Hong Kong’s once powerhouse textiles and apparel sector is continuing its downward slide, but the government and experts believe value added apparel will survive and remain globally competitive.

"I would say there’s a good prospect quality manufacturing operations in textiles and clothing would have a future if they move upmarket," said Stuart Harbinson, senior adviser at the international trade practice of Sidley Austin LLP, Geneva.

"I don’t see why the best should not survive and thrive," he said. Austin stressed that the workforce is very skilled but also argued that as costs in Hong Kong are high, "the value and production also has to be high."

"Made in Hong Kong labels already carry a certain premium," said Harbinson, a former ambassador of Hong Kong to the WTO and former chairman of the International Textiles and Clothing Bureau (ITCB).

Harbinson said Hong Kong has in place a "strong system" that registers workers and firms to ensure the products are made in the city-state..

"The concern here is to preserve the value of made in Hong Kong designer labels which are not cheap," he said.

A World Trade Organization review of Hong Kong’s trade regime recently concluded the textiles and apparel sector has continued to contract in terms of both employment and manufacturing output.

As a result, in March of this year only about 2,036 enterprises remained in the sector, the WTO said.

The analysis also outlines that lower-value production has been re-located mainly into China, and local firms have moved up the value chain towards original brand manufacturing (OBM) production.

Hong Kong authorities expect, says the review, that brand-name products and products with high value-added content will remain competitive on the global market.

They also see potential for Hong Kong developing into a logistics and sourcing hub for textiles and apparel, it says.

In 2009, textiles and apparel accounted for 11.6% of Hong Kong’s total domestic merchandise exports (valued at $7.4bn), which represents a sharp decline from 41.9% in 2006 (worth $17.3bn).

Moreover, last year textiles and apparel accounted for 10.3% of total merchandise re-exports, valued at $311.1bn, down from 11.7% three years earlier ($299.5bn).