Sunday, September 30, 2007

What Separates the Good Traders from the Bad Traders?

There are many forms of investing online. While I can give you a list that is a mile long, these are the most common forms of successful investments. Some of the following know how to invest terms are:

1. Option trading
2. Future trading
3. Currency trading
4. Stock trading
5. Future trading
6. Forex trading (or) foreign exchange trading

I want to start this investing online critique out with a story... On a beautiful late spring afternoon, twenty-five years ago, two young men graduated from the same college. These men were very much alike. Both, better than average students, were personable and filled with ambitious dreams for the future.

For the sake of my example, I will set both college graduates off online trading using a day trading plat form. Through a gift, both start with the same online investing investment risk capital, the same daytrading plat form, and the same trading system with precise rules for entry and exits.

Shockingly, there is a difference. After one month, one day-trader went broke / bust, while the other day trader returned a 20% profit.

Have you ever wondered, as I have, what makes this kind of difference in people's trading? It is not always a native intelligence, talent or dedication. It is not that one person wants success and the other does not.

The difference lies within the psychology of the brain. Your psychological mind set is likely to play a larger role in your trading online career than your chosen technique or any other details associated with your day-to-day practice.

Here are some good examples:

1. One person looks at a glass empty, while the other personality looks at that same cup as full.

2. Someone may look at problems and call them stress, while another individual looks at troubles as challenges.

3. Another one may look at a ship in a storm as an adventurous roller coaster ride, while another human being sees the same situation as a hurricane that has a death call.

I am not the only one to discover this

In his book, Trade Your Way to Financial Freedom, the renowned American psychologist Dr. Van Tharp discusses the role psychology plays in trading success. He divides trading into three Ingredients.

In his pie chart:

-- System is 10%
-- Money Management Success is 30%, and
-- 60% pertains to the psychology of thought and emotion.

Tharp discovered that the trader's psychology make up of the mind has more to do with his success than anything else does.

However, what exactly is the psychology of the mind?

In short, the psychology of the mind refers to your thinking and emotional actions and responses to any given situationIn trading, fear, greed, vanity, pride, hope, jealousy, denial - all these can affect investment decisions. Although, your aim in the market is to maximize your profit and minimize your risk, thinking and emotions often make this easier said than done.

FOR EXAMPLE - Traders, who cannot control the psychological process of thought and emotion, make the wrong decision - such as the common amateur mistake of holding a losing position in the belief that someday it will become a winner.

Loss aversion is a classic mistake. By nature, humans value a loss. Therefore, you suffer almost twice as much pain losing $1 as you would in gaining $1. Loss aversion compels most traders to hold a losing stock while it plummets downward. This clouded judgment clearly contradicts the trading adage: cut your losses and let your profits run.

Emotional investors hold losing positions because they view paper losses differently from realized losses. An investor also engages in other forms of irrational behavior.

EXAMPLES are attributing success as natural and losses to bad luck.

This is just the tip of the iceberg. When talking about the other devastating effects of trading, if you do not have the psychology of your thought and emotions in the proper prospective the consequences can be devastating.

This is what opens up problems for new traders, and then they lose manage money very quickly in the markets. Most people completely wiped out their finances within the first year of trading. So, as you can see, your thinking and emotions play a big part in determining whether you fail or succeed, but did you know that thought and emotion make up two different spheres pertaining to trading success?

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How To Invest Money In Hungary And Romania

Hungary - In my view Hungary isn't best pick for long for year 2007. Politic situation doesn't support growth as government debt is 10% of GDP, CPI is 9%.

Hungarian stocks index BUX gained 9% in last 12 months which is even less than EURO STOXX 50 (15%). On the other side due to those politics instabilities BUX P/E ratio is 12.6 which is the lowest eastern european. Your investment to hungarian financial instruments could support also currency appreciation as central bank is probably going to do intervention in favour of hungarian Forint.

Basis of BUX:
bank OTP 35.8% of BUX, gas company MOL with 28.3%, telco Magyuar Telecom 13.7% and pharmaceutical Gedeon Richter with 14.5%.
All together those 4 blue chips represent 92% of BUX!

And how to invest in Hungary? In EUWAX, I have two favourite open-end index certifikates.
1. ISIN CH0021606022 from UBS for index BUX (included dividend payments which are btw 13%!).
2. ISIN AT0000454194 from Raiffeisen Centrobank for index HTX (w/o dividends).

