2006		2007
by Market	Share %	Growth %	Share %	Growth %	Share %	Growth %
USA	36.5	-1	35.3	-4	33.0	-5
EU	27.6	+6	28.3	+1	29.6	+7
UK	6.7	-2	6.8	*	7.0	+5
Germany	5.3	+8	5.1	-6	5.2	+4
Italy	4.0	+14	4.3	+7	4.7	+13
Japan	9.0	-1	8.5	-6	8.0	-5
Chinese Mainland	5.6	+1	5.5	-3	5.7	+5
ASEAN	3.5	+17	3.4	-4	3.7	+12

by Category	2005		2006		2007
by Category	Share %	Growth %	Share %	Growth %	Share %	Growth %
Wheeled Toys	-	-	-	-	25.5	=
Fine Jewellery	14.9	+22	17.2	+14	19.7	+17
Battery Powered, Non-precious Metal Wristwatches	16.0	*	16.5	+2	16.8	+4
Cases of Optical Goods	8.5	-2	8.6	*	8.4	-1
Imitation Jewellery of Base Metal	3.5	+25	3.5	*	3.8	+9
Wallets, Purses, etc.	2.9	+5	3.2	+6	3.5	+12
Non-Plastic Artificial Flowers	3.1	-6	2.7	-14	2.4	-7
Precious Metal Battery Powered Wristwatches	1.3	+29	1.4	+10	1.4	+5

Note: ^ Since offshore trade has not been captured by ordinary trade figures, these numbers do not necessarily reflect the export business managed by Hong Kong companies. * Insignificant. = Infinity.

Hong Kong's giftware and premiums exports, as reflected in trade statistics, have been quite sluggish in recent years. The US is the largest market for Hong Kong's giftware exporters, followed by the EU and Japan. In 2007, these markets respectively accounted for 33%, 30% and 8% of the total. Demand from the EU appeared to be stronger compared to other major markets, likely attributed by its higher purchasing power amid sustained economic growth and euro appreciation during the period. Product-wise, demand for jewellery items has stayed strong, but the robust growth was largely a reflection of the surging prices of precious metals in the past few years.

Structurally there was a rising trend of offshore trade. This tendency is phenomenal in the case of toys and some lower-priced gift items, particularly for those bounded for the US and increasingly the EU market. On the other hand, high-valued items like timepieces and precious jewel remain largely exported through Hong Kong, mainly by air.

Sales Channels

In general, Hong Kong companies rely heavily on OEM and ODM orders. While premium and give-away items are embossed with the buyers' company logos and names, most gift products are exported as open items. Hong Kong manufacturers also offer expertise in design, engineering, tooling, quality control and other technical know-how to its customers.

To expand business networks and explore market opportunities abroad, Hong Kong manufacturers may participate in some influential international trade fairs. Since gifts and premiums comprise a wide range of products, manufacturers may also participate in other related fairs; say for toys, stationery, jewellery, and timepieces. Some leading trade fairs are listed as follows:

Country/Region	Major Events
Hong Kong	Hong Kong Houseware Fair in April Hong Kong Gifts and Premium Fair in April Summer Sourcing Show for Gifts, Houseware & Toys in July
US	New York International Gift Fair in January National Premium Incentive Show, Chicago in September
Europe	Macef Primavera, Milan in January Ambiente, Frankfurt in February Tendence Lifestyle, Frankfurt in August Intergift -- International Gift Fair, Madrid in September
Japan	T.I.G.S. International Gift Show, Tokyo February and September

Industry Trends

There is a trend towards consolidation of buyers and retail channels. In particular, large-scale retail chains and mass merchants are minimising inventory and shortening delivery lead time in an effort to lower costs and business risks. Such a development will continue to pose a threat to smaller manufactures, as giant retailers, doing direct sourcing on their own, may tend to favour large suppliers. On the other hand, the rise of giant retailers has provided new opportunities for private labelled items. A recent survey also finds that consumers are buying more store brands and purchasing them more often, suggesting that private labels have additional potential for growth.

The intensifying price war and increasing environmental awareness are prompting giftware manufacturers to explore more affordable and non-polluting substitutes to traditional materials. Also, due to the intense competition, giftware firms need to turn out an increasing number of new models and designs in an effort to stay competitive.

Licensing is entering the home accessories market. According to industry sources in the US, there is good market potential in the licensing of decorative accessories. Licensed products based on familiar characters from movies or TV series will likely remain popular. Hong Kong companies are in a good position to capitalise on this trend, as they are known for protecting clients interests with due respect for intellectual property rights.

