Creative designs distinguish Philippine gifts and premiums from competitors

The Philippines is called the "Milan of Asia" because of its people's ingenuity and creativity.

The creativity of Philippine designers has been pointed out as the key factor that distinguishes its products from competitors. The country has been labelled as the "Milan of Asia," as a testament to its people's ingenuity and creativeness.

The handicrafts industry, which includes gifts and premiums, has approximately 250,000 workers, according to the Bureau of Export Trade Promotion (BETP). Filipinos are known to be skillful in in design as well as carpentry, sculpting, welding, carving and sewing.

Exports

Philippines' exports of gifts and premiums totaled to $251 million in 2014, earning the 60th position among world exporters. Statistical data is based on the adjusted and final international data from the Philippine Statistics Authority. The top export products include wooden table- and kitchenware, wrist and pocket watches, and worked capiz shells on lamps, picture frames and jewelry boxes, among other gift items.

Major markets for gifts and premiums exports are the US, accounting for 61 percent of total exports in 2014, followed by Japan, the Netherlands and Canada for 5 percent each, Hongkong and the UK 3 percent each. The US continues to be the top destination, while exporters look for alternative markets, as traditional buyers from the US and Europe have shifted purchase preference to cost-competitive countries, such as China, Vietnam and Indonesia.

Competitive advantages

The sector has several strengths, aside from having world-class quality of designs.

The country has a wide array of indigenous materials, such as abaca or the Manila hemp, sea grass, rattan, bamboo, coconut shells, fibers from maguey, pineapple and banana, buri, raffia, nito, tiger grass, and capiz shells.

Having a large pool of well-educated, skilful and highly trainable workers in the countryside, and locally-owned export trading companies are some of the advantages of the industry.

They need more orders to encourage people to work for the industry.

Challenges

Manufacturers face several challenges, such as keeping their original designs and local designers from being pirated abroad. Ingenious designs were copied and reproduced by makers from other countries at lower prices. Some designers were offered salary up to five times higher than the current.

Suppliers also need more skilled workers in woodcarving and weaving, as the young generation tends to work more with computers and machines than make handicrafts.

Prices of imported materials, such as chemicals for molding, bleaching and casting, usually increase by 5 percent annually. Manufacturers consider this as additional burden for they maintain prices at least within two years.

Costs of indigenous raw materials, including raffia, buri, abaca and sinamay are also increasing due to demands from other countries, such as China and Taiwan. Farmers or semi-processors of raw materials prefer selling to bulk orders to foreign buyers.

Typhoons and other natural calamities had damaged some plantations, roads and infrastructures, contributing to the increment in materials and labor costs.

High labor and utility costs influence increase in products prices.

Filipino manufacturers develop models aimed at the midrange and high end markets to avoid direct competition with other sourcing centers in Asia that cater primarily to the low-end segment.

Filipino manufacturers develop models aimed at the midrange and high end markets to avoid direct competition with other sourcing centers in Asia that cater primarily to the low-end segment.

Fluctuation of foreign exchange rates forces some companies to shut down. Small companies avoid this by diverting their production to domestic market.

This article and its contents are provided by the Hinrich Foundation, a partner of Global Sources in promoting trade across Asia. The products and the suppliers featured in this article are export assistance program beneficiaries of the Hinrich Foundation.

See a comparison table of gifts & premiums suppliers on GlobalSources.com