Romania - Romania as a EU newcomers is a emerging country with high potential. Main index BET is composed mainly of financial and mining. it is around 60% of market cap. Traded blue chips are Petrom, BRD, Banca Transilvania, C.N.T.E.E. Transelectrica. As in other transition economies local romanian companies are targets for acquisitions. In bank's sector BRD acquired by Societe Generale, Banca Transilvania by austrian Erste Bank.

On AMEX you have only few ETF focused on central and eastern europe only with fraction of romanian shares. Better way is to use certifikates at Xetra Wien or Stuttgart. Main emitents are Raiffeisenbank, Erste bank.

Originally posted at:
Blog about investing in Eastern Europe

What the SEC Really Thinks About Mutual Funds!

Lets go into the details of why non-indexed mutual funds are such a bad deal. When Arthur Levitt became the head of the Security Exchange Commission in 1993 he had to sell off all of his individual stocks so that people would not claim that he was doing any dirty inside dealing. He decided to put the cash from selling off his stock portfolio into mutual funds.

Mr. Levitt grew very angry when he tried to decipher how particular mutual funds divvied up their cash into specific stocks. He couldnt make heads or tells from the fancy brochures of the mutual funds called prospectuses. He had been a major player in the stock brokerages for over 25 years at that point and knew that if he couldnt understand the mutual funds prospectus then he knew public investors couldnt either; it had to be a big scam to suck money out of the public.

In 1980 the US public invested $100 billion into the 500 mutual funds that existed at that time. By 1993 the public put $1.6 trillion into the more than 3,800 mutual funds that existed in that year; talk about growth! By the end of February 2003, at the bottom of the bear market there were 8,200 mutual funds and the public had pumped in $6.3 trillion dollars. Wow! That is a lot of money. What is important to note is that at least 40% of mutual fund money comes in from 401(k) retirement accounts. Today these mutual funds own about 20% of all publicly traded shares of stock. Mutual funds act like a herd of cows buying and selling the same stocks at the same time. This increases the wild price volatility swings in the stock market.

These funds are also sold and managed on pure hype, short term trading, and with key information withheld from the public. All of these factors I teach finance students and investors to avoid! The industry confuses investors by focusing on past performance, which should not be a factor to consider. Many mutual funds are able to cheat the public with excessive fees because investors dont understand how these big costs destroy their profit. Mutual funds have no interest in educating investors because it is easier to hoodwink the ignorant!

Dont put your trust in mutual funds unless they are fully indexed. Indexing means that the mutual fund simply uses a computer to buy and sell stocks in the mutual fund portfolio so as to mimic the composition of a major stock market index like the S&P 500. This means that there is no fund manager sucking out needless fees. A good example is the first fully indexed mutual fund called the Vanguard 500 (VFINX) which is also now the largest of its kind.

ABOUT THE AUTHOR: Dr. Scott Brown, Ph.D., a.k.a. The Wallet Doctor, is a successful futures trader, real estate investor, and stock investor. Dr. Brown holds a Ph.D. in finance from the University of South Carolina. His 1998 articles in Technical Analysis of Stocks and Commodities were prophetic in predicting an impending stock market crash. He has helped many people become profitable investors by teaching them to look out over many years to spot stocks that are low and primed for rise in the new bull market. His second article met with approval by Dr. Bob Shiller of Yale University. Dr. Shiller is the economist that Alan Greenspan most highly regards who coined the term Irrational Exuberance. In 1998 he shouted to the world to get out of the stock market but now he is shouting to everyone that it is time to get in! The Wallet Doctor is not only sought after for investment advice and coaching in stock investing but also in futures trading and real estate investing.

Visit Dr. Browns site at or sign up for his investment tips at

Forex System Addiction, Don't Let This Happen To You!

It is a process many new traders in forex go through. Find a system that people seem to be making money with and start trading it. At fist you make some pips but inevitably you experience some losses and then move onto the next system. We have all fallen victim to this process, it's what kills many new traders. At the first sign of a loss you move onto the next best thing and this process repeats its self over and over. Some traders can be trapped in this circle for many years.

It is the quest for the perfect system, let me assure you there is no perfect system, you will not find a system that never looses. However you can find a system that wins more than it looses, this is all you need in order to make money in the forex market. All we are looking for is an edge, an edge that over 10-20 trades will bring you out on top with a profit. Once you have this edge all you need to do is keep trading it, trade it like a machine.

