Small but Viable

Out of the country’s 80 million population, only 10% is tagged the high-end market. And of this eight million, only 1.2 million is the market for locally-made furniture.

"It’s a small market," said Chamber of Furniture Industries of the Philippines vice-president Eduardo Zuluaga, whose company, Azcor Lighting Systems Inc., generated 60% of its P100 million sales last year from the local market.

"These are the people who have disposable income. Our high-end market is well-traveled and well-versed in fashion because they attend fashion shows. They really have a picture of what is in and what is out. They can appreciate the use of natural materials but we still have to better our presentation," said Padua International Corp. owner Vincent Padua.

Despite the small Philippine market, some manufacturers such as Cainta Bamboo Furniture prefer to focus on the local rather than the foreign buyers. "If you have at least three international buyers, you are okay. But if one or two of them pull out, then you start having problems," said Cainta Bamboo owner Veronica Alfonso-Olitin. "In the local market, the order volume does not fluctuate as much and the risks are lower."

Volatility

A major factor faced by exporters is volatility. Take the example of Artecano Corp., which participated in the 1997 Philippine Furniture Fair and bagged an 18-month order from an American buyer. Artecano was to start with two containers a month, which was to gradually increase to 10 containers a month.

"This prompted us to expand. Every chance we got, we set aside money for expansion. We constructed a building. After we reached the 10 containers a month level, there were major changes in the company of the buyer. All of a sudden, my 70 to 100 employees were trimmed down to 15. My expansion was eight times my original size. So, I had the capacity but I had nowhere to sell my products," said Artecano owner Jofel Babaran.

Artecano quickly refocused its marketing strategy to the local market. The company began showing in the CFIP-sponsored 10-day furniture festival, which this year started simultaneously on May 9 at SM Megamall and Festival Mall.

By 2001, Artecano was generating monthly sales of P1 million. Early this year, the company opened a Julianne Collection store in White Plains, Quezon City.

"We now ship only 20% of our production or one 40-foot container each month abroad," said Barbaran.

Viable

Even a big furniture company such as Padua International Corp. believes the local market can become viable.

"The local market is increasing, not diminishing. These guys are willing to pay, considering the high prices. At the end of the day, if you sell locally, your money is now at hand, which is enough to sustain your cash flow. Our factory is designed for mass production but we are very much willing to sell to the locals," said Padua.

Trade shows such as the ones that the CFIP holds for the local and international market have become very valuable for the manufacturers. "Trade fairs are the only way we can sell because it has a wide market reach. For every show, we get enough orders to keep our hands full for six months," said Olitin.

The CFIP has its hands full in keeping the members of the chamber educated. However, there is much to be done to make the industry competitive against other countries. "We cannot compete with the likes of China. They have cheaper labor and they have mechanized while we still operate manually," said Zuluaga.

Having machines do not, however, necessarily increase competitiveness. An example is the furniture province of Pampanga, which has been the recipient of machines from Germany. "They taught our people how to operate them but then these people cannot afford these machines. And even if they can, these machines will have to operate 24 hours a day to maximize their worth. Where would they sell their production then?", asked Zuluaga.