Economic recovery shows changes in buying patterns

CEBU, Philippines - Although the Gifts, Toys and Housewares (GTH) sector already felt the positive effects of the recovering global economy, the anticipated recovery however failed to meet the expectations of most exporters.

GTH-Cebu past president and member of the board Jenifer Cruz said yesterday that after the global recession, the market trend and buying pattern of the overseas market has significantly changed.

“We did not expect that the recovering market will bring us a very slow movement of volume orders. Unlike in the post 1997 crisis, that after the regional economy recovered, the global market was also able to respond,” Cruz said.

Cruz, who owns one of the largest home furnishing exports manufacturing companies in Cebu, the 33 Point 3 Exports Inc., said that the recovery of orders in the last five months of this year is not discouraging, however a change of consumer and buying pattern was observed.

While in the past, regular clients from the United States ordered long-lead and greater volumes of products immediately after the 1997 regional crisis, but now most if not all clients only placed lesser orders, with short-term lead-time.

Because of stiff competition with China and also India, in the home furnishing sector, Cruz said the recovery of the global recession starting 2010, is hardly felt by the exporters.

“There is still uncertainty of orders. That’s why we still have to work double-time and invest equipment upgrade and design capability,” Cruz said adding that despite the recovering market, exporters now a days still face market uncertainties.

For his company alone, where 80 percent of its total product are orders from long time client base, Cruz said they still have to “watch their back” and be on their foot all the time in order to sustain the client base.

“The US market now, is very careful in choosing product lines. Only about 20 percent of our exports are orders from new buyers,” Cruz said.

Cruz’s company, which directly employs over a hundred employees in his plant in Mandaue City, is the original-product-marker of famous signature brands which also have home accessory lines, such as Casa Armani, Ralph Lauren, among others.

Cruz’s company’s subcontractor-base would reach up to over a thousand, only for waivers, excluding the suppliers of other materials.

Industry-wide, GTH-Cebu is providing daily income to at least 20 thousand people and families, in Cebu, and neighboring provinces in the region, as well as other areas in Mindanao and Luzon.

“We hope that the next government will [still] consider us as one of the revenue generators for the country. We are still trying to get up,” Cruz stressed.

Cruz mentioned that the exporters are now seeing hope with the stabilizing foreign exchange which is setting in the P46 level. “Once the peso will go up to P43 versus one dollar, abruptly, then we will be facing another problem,” he said.

In Central Visayas, total exports in 2009 fell 37 percent from 2008 levels, with the furniture sector being the hardest hit.

Cruz hopes that in the coming months, the GTH sector will see a full recovery of business, and increased volume of orders.