Trading for a living can be very boring at times, we all enjoy experimenting with the latest indicators and systems but try to keep them separate from you main bread and butter trading system. Don't let new systems distract you from your trading routine, it is imperative in this business to find a system you like and stick to it. Focus on your solid edge that will pay you over time.

If you are wondering which profitable edges you should trade I recommend you study some price patterns, find one that appeals to you and back test it manually. You could then add this edge to your favourite system as a filter or trade it with discretion. You will be surprised how much price action can improve a system's results. Record your back testing results over a large period of time so you can know what to expect in your live trading.

Let's take a simple system and add price action to demonstrate this. For my example I will use a simple 10ema 21ema moving average cross. Everyone knows if you just trade every cross of moving averages you will end up losing your account, however this is not what we are going to do.

The cross of the moving averages is our signal to look at price action. I will only use one candle stick pattern in this example the 'engulfing candle'. Once you have a cross of the moving averages look for a small retrace with an engulfing candle in the direction of the cross, take the trade on the close of the candle with your stop behind it. I can guarantee you will be surprised with the results of this simple system, go ahead and test it out, try shooting stars also as they can be a great formation to trade on with the trend.

Although you may think that this is far too simple to work, I assure you this is why 95% of forex traders fail, they try to complicate trading too much. Keep it simple and you will succeed.

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Buy And Sell Stocks Online

All dreams can be realized, as long as you do not dream something that is humanly unachievable. But, dreams can be realized with proper planning and with the help of strong willpower. However, before you apply both these, have a look at an easier way to gain success, i.e. money. You need strategies here too; some prudent strategies that help you to reap profits on your invested money. It is to buy and sell stocks online.

Consider this, someone needs money to start a business and you lend it to him. But here instead of taking any interest from him, you ask him to give you some percent of the profit he makes with the business. When you are buying stocks you are actually doing this, you buy stock or shares from some company and give it some money to invest in the business. As the business starts earning profit with your money, you have some share in the total capital of the company. The company gives you some share of profit.

You do not do anything else and you are paid the profit your money earns. Your money grows by itself and offers you profit. You must be feeling the urge to dive into this buy-sell stock business right now. But wait. As told before, it is a business the company does with your money. Businesses may end in a loss or a profit. And if the company faces a loss, it will charge a loss on your share too, resulting in a fall in your share price. Therefore, it is essential to observe caution while doing stock trading.

But, dont get disappointed. If you use your experience and take some expert advice, your chances of losing are very less. A good and efficient stockbroker can help you in this context. Brokers are people who help you and suggest you the best stock to buy and hence increase your chances of gaining through the stock market day trading. He, in exchange of his service, charges a small amount of commission.

However, in the world where computers and Internet have invaded everything, it is quite common that you can get this all stuff online. So, try finding a brokerage site. It is better that you find one online. Online brokerages site helps you in making the right decision by offering the right products and right information.

User-friendly site can really guide your money well by deciding the best stock to buy now factor. Several options should be there when you open an account and it must suit your budget and investment plan.

Compound Interest Return and Dollar Cost Averaging can be great features. Dollar cost averaging is a system where investment is made at regular intervals over the same dollar value of shares. The use of the Compound interest return by this site really maximizes your long-term profit. Monthly, weekly or daily automatic investments provide you yet another comfortable option. The firm should charge low commissions.

I wrote this article to share my views about buy stocks online and buy cheap stocks

Variable Annuities

The term annuity derives from a Latin term meaning annual and generally refers to any circumstance where principal and interest are liquidated through a series of regular payments made over a period of time. A deferred annuity is an annuity in which both the income, and any taxes due on growth inside the contract, are pushed into the future, until they are actually received by the owner.

A commercial, tax-deferred annuity is a contract between an insurance company and a contract owner. In a typical situation, the contract owner contributes funds to the annuity. The money put into the contract is then allowed to grow for a period of time. At some future date, the contract owner has the choice to: 1) Annuitize the accumulated funds paid out, generally through periodic payments made over a specified period of time, the life of an individual, or the joint lives of a couple. 2) Continue to let the money grow or 3) Take withdrawals of amounts he would like.

A variable annuity is a type of annuity in which the contract owner directs the overall investment strategy for the funds placed in the contract.

Two primary annuity types are fixed and variable annuities. Although these annuities have many features in common, the key differences between them arise from the means used to grow the funds contributed by the contract owner.

