Demand prospects for imported pearls in China and Brazil appear to be also sanguine, with their imports growing by over 50 percent.

Adding to the array of products that are hugely demanded in emerging markets are furniture, fish and crustaceans. Furniture imports of China, Brazil, Russia and Indonesia rose by over 100 percent, while those of Vietnam more than tripled.

Meanwhile, Indonesia's imports of fish and crustaceans quadrupled while those of Vietnam and Brazil grew by over 100 percent. -- Ritchelle Alburo, PHILEXPORT News and Features <--back

2. Strong peso behind boom-bust cycle, slow growth, unemployment

An overvalued peso has been found to have triggered off the boom and bust cycle that has afflicted the economy for decades, caused balance of payment crises, chronic unemployment and served as an incentive for smuggling.

This was the contention of Action on Economic Reforms chairman Filomeno Sta. Ana II in a chapter devoted to the exchange rate issue in a recently launched book titled: Philippine Institutions: Growth and Prosperity for All.

Sta. Ana argued that an overvalued currency, meaning a strong peso, hurts the Philippine economy. Using the data of the Bangko Sentral ng Pilipinas (BSP) on the real exchange rate but rebasing this to the exchange rates in 1986 and 2001, instead of 1980. He found that the peso was overvalued by 15.7 percent middle of last year compared to 2001 and 11.3 percent overvalued using the 1986 baseline.

"The popular perception is that exporters and the families of overseas Filipino workers are the most hurt by the appreciating peso. That is only partially true. The whole real sector of the economy (the tradable sector particularly) hurts from an overvalued peso. Those that produce mainly for the domestic market are negatively affected too. They have to compete with cheap imports as well as the rampant smuggling of goods," Sta. Ana pointed out.

He observed that in recent years, the main driver of an appreciating peso was OFW remittances, the second highest dollar earner next to exports, which have far outstripped foreign direct investments.

"It takes a radical change in policy regime for the government to opt for a strategy of an undervalued currency," the economist further argued.

He had reviewed the rich literature on what he called the Sustained Growth (SG) countries in Asia including China, India, South Korea and Taiwan whose most common driver for growth is an undervalued local currency.

The studies have pointed out that growth was sustained for long periods of at least eight years in their bid for progress regardless of what was happening in the rest of the global economy.

He, however, suggested that it should be the national government that must initiate a calibrated depreciation of the peso as a development strategy.

With its fixation on inflation targeting and proven bias in favor of less dollars in exchange for the peso, the BSP is not expected to initiate a creeping depreciation as a strategy for sustained economic growth.

After all, the economic reformist further argued, the BSP's mandate is not simply controlling run-away inflation. It is to promote price stability conducive to a balanced and sustainable growth in the economy. -- Abe P. Belena, PHILEXPORT News and Features <--back

3. DTI prepares to boost export earnings from Japan

The Department of Trade and Industry (DTI) is beefing up strategies for the country to least sustain its annual export earnings of over $7 billion from the Japanese market.

In a paper titled Exploring Market Opportunities in Japan, the DTI sets out to characterize Japanese consumers and identify crucial market developments in Japan aimed at crafting strategies to address the virtually flat growth of export earnings from Japan in the last six years.

While the emergence of China and ASEAN as increasingly important export destinations has contributed to the decline in Japan's export share from 20% in 2004 to 15% in 2008, much of said decline appears to be largely occasioned by a host of market developments in Japan.

Competition in the Japanese market is increasingly becoming stiff as shown in the proliferation of bargain stores, such as the Y100 stores. Philippine products face intense competition from both locally-made products and developing country exports, which have been flooding the Japanese market.

The paper noted that there has been an oversupply of foreign goods which tend to shorten the product life cycle, spelling the need to continually innovate and keep abreast of market developments and trends.

The Japan-Philippines Economic Partnership Agreement (JPEPA) affords some market access advantage, particularly for industrial goods, agricultural exports, marine products and leather articles which are accorded duty-free entry to the Japanese market.

Such market access advantage, however, should be accompanied with practical strategies and action plans to take advantage of the vast export opportunities in the world's third largest economy.

Some of these strategies as detailed in the DTI paper are the importance of developing unique products, targeting a specific segment of the market and working closely with the Japanese importer in the design and packaging of the products as Japanese consumers are known to be fastidious in the quality, the price, functionality and even the size of the products.

The paper likewise reiterated the importance of actively participating in local and international trade fairs to gain wider exposure and broaden networks with domestic and foreign suppliers and buyers.

Japan is the Philippines' second largest export market, particularly for ink jets, electrical and electronic machinery, equipment and parts, semiconductor devices, wiring harnesses for motor vehicles, electronic micro assemblies, other chip type fixed inductors, bananas, optical disk drives and copper anodes. -- Ritchelle Alburo, PHILEXPORT News and Features <--back

4. Businesses advised to develop goods that meet consumers' needs

Businesses are advised to develop products that meet the needs of the consumers and diversify into other multi-channel sales and distribution network to effectively capture more markets. Robert McKee, fashion industry strategy of Lawson, said they have to make fundamental changes in their business processing or model to lure more people buy their goods following the global economic downturn.

