Don’t just sit, furniture sector told-A A +A
Wednesday, July 2, 2014
AN OFFICIAL from Philexport-Cebu said furniture players face tougher competition when Asean integration comes into force next year.
Philexport Cebu executive director Fred Escalona said that although Asean is a huge potential market for Filipino furniture players, the industry will face tougher competition because of free trade.
Drive prices down
Escalona said furniture import is at zero tariff already and as the integration happens, more products will enter the market and will drive down prices.
He warned there will be “a lot of companies that will shut down after Asean integration” and there might also be relocation of factories to where raw materials and labor are cheaper in the Asean region.
“Rising labor costs almost every year might push furniture exporters to relocate factories to Vietnam or Myanmar,” said Escalona.
On top of these, he also pointed out the shrinking supply of designers.
“We are losing our good designers to China for custom jewelry and home decorations, including furniture. China offers a higher salary than the Philippines,” he said.
A designer in the Philippines is paid P25,000 to P30,000 monthly, compared to China’s monthly salary of P50,000 to P60,000, he said.
“We haven’t lost the competitive battle, it’s just that the furniture industry has to step up. Filipinos are still considered the creative designers,” said Escalona.
He urged companies to send their designers to international trade shows for them to know the market and trends, gain new ideas and knowledge and later own come up with new designs.
“The big mistake is not sending these designers to trade shows. It shouldn’t just be the owners who should participate. They should bring their designers with them,” he said.
Other factors that challenge the furniture industry include limited government support, increased piracy, higher cost of raw materials, lack of adequate capital for smaller manufacturers and unwillingness of some players to invest in new plant equipment.
“They foresee challenges but the furniture industry is preparing for the Asean Economic Community (AEC). The integration presents opportunities for local furniture makers to make their brands known to other countries in Southeast Asia,” he said.
According to the Chamber of Furniture Industries of the Philippines, the industry’s overall revenue was estimated to reach $750 million in 2013, of which exports accounted for $177 million in 2013 from $150 million in 2012.
For this year, the industry is expected to grow eight percent. Domestic sales is projected to grow faster at eight percent while exports at five percent.
The chamber said the boost in domestic sales is a result of the robust property developments like condominiums, office and house and lot projects here.
Published in the Sun.Star Cebu newspaper on July 03, 2014.