Fixed annuities: Fixed annuities are characterized by a minimum interest rate guaranteed by the issuing insurance company. Typically, a minimum annuity benefit is also guaranteed. The funds contributed to the contract by the annuity owner are placed in the insurance companys general account, and the investment risk involved rests entirely on the insurance company. With a fixed annuity, the focus is on safety of principal and stable investments returns. Variable annuities: In contrast, a variable annuity contract generally has no guarantees as to investment return or annuity benefits. The funds contributed by the contract owner are placed in special, variable annuity subaccounts. Within these subaccounts, the annuity owner may choose to invest the funds in a wide variety of investment options. Annuity benefits depend upon the investment results achieved, and the investment risk rests entirely on the contract owner. With a variable annuity, the goal is to provide benefits that keep pace with inflation.

During the accumulation phase, the contract owner contributes funds to the contract through either a single lump sum, or a series of payments. Any increase or decrease in the market price of the underlying investments is always reflected in the value of each accumulation unit.

If a contract owner decides to annuitize the contract, the accumulation units are exchanged for annuity units. The number of annuity units received will depend on the price per unit, and certain insurance company assumptions regarding income, mortality and expenses. Once determined, the number of annuity units remains constant. The amount of periodic income payable is determined by multiplying the current value of each annuity unit by the number of units. As the value of each annuity unit increases or decreases, so does the periodic income.

There are a number of key contract provisions that a buyer of a variable annuity contract should be aware of. Among these are: Guaranteed death benefit: The contract will pay the named beneficiary the greater of the investment in the contract (less any withdrawals) or the contract value on the date of death. Enhanced death benefit: Some variable annuities offer an enhanced death benefit option. This feature provides that upon the death of the annuitant, the beneficiary will receive the greater of the accounts value on the date of death, or the highest contract value ever reached during the accumulation years. The ultimate death benefit is subject to the claims paying ability of the insurer. Prospectus: Variable annuities are considered by the Securities and Exchange Commission (SEC) to be a security. The SEC requires that the purchase of a variable annuity be given a prospectus, which provides detailed information on how the annuity contract works, and the subaccounts available. The SEC also requires individuals selling variable annuities to be licensed to sell securities. Contract fees and charges: A contract may include charges for investment management, administrative and mortality risk charges to cover the insurers basic expenses, as well as the cost of the guaranteed death benefit provision.

The tax treatment of payments made from an annuity will vary, depending on where in the life cycle of the annuity the payments are made. In general, the following rules apply:

Withdrawals: Funds withdrawn from an annuity contract prior to annuitization are considered to be made first from interest or other growth. These earnings are taxable as ordinary income. If the annuity owner is under age 591/2 at the time a withdrawal is made, the earnings are also generally subject to a 10% IRS penalty. If earnings are completely withdrawn, and payments are then made from the owners initial investment, the withdrawal is treated as a tax-free recovery of capital.

Annuitization: Regular annuity payments are treated as being composed of part earnings, and part return of capital. The earnings portion is taxable as ordinary income. Once the owner has completely recovered his or her investment in the contract, all remaining payments are fully taxable as ordinary income.

Estate taxes: Any amount payable to a beneficiary under an annuity contract by reason of an owners death is includable in the owners gross estate. If an annuitant/owner receiving payments under Lie Only annuity contract dies, no further payments are due, and nothing is includable in his or her estate.

Tax-deferred annuities are primarily intended to be long-term investments. Because of this, and because of the complexity of many annuity contracts, an individual considering the purchase of a tax-deferred annuity should carefully consider all aspects before entering into the contract. The advise and counsel of appropriate tax, legal, and other advisors is highly recommended.

Mark K. Lund, CRFA, has spent almost a decade as a Wealth Manager, serving the retirement planning needs for clients in Salt Lake City, Utah. Mark is one of a very small number of retirement planners across the country trained in retirement tax strategies. Most financial professionals typically take only one aspect of your personal finances and attempt to make it grow in a very linear, single-dimensional fashion. Thats why they dont bother to correlate other items or tax issues in your total financial picture! Mark looks at all four phases of wealth accumulation to plan the most effective way to manage your wealth. To learn more about Mark, please visit

Hong Kong Clothing Industry


Textile quotas were eliminated among WTO members at the first day of 2005 in accordance with the Agreement on Textiles and Clothing (ATC). However, resistance to quota removal spread in the US and EU. Subsequently, China reached agreements with the EU and the US in June and November 2005 respectively. The China-US agreement, effective from January 2006, governs the exports of a total of 21 groups involving 34 categories of Chinese textiles and clothing products to the US during 2006-2008. The China-EU agreement, effective from June 2005, covers 10 categories of Chinese textiles and clothing exports to the EU during 2005-2007.

