Local firms urged to reposition products

Filipino exporters have a fair grasp of their markets. That’s the good news. But the fact that they are fighting it out in the commodity market where the cheapest goods often win makes them highly vulnerable to products made by labor-cheap rivals.

Whole industries must now reposition themselves to hit new niches and custom-build their strategies around that vision. At this point in time, cheap labor, a devalued peso, abundant local raw materials and other basic advantages common in third world economies are no longer enough to sustain growth.

These assessments and advice were forwarded by a team of competition experts from the J.E. Austin Associates, a Washington-based consulting group commissioned by the USAID in partnership with Philexport to help export industries in the Philippines cope with the challenges of free-wheeling trade in the new century.

Composed of Austin Associates vice president Martin Webber, project specialist Urzu Matyakub and Asian Institute of Management professor Francisco Roman, the consulting team just completed a three-week swing across the top exporting regional centers in the country, mainly Cebu, Davao and Metro-Manila – in an initial effort to help industry clusters hammer out their strategies.

The team held consultation meetings with 15 export groups, the most prominent of which were the agri-based industries in metro-Davao, the furniture and fashion accessory industries in Cebu, the ceramics and fine jewelry industries in Metro-Manila and members of the influential Philippine Chamber of Commerce and Industry (PCCI), representing the domestic-market oriented industries.

If a sufficient number of industries find it necessary to tap their services, the team is expected to spend two to four months working with each of the participating clusters of related enterprises to identify strategies fitted for them, and another one to three months to carry out industry-wide programs.

It will take industries involved in the competitive project two to three years to achieve results in terms of increased export sales, better income, higher pays and increased number of workers, as well as more direct investments, both foreign and local, explained Webber.

In meetings with export enterprise owners and chief executive officers, Webber and his group used the Austin module of analysis in determining where specific industries stand in the over-all picture of the international trade in relation to their closest competitors and the top performers in their respective market arenas.

In most industries, China has been identified as the dominant player in areas where the main basis for competition is product cost. It was determined that for Philippine export industries to survive and carve out niches for themselves, they have to position themselves in parts of the market where their edge in superior design, unique and hard to copy products can be taken full advantage of.

It is in this segment of the market where buyers go for higher-priced, quality goods, instead of cheap ones. Getting there will assure sustained demand for Philippine goods.

In sum, the consultants have suggested to local exporters that by fully knowing the nature of their markets, where they are now vis-à-vis their rivals, and what segment of the market they are in the best position to fight in – they may then focus their strategies, industry programs and private resources to reach their targets.

The government, instead of acting as the super-strategist for the export industries, will have to play a supporting role. – Abe P. Belena, Philexport News & Features