"It is one of the flagship industries of Hong Kong that helped make Hong Kong what it is," said Professor Edward Newton, Head of the Polytechnic University's Institute of Textiles and Clothing. "Without textiles and clothing, I don't think Hong Kong would be what it is today."

About 66,000 people in Hong Kong worked in the textile and clothing sector in 2000, which produced HK$87 billion worth of exports, or 48 per cent of Hong Kong's total domestic exports, according to figures compiled by the Hong Kong Census and Statistics Department.

Exports of clothing alone accounted for HK$77.4 billion of the HK$87 billion, up from HK$72.8 billion in 1997. For 2001, however, clothing exports slipped to HK$72.2 billion as the global economy slowed down.

But the industry remains upbeat. This is partly due to the fact that the decline in clothing exports of 6.7 per cent was far better than the 15.2 per cent decline in domestic exports overall. Moreover, between 1997 and 2000 the value of clothing exports continued to rise.

"We have always been under the quota system. This can only mean that our value per garment is rising, that our quality is rising, and that our quality is being recognised and people are willing to pay more for it," The Hon Sophie Leung, chairman of the Young Entrepreneurs Development Council said.

Twenty-five-year veteran in the apparel industry Robert McKee, who is director of Fashion Industry Application Centre, Intentia International, which produces software for the apparel industry, echoes her sentiments.

"I'm one of those people who believe that you only get what you pay for. With Hong Kong, you may pay a little more, but you certainly get the quality," he said.

Manufacturers have managed to move up the value chain and the industry is now trying to go one step further to become a fashion design centre for Asia. Prof. Newton believes this is natural evolution from what has taken place.

"If you look at any of the areas that are now fashion centres today, they all started from a similar base. London had a clothing industry in the East End. New York had Seventh Avenue manufacturing businesses ... so they have all had a base and Hong Kong has had that same base," he said.

Felix Chung, chairman, Hong Kong Apparel Society Ltd, said Asia does not have a fashion capital that can be compared to the likes of Milan, Paris or New York.

"In Asia there is nothing. It used to be Japan, but now you don't see that many Japanese brands in the market, all the famous Japanese designers have gone to Europe," he said.

Hong Kong is ripe to fill that void, and is itching to become a world-class design and fashion centre.

"Right now, Hong Kong has good designers, a very good school, a very good foundation in the industry, the TDC promotes Fashion Week, et cetera, so we already have all the resources. The problem is how to get all these resources together and build up a fashion centre," Mr Chung said.

To this end, the government has earmarked HK$140 million to finance some 60 projects aimed at facilitating the knowledge-intensive end of the apparel business with an emphasis on design, marketing, packaging and distribution.

But becoming a fashion centre will require more than small change from the government and enthusiasm from those within the industry.

"When we think of the capitals of fashion, what do we think of? Paris, Milan, Florence ... it takes a certain type of mentality and culture to be able to live and breathe fashion," Mr McKee said.

In order to become that fashion centre, Hong Kong and China will have to put more emphasis on artistic expression.

"Those fashion centres are more right-brained, and until we can accept and nurture that, we are not going to have very many Hong Kong or Chinese designers," he said.

Prof. Newton said he believes Hong Kong has as much -- if not more -- talent and ability than many other parts of the world. If there is a problem, he believes it is the territory's lack of self-confidence.

"We have to have confidence in what we do and to not always think that things are better from somewhere else," he said. "We must not forget that not so many years ago people would see the Tokyo label and think it was rubbish [and now people associate it with quality]".

By having high-quality design, good and strong innovation, be leading the new, and producing fashions of high quality, Hong Kong is on the threshold of becoming a fashion centre. But the territory needs to bang the drums as loudly as other areas do to promote the Hong Kong label.

Local designers have been developing their own labels since the early 1980s, and a healthy roster of locals have achieved some measure of success on their home soil.

The Hong Kong Trade Development Council has been testing the international waters by working with some well-known designers to exhibit their designs at international shows.

Reactions at these fashion shows have been mixed, but on the whole positive. At the Mercedes Australian Fashion Week for Spring/Summer 2002 in Australia last year nine Hong Kong designers -- Pacino Wan, Flora Cheong Leen, Joanna Chu Liao, Diane Freis, Virginia Lau, Doris Lee, Bonita Cheung, Dorian Ho & John Cheng -- created a stir amongst buyers and media.

Fashion guru Alfred Morris from Browns, London, said, "We are a major fan of Pacino Wan, and he didn't disappoint us! We just loved his cheeky play on logos!"

Designers were similarly well received at New York Fashion Week, 7th On Sixth, last September, and more recently at the Fashion Extravaganza in Beijing from March 26-30.

A big concern among manufacturers when hiring designers is that they often work on different wavelengths, said Mr Chung, who also runs his own clothing manufacturing business. Designers have their own ideas and dream up sketches of "cream cake" style clothes, instead of practical, leisure and sportswear designs which Hong Kong excels in.

To help everyone speak the same language, he is calling for the establishment of a centre where local SMEs and designers will be able to get together, bounce ideas off each other, and hopefully reach an agreement to work together.

The centre also aims to help companies go branded, in the belief that if local makers can produce clothing for such quality brands as DKNY and Calvin Klein, then why not for themselves?

Much of the success of such brands has been built through years of marketing to gain brand recognition -- something few Hong Kong companies have the marketing savvy or finance to achieve.

Breaking through into the international market with their own brand names, however, has continued to be a sensitive issue. Some companies say they are happy just producing apparel for U.S. and European brands.

Others have been developing their own labels since the early 1980s. Some have achieved a measure of success in Hong Kong and in some cases regionally, but they are just a small contingent when compared to the production side of the business.

Ms Leung admits that brand name building is a daunting task for many SMEs, so the centre will instead focus on brand creation. To get SMEs started the Hong Kong Apparel Society is encouraging its members to draw on their understanding of their buyers' preferences to work with a design person to create a few samples which their buyer may like, instead of just waiting for buyers to throw them a few samples to make. This adds value to their services and reduces buyers' costs which will discourage them from going to other areas.