On the other hand, the mainland and Hong Kong agreed in October 2005 to further liberalise the mainland market for Hong Kong companies under the third phase of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA III). Along with other products of Hong Kong origin, the mainland agreed to give all products of Hong Kong origin, including clothing items, tariff-free treatment starting from 1 January 2006. According to the stipulated procedures, products which have no existing CEPA rules of origin, will enjoy tariff-free treatment upon applications by local manufacturers and upon the CEPA rule of origins being agreed and met.

Hong Kong clothing companies are reputable for ODM and OEM production. They are able to deliver quality clothing articles in short lead time, as foreign importers and retailers request clothing suppliers to tighten up supply chain management to ensure the ordered merchandise reaching the store floor at the right time. Increasingly, Hong Kong clothing companies, the established ones in particular, have shown enthusiasm for brand promotion.

Hong Kong's total exports of clothing rose year-on-year by 9% in the first 11 months of 2005. While Hong Kong's re-exports of clothing rose by 20%, domestic exports fell by 14%. In the first 11 months of 2005, Hong Kong's clothing exports to the US and EU rose by 11% and 18% respectively. While Hong Kong's clothing exports to Japan levelled off, those to the Chinese mainland declined by 11%.

Industry Features

The clothing industry is a major manufacturing sector of Hong Kong. Its gross output is one of the highest among all manufacturing sectors, amounting to HK$35.9 billion in 2003. It is the largest manufacturing employer in Hong Kong, with 1,673 establishments hiring 28,752 workers as of June 2005. It is also the leading earner in terms of domestic exports, taking up 40% of the total in the first 11 months of 2005.

Hong Kong's geographic boundary has never constrained the development of the forward-looking clothing industry. The majority of clothing manufacturers have set up offshore production facilities in an attempt to reduce operation costs. Relocation of production facilities offshore has however resulted in a steady decline in the number of clothing manufacturers in Hong Kong.

Hong Kong is not only a leading production centre but also a hub for clothing sourcing globally. Companies doing garment trade in Hong Kong are experienced in fabrics procurement, sales and marketing, quality control, logistic arrangements, clothing designs and international and national rules and regulations. The professionalism that they command and the combined services offered are not easily matched elsewhere. With a total of 15,190 establishments hiring 95,889 workers, they form the largest group involved in import-export trade in Hong Kong.

Performance of Hong Kong's Exports of Clothing

Hong Kong's total exports of clothing rose year-on-year by 9% in the first 11 months of 2005. While Hong Kong's re-exports of clothing rose by 20%, domestic exports fell by 14%. The contrasting performance of Hong Kong's re-exports and domestic exports was basically ascribed to the increasing relocation of garment manufacturing to the Chinese mainland, resulting from the removal of quotas under WTO's Agreement on Textiles and Clothing (ATC). But the declining trend of domestic exports has been reversed somewhat in recent months, due to the re-imposition of quantitative restraints on mainland-made textiles and clothing by the US and EU.

Retail sales in the US held firm in the first 11 months of 2005, rising by nearly 6% from the same period in the previous year. In the first 11 months of 2005, Hong Kong's clothing exports to the US rose year-on-year by 11%.

In the first 11 months of 2005, Hong Kong's total clothing exports to the EU surged year-on-year by 18%. Clothing exports to major EU markets like France, Germany and Italy recorded growth rates in excess of 20%.

On the other hand, Hong Kong's clothing exports to Japan levelled off in the first 11 months of 2005 partly due to the trend of direct shipment. On the back of the rising income however, Japanese consumers tend to resume their spending spree on premium clothing items. Meanwhile, Hong Kong's clothing exports to the Chinese mainland dropped by 11% in the first 11 months of 2005, compared with the same period last year.

Product-wise, Hong Kong's exports of woven wear rose by 12% in the first 11 months of 2005. While woven wear for women/girls grew by 13%, those for men/boys recorded a growth of 8% from the same period in the previous year. Knitted wear grew by 2%, with women/girls and men/boys rising by 1% and 6% respectively. While clothing accessories declined by 3%, other apparel articles, for their part, increased by 13%.

