DESPITE the difficulties faced by the industry, furniture exporters in Cebu are hopeful about tapping new markets and developing new products.
Cebu Furniture Industries Foundation Inc. (CFIF) president Eric Vincent Casas said that most of the more than 700 pre-registered buyers in this year’s Cebu International Furniture and Furnishings Exhibition (Cebu X) are from Russia, other Asian countries and Europe.
Casas said the furniture manufacturing and exporting sector is hit by a “triple whammy:” the appreciation of the peso, the softening of the US market and the rise in the cost of production due to fuel price increases.
But while CFIF expects a “contraction” in the industry, Casas said the sector is optimistic about tapping upscale market segments in Europe, Russia and the Middle East.
Venturing into the European market also entails the development of more environment-friendly products, he said.
Funding
He said in a press conference yesterday that CFIF is seeking funding assistance of more than Euro 1 million to implement a program that will enable local furniture makers to come up with “green” or environment-friendly products and gain access into new markets in Europe.
The CFIF is also seeking a P4-million subsidy from the National Government to help it implement a P7.5-million production development, and material and design development program for members, said executive director Ruby Salutan.
Salutan said CFIF is also optimistic about the prospects of establishing ties with buyers in Slovenia, after Gov. Gwendolyn Garcia promised the group she will bring industry representatives when she goes there in May.
“There’s going to be business matching,” Salutan said, adding that Slovenia is one of the fastest growing furniture importers in Eastern Europe.
“It’s more than enough that the governor will provide us with the platform (for trade relations in Slovenia),” Casas said.
Garcia led the opening of the Cebu X 2008 yesterday at the Waterfront Cebu City Hotel and Casino.
Major customer
In an interview with Sun.Star Cebu, Casas said that while the furniture industry is looking at other markets, the United States remains to be a major customer.
About 70 percent of worldwide furniture exports are sold to the US and 75 percent of the Philippines’ furniture exports are also for the US market, he said. This is despite the slowing down of the US economy, he added.
Aside from the weakening of its major market, the furniture industry—and the entire export sector, for that matter—have also reported losses caused by the appreciation of the peso against the US dollar.
The rising peso makes Philippine exports less attractive cost-wise and may cause product orders to decline. Exporters also suffer loss of projected earnings due to the peso’s appreciation.
“In a span of, say nine months, the peso could have gone up to 40 from 49 against the dollar, so the exporter who expects to earn P49 for every dollar paid by the buyer ends up with (an exchange rate that is) P5 less,” Casas said.
These factors, together with high production costs, brought down the number of exhibitors at Cebu X from 100 to 85.
Casas admitted that CFIF’s membership has also gone down by 30 percent as many smaller companies have closed shop.
He said, though, that the number of pre-registered buyers in the Cebu X 2008 has doubled over that of last year. But, he said, major industry players, such as Dedon, which have created a niche in the upscale international market reported an increase in number of buyers.
“For any adversity, there is always an opportunity,” he said, adding that many buyers consider the present political turmoil and the volatility of the peso as “nothing new.”
He said the Cebu X is also meant to bring the local industry past the present difficulties. “With Cebu X, the buyers that we want will come down here,” he added.
Casas said CFIF is also preparing a strategic plan to address the needs of the industry amid the challenges that affect the sector. (LAP)