CEPA Provisions

Under the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA), the mainland has given all products of Hong Kong origin, including giftware, tariff-free treatment starting from 1 January 2006. According to the stipulated procedures, products which have no existing CEPA rules of origin can enjoy tariff-free treatment upon applications by local manufacturers and upon the CEPA rule of origins being agreed and met. Non-Hong Kong made giftware products are subject to tariff rates up to 35% when entering the mainland.

The promulgated rules of origin for giftware products to benefit from CEPA's tariff preference are basically similar to the existing rules governing Hong Kong's exports of these products. Generally speaking, for the manufacturing of imitation jewellery, moulding and assembling, identified as the principal processes for the purpose of delineating their origin, must be done in Hong Kong. For giftware articles manufactured from paper, cutting, die-pressing, wrapping and glueing, must be done in Hong Kong. If rolling and/or forming is/are required after die-pressing, such process/processes must be also done in Hong Kong. Detailed information is available from the following hyperlink: http://www.tid.gov.hk/english/cepa/files/mainland_2008.pdf.

Trade Measures Affecting Giftware Exports

Some trade measures such as anti-dumping charges affect giftware products exported by Hong Kong companies. For example, certain paper-made products, folding gift boxes and wax candles are subject to anti-dumping duties by the US, while some ring binder mechanisms are charged against by the EU. These measures can affect Hong Kong companies as many of them are manufacturing on the mainland. On the other hand, the EU has removed its import quotas on China-made kitchenware of porcelain or china since 2005.

Product requirements are becoming more stringent in overseas markets, mainly in areas of product safety and environmental protection. For example, the EU Toys Directive, which is under review amid the recalls in 2007, stipulates that all toys must meet the essential safety requirements and bear the "CE" mark denoting conformity. Safe and ethical working conditions have also increasingly been a concern among overseas buyers. A number of leading buyers such as Hasbro, Mattel, LEGO, and Wal-mart are all requiring the supplier to meet the standards. The International Council of Toy Industries (ICTI), with active involvement of Hong Kong toy makers, has introduced the ICTI Code of Practice and an associated auditing process known as the CARE Process to manufacturers, distributors and retailers of toys and related merchandise in member countries.

For health reasons, the EU has adopted a directive on the control of use of nickel in objects intended to be in contact with the skin, such as watches and jewellery. The EU has also adopted a permanent ban since January 2007 on the use of phthalates in certain soft PVC toys and childcare articles. In addition, the EU has prohibited the trading of clothing, footwear and other textile and leather articles containing azo-dyes, from which aromatic amines might be derived. The US Consumer Product Safety Commission keeps on watching the quality of all kinds of goods, including toys, candles, and lighters, etc.

The National Candle Association has established a framework for quality control on candle and its accessories, and published through the American Society for Testing and MaterialsASTM) international standards. Although the standards are not legally binding to outsiders and is only applicable to the US, candles bearing the quality mark may have a competitive edge.

Product Trends

Souvenirs for global sports events: The coming Beijing Summer Olympic Games 2008 is expected to cheer up a buying spree for souvenirs, festive items and related goods. The event will attract numerous of sports fans from all over the world. It is also expected that corporations will prepare lists of giveaways for advertising their companies.

Distribution of higher-valued, functional corporate giveaways to boost sales: Corporate giveaways will continue to be an effective sales and marketing tool. Companies will however tend to distribute higher-valued, functional yet creative premiums in the future, as target recipients appear to feel drained of low-valued items. For example, with the widespread use of computers, IT peripherals such as USB flash memory are increasingly considered as corporate gift items.

Refocusing on family value and connecting with others to strengthen sales of home products, festive items, and luxury stationery: A major trend is the popularity of the so-called "home products" and festive items, as the trend of "nesting" continues to evolve; shoppers now tend to spend more time entertaining with families and friends at home. Along this development, houseware, tools, DIY & home deco products will continue to be favoured gift items. Consumers also feel increasingly the need to reach out and communicate with others in a traditional way, like sending hand-written greeting cards and scrap booking.

More emphasis on health care and related products: Given the trend of ageing population and rising health awareness, the demand for health care and related products will remain strong and have greater growth potential in the future. Candles, fragrance and aromatic gifts will also be sought after as a way to relieve work pressure, home affairs, etc. Their popularity has led to the increased sales of related items like candle holders, fragrance oils and other glass decorative accessories.

Hong Kong Industry Profiles