Sales Channels

Hong Kong's clothing manufacturers have forged strong relationships with their customers. They are able to understand and cater for the preferences of very broad customer bases. Exporters also have good knowledge of international and national rules and regulations governing clothing exports, such as rules of origin, quota restrictions, tariff rates and documentation requirements. Cut, make and trim (CMT) arrangements are common although many Hong Kong manufacturers have moved to higher value-added activities such as design and brand development, quality control, logistics and material sourcing.

A few well-established local manufacturers have entered into the retailing business, either locally or in overseas markets. Many of them have retail networks in major cities around the world including Beijing, London, New York, San Francisco, Shanghai, Singapore, Sydney, Taipei and Tokyo. Some well-known manufacturing retailers include Baleno, Bossini, Crocodile, Episode, Esprit, G-2000, Giordano, JEANSWEST, Moiselle and U-2.

As a global sourcing hub in Asia, Hong Kong attracts a number of international trading houses and major retailers. Buyers sourcing from Hong Kong include American and European department stores (e.g. Macy's, JCPenney, Federated, Karstadt Quelle, C & A), discount stores (e.g., Sears, Target and Carrefour), specialty chains (e.g., The Gap, The Limited) and mail order houses (e.g. Otto and Great Universal Stores). Many international premium designer labels -- such as Calvin Klein, Donna Karen, Ralph Lauren, Tommy Hilfiger and Yves Saint Laurent -- source clothes in Hong Kong through their buying offices or other intermediaries.

Hong Kong's fashion designers have been gaining worldwide reputation for their professional expertise, sensitivity to current trends and ability to blend commercialism with innovation. Medium to high-priced fashion clothing bearing Hong Kong designer labels is being sold/have been sold in renowned department stores overseas such as Bloomingdale's, C & A, Harrod's, Isetan, Macy's, Marui, Mitsukoshi, Nieman Marcus and Seibu.

Trade fairs and exhibitions remain common places for buyers and suppliers of clothing to congregate. To establish connections and explore market opportunities, Hong Kong manufacturers and traders have involved themselves actively in international shows led by the Hong Kong Trade Development Council (TDC), including the ones in Beijing, Chengdu, Dalian, Dubai, Dusseldorf, Hong Kong, Moscow, Mumbai, Paris and Tokyo. 'Hong Kong Fashion Week' is organised twice a year and attracts international suppliers and buyers to participate in the exhibition. Organised by TDC, 'World Boutique, Hong Kong' is the first independent event in Hong Kong dedicated to promoting designers' collection and brands from around the world.

Industry Trends

Changes in retail landscape: In the US and EU, large-scale retailers are undergoing drastic restructuring and consolidation, in particular, the growing prominence of hypermarkets such as Wal-Mart. To strengthen competitiveness, Sears and Kmart have merged to form the third largest retail group in the US.

Growing importance of private labels: Private labels, in essence, have become an increasingly effective marketing tool among garment retailers. In order to differentiate as well as upgrade the image of their products, major retailers have started to put a stronger emphasis on their own labels. According to Cotton Incorporated, private labels accounted for 45% of total US apparel sales in 2003, up from 39% in 2001. In some adult apparel categories, such as skirts, private labels accounted for as high as 76% of the total sales. It is also estimated that 45% of products sold in the EU are sold under private labels. Renowned retailers such as H&M, Marks & Spencer, Orsay, Palmers, Pimkie, Springfield and Kookai have owned their private labels. As consumers desire to have private labels on everyday garments like jeans, accessories and T-shirts, the doors are also open to the supply of these clothing items to private label owners.

Growing interest in China's domestic market: The rapid expansion of mainland's economy has attracted great interest of Hong Kong clothing companies to explore its clothing market. A TDC survey on mainland's garment shoppers indicates that Hong Kong brands are ranked number one by the respondents in the mid-range segment. While international brands are most preferred in the high-end segment, mainland brands dominate the low-end. In addition, the same survey finds out that in the eyes of mainland consumers, Hong Kong companies are very strong in casual wear, as they are generally of good design and quality. In essence, many mainland consumers have developed a stronger awareness of Hong Kong brands through tour to and shopping in Hong Kong. Therefore, Hong Kong's casual wear has successfully projected a positive image to mainland consumers.