"It is not competition that you have to worry about. It is making your own business model in a much more creative way than in the past. It is time to fulfill the requirements and desires of the consumers; almost everybody to some degree fails to meet the needs of the consumers," he said in an interview.

McKee observed that buyers are exercising new judgment to determine why they need to continue shopping in traditional retail stores that are not really offering diversity and differences in products which they are looking for.

"In the fashion industry, most of the organizations have to deeply discount their products to get people to buy. That's an indication that there is too much inventory and too much sameness in the inventory," he reasoned.

McKee believed that people have money to buy, citing the three million iPODs sold by retailers since the technology was introduced to the market. This happened while some retailers offering fashion goods could not attract buyers.

"Somewhere, we missed the ability to capture the imagination and desire of the consumers. Consumers are sending us a message that when we are not smart, they will start looking for other places to spend their money," he noted.

McKee also stressed the need for business owners to build "consumer intimacy".

"We can stick with the old way of just putting in the store (our products) waiting for somebody to get it or we can try to get closer to the consumers. In addition to purchasing some product, the consumers will also give you good information what they are looking for," he said.

Moreover, McKee said they should consider embarking into other multi-channel sales and distribution network apart from just selling through traditional retail operations.

"If you are not present on the internet, you should be. If you are not selling on social network sites, you should be," he said.

McKee said technology would allow businesses to attend bulk orders which they could not handle manually.

Lawson provides software and service solutions to 4,500 customers in the manufacturing, distribution, maintenance and service sectors across 40 countries. -- Danielle Venz, PHILEXPORT News and Features <--back

5. Home accents exporters to strengthen niche in high-end market

Exporters of home accents will continue catering the high-end market and utilize indigenous raw materials grown and available in the country to gain revenues despite stiffer competition.

"This is HAPI's (Home Accents Group of the Philippines) product marketing strategy which has proved successful throughout the years," noted Luis Sicat, the founder and permanent Chairman of the Board of HAPI.

Sicat said serving the high-end market has been keeping key industry players ahead of competition where price is a major consideration.

To this end, HAPI president Jason Tan said they expect that deliveries in the third of the year will sustain the high growth path shown in the first half of 2010.

"Historical experience during periods of growth indicated that buyers made bigger orders in this quarter for the expected surge for Christmas shopping wherein a number of major international trade shows concluded during the first half of the year," he noted.

HAPI represents exporters of home style products such as furniture, home décor accessories, lighting, wall décor, rugs and carpets, botanicals, garden accessories and all other items that are unique and creatively designed home accent pieces with distinct competitive advantage.

"For the non-traditional manufactured goods such as home style products wherein the members of HAPI belongs to, we are being hopeful to be able to generate export turnover of $50 to $55 million by the end of 2010," Tan said.

The industry sector of gifts and houseware roughly represents two percent of total export, he said.

Apart from the American market, industry players are tapping the emerging markets like Germany, South Africa, United Kingdom, Ireland, Brazil and Croatia. They also maintain the Middle East and Turkish markets. -- Danielle Venz, PHILEXPORT News and Features <--back

6. Government's continued support for the exports sought

Furniture makers have called on the government to continue supporting the exporters, particularly in marketing their products abroad, to achieve steady revenue growth.

Rashmi Tolentino-Singh, vice president for industry relations of the Chamber of Furniture Industries of the Philippines (CFIP), made this call despite the 37.7-percent rise in merchandise exports during the first half of 2010.

"Yes, it (growth) has improved but it is not spread out. If you have a hundred exporters, is it the hundred that brought up the export figure or is it just three of them who made that difference?" she asked.

With this, Singh said industry players need continued assistance for their trade show participations abroad, for bringing in internationally-known designers and marketing consultants in the country and finance second-level designerstraining in the countryside.

"While we work with our own designers, we have to work also with designers of other countries for us to know what they are really buying," she reasoned.

She said that the sector needs to partner with the government particularly the Department of Agriculture, the Department of Labor and Employment and the Department of Trade and Industry playing the major role.

Singh particularly cited the country's participation in the Frankfurt fair in Germany wherein local firms were distributed in different locations, while companies from China and Thailand were grouped in one big pavilion.

The latter firms also got subsidies from their governments when they promote their products abroad, she added.

"We did not look pitiful there but we could have a better presentation, we could build a better image, we could brand ourselves more effectively if the government and the private sector work hand-in-hand," she stressed.

And as the sector's growth remains erratic, Singh said this is an opportunity for industry players to intensify product and material development especially for wood furniture.

"We also need to look at other non-traditional markets. We have been saying this for the past seven years. I think now, we are really driven to it," she said. -- Danielle Venz, PHILEXPORT News and Features <--back