1 Sept 2000
Hong Kong Optical 2000 Industry Trends
Gains In Design And Technology
HONG Kong remains the largest exporter of frames in Asia and is second in the world only to Italy, with the most prominent players manufacturing products for international brands and designer labels. In the past decade, Hong Kong's optical producers have been able to lower their costs by shifting manufacturing operations to mainland China, but how are they coping with the competition?
Billy Wong, an economist with the Hong Kong Trade Development Council, says: "In general, Hong Kong, as a major producer, already has a good foundation. It is not easy for developing countries such as those in Southeast Asia to catch up, but Hong Kong still needs to maintain its competitiveness in terms of design especially, but also new technology.
"Whatever the latest materials that the market is using, we need to follow very closely. For example, in recent years, titanium has become a major metal. In terms of design, we are producing on OEM basis for many leading brands, but we are also doing ODM now. Another development is licensing, whereby manufacturers have an agreement with a brand that is not in the optical business, to manufacture and market using their [brand] name," says Wong.
The Hong Kong Optical Mfrs Assn (HKOMA) is working closely with the Hong Kong Productivity Council on a number of initiatives. Says HKOMA president Hui Leung Wah: "In the pipeline is a knowledge-based design system and numerically controlled production technology for metal spectacle-rim fabrication. The technology allows manufacturers to design spectacle frames and produce small batches with short lead time.
"In addition, a prototype facility has been set up at the City University of Hong Kong to develop industrial application of diamond-like carbon coating to plastic parts to improve wear- and scratch-resistance," says Hui, who is also chairman of Elegance Optical Mfy Ltd.
Focus On Quality
Hong Kong's larger manufacturers are now concentrating on the medium-range to upper-end frame business, where customers tend to stay more loyal to producers. They are very cost-conscious, however. "It is a major problem," says Cary Ma, managing director of Moulin Optical Mfy Ltd. "Cost problems, overheads, labour -- we have to manoeuvre all these elements to stay competitive." Hong Kong needs to emphasise its quality, he notes, and to get the message across that "value for money" is not synonymous with "cheap".
Moulin, for example, has just received ISO 9001 certification. "We stay focused on cost-cutting at all times," says Ma. "We are always upgrading our information systems. For example, we have just signed a contract with SAP to install ERP [Enterprise Resource Planning]."
Elegance has also received ISO certification, as well as a Q-Mark licence. "To achieve excellence in its products and services, Elegance has not only continuously enhanced its production facilities, but also developed innovative designs for customers," says Hui.
Joanne Chan, general manager of Arts Optical Mfy Ltd, says: "We will still go in the direction of producing high-value-added products, and continue to develop our brand business. It is very important that we develop a new retail sales network in [mainland] China, as well as diversify into other optical products, such as optical lenses and contact lenses."
The industry is facing a lot of changes, adds Ma. "There has been much consolidation, because of the competitive environment, with mergers and acquisitions. Everyone wants to be bigger because that attracts more financial support, more big names and more distributors."
Hong Kong's optical industry is pretty well self-contained, except for the raw materials used in the making of metal frames, according to HKOMA's Hui. "It is well supported by ancillary industries. The sourcing of optical parts such as spring hinges and nose bridges or basic raw materials such as cellulose acetate sheets is very convenient. Electroplating and mould- making services are available at competitive rates."
harvey Fung, managing director of VIP Optical Int'l Ltd, which has been producing eyewear for more than 30 years, says Hong Kong constantly strives to produce lower-cost products, and with better quality and service. "The competition is so tough here, so the quality and prices have to be very good," says Fung. "[Hong Kong's prices are low because] we use labour inside [mainland] China. And our quality is number two in the whole world, next to Italy."
In recent years, demand for metal frames has been growing rapidly, though plastic is still favoured for sunglasses. Spectacle frames that combine metal and plastic elements are also popular.
Though expensive, titanium is growing in popularity because of its light weight and durability. Another favoured new material is stainless steel, says Dennis Mui, senior account manager at Swank International Optical Co Ltd, which produces a light, flexible frame. "Memory" plastic, which goes back to its original form if accidentally bent out of shape, is also in demand, Mui says.
Investment in production is very important, says HKOMA's Hui. "The industry is already equipped with computer numerically controlled (CNC) single-point diamond lathes to produce aspheric optical lens surface with a finish under sub-micron level. Precision engineering and computer technologies allow Hong Kong to turn out components with accuracy up to nanometre level."
Elegance, which provides all kinds of metal-based and acetate optical frames and sunglasses, has recently enhanced its production facilities by setting up a dust-free spraying workshop, fully automatic CNC lathe, semi-automatic titanium-plating production line and a vacuum oven for heat treatment.
Wah Ming Optical Mfy Ltd has invested heavily in titanium-frame manufacturing, and emphasises its allergy-free qualities. "Although the manufacturing of titanium frames is different and more complicated than [that for] the traditional metal used in the optical field, its benefits are particularly rewarding," says assistant director Daisy Cheung.
Moulin's Ma points out that high-end frames require more attention throughout the production process. "Equipment, machinery and factory facilities must be in much better condition, you need more precise craftsmanship and dust-free injection-moulding workshops."
Swank has had some of the industry's most advanced machinery in place for some time, says Mui. The fully automatic plating line is extremely important, he says, as it allows it to run operations 24 hours a day.
Arts Optical, however, keeps its production costs down by concentrating on high-quality handmade acetate frames, says Chan. There is no need to invest in high-priced injection moulding machinery, she explains, and handmade production has the advantage that customers can order a much larger variety of colours in smaller quantities.
"Design plays an indisputably significant role in optical frames, as most consumers see the products as part of fashion accessories," says HKOMA's Hui. "Most manufacturers have their own in-house design teams, capable of showering the market with hundreds of fashionable models annually."
Swank's Miu says: "We place a lot of emphasis on R&D and design because we want to maintain our position in the price range. Our designers travel around the world, attending optical shows in Europe and the US and visiting customers where they listen to their requirements.
"We also spend a lot of time developing new materials and the designers are very involved in this. If you have nice materials but don't have nice designs, it just doesn't work."
It is a policy that Wah Ming also follows. "We are strengthening our R&D team to generate more innovative ideas to deliver to the market," says Cheung.
Moulin has been working hard to strengthen distribution, which is concentrated on the mainland. "Our distribution business had grown from HK$30m to HK$300m in five years," says Ma. The company has also been developing strong relationships with licensors. "In the past 3-4 years, we have signed licensing agreements with companies including S.T. Dupont, Aigner, Elizabeth Arden, Benetton, and two Hong Kong companies, Goldlion and Giordano, plus Playboy for China."
Wah Ming is involved in distribution, through a subsidiary, Avanti Trading, that distributes products in Southeast Asia, with its own brands. Elegance Optical's clients include prestigious overseas chain stores, importers and buying groups. "While we have been working mainly on OEM products, with a concerted effort and determination to develop a wider product range and a more diversified market segment, the proportion of ODM products has been increasing in recent years," says Hui.
Despite increased competition and the need to constantly focus on cost-cutting, Ma feels that Hong Kong's middle-range to high-end manufacturers are well placed.
"The strongest in the region are Taiwan, South Korea, Japan and Hong Kong and [mainland] China," Ma says. "Many of [mainland] China's factories are low end for the domestic market; Taiwan is mainly sunglasses; [South] Korea is lower to middle [range] frames in huge quantities; Japan is a specialist in high-end frames. Hong Kong has a mix of everything from lower-end sunglasses to a handful of factories known as high-end producers."
Written by Ann Williams
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