On 18 October 2005, the mainland and Hong Kong agreed to further liberalise the mainland market for Hong Kong companies under the third phase of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA III). Along with other products of Hong Kong origin, the mainland agreed to give all products of Hong Kong origin, including clothing items, tariff-free treatment starting from 1 January 2006. According to the stipulated procedures, products which have no existing CEPA rules of origin, will enjoy tariff-free treatment upon applications by local manufacturers and upon the CEPA rule of origins being agreed and met. But non-Hong Kong made clothing products will remain subject to tariff rates of 10-25% when entering the mainland.

The promulgated rules of origin for clothing items to benefit from CEPA's tariff preference are basically similar to the existing rules governing Hong Kong's exports of these products. Generally speaking, the principal manufacturing process of cut-and-sewn garment is sewing of parts into garments. If linking and/or stitching is/are required, such process/processes must also be done in Hong Kong. For piece-knitted garment, if it is manufactured from yarn, the principal process is knitting of yarn into knit-to-shape panel.

If the piece-knitted garment is manufactured from knit-to-shape-panels, the principal process is linking of knit-to-shape panels into garment. If stitching is required, it must also be done in Hong Kong.

Trade Measures Affecting Exports of Clothing

According to the ATC, textile quotas were eliminated among WTO members at the first day of 2005. However, resistance to quota removal spread in the US and EU. Particularly in the US, China-specific safeguards on 10 categories of clothing items from China were invoked. Against this background, China reached agreements with the EU and the US in June and November 2005 respectively.

The China-US agreement, effective from January 2006, governs the exports of a total of 21 groups involving 34 categories of Chinese textiles and clothing products to the US during 2006-2008. It allows an annual growth of 10-15% in 2006, 12.5-16% in 2007 and 15-17% in 2008. The China-EU agreement, effective from June 2005, provides for an annual growth of 8-12.5% in 10 categories of Chinese textiles and clothing exports to the EU during 2005-2007. In addition, both EU and US agreed to exercise restraint in invoking China-specific safeguard against Chinese textiles and clothing that are not covered in the agreements.

Product Trends

Formal Dressing: While casual wear accounts for the bulk of clothing sales, a general trend towards stricter corporate dress codes has led to a rising demand for formal dressing, particularly suits. According to a survey by Cotton Incorporated in late 2004/early 2005, 38.5% of respondents believe that people dressed too casually at work. This is a 6.5 percentage point increase over the same year-ago.

Teenager: One of the major driving forces of clothing market appears to be the teenagers in the coming years. The number of teenagers in the US expects to increase from 31.6 million in 2001 to 34.1 million in 2010. A recent survey by Teenage Research Unlimited found that teens are saving money by value shopping. While JCPenney is their favourite department store, Target and Wal-mart are their favourite hypermarkets. In addition, Old Navy is their choices among specialty apparel stores.

Silver Market: Ageing population becomes a common phenomenon in many developed countries in Europe as well as Japan and the US. Elderly people constitute a major market segment called 'silver market'. Supported by savings, social security benefits and pensions, many elderly people have rather strong spending power. It is estimated that the age group of 65 year and above accounted for about 21% of Japan's consumption expenditure in 2000. A survey conducted by the Japanese government also shows that people who are 60 years old and above possess almost three times the financial assets of those in the 40-50 age group. In the US, those aged at or above 65 amounted to 18.1 million in 2001, and the number is expected to swell to 26 million in 2015.

Plus-size Market: The plus-size market has been an area of growth for many years, and the trend is expected to continue in the coming future. It is estimated that 65 million women in the US wear size 14 or above. This group represents one-half of the US female population. It is reported that some renowned brands have already responded to the trend by offering merchandise of larger size; these companies include Liz Claiborne, Ralph Lauren and Tommy Hilfiger.

Easy-care Clothes: Clothes made of stain-resistant and wrinkle-free fabrics are well received in the market. It is estimated that about a quarter of apparel is now made of easy-care fabrics, and its popularity is expected to continue in the next few years. While major apparel brands like Dockers and Liz Claiborne have already marketed extensively easy-care clothes, major hypermarkets, like Wal-Mart, also offer more merchandise of such quality.

Source: Hong Kong Trade Development Council - Leading B2B Portal and Marketplace of Global Textile, Apparel and Fashion Industry offers Free Industry Articles, Textile Articles, Fashion Articles, Industry Reports, Technology Article, Case Studies, Textile Industry News Articles, Latest Fashion Trends, Textile Market Trends Reports and Global Industry Analysis.

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