Saturday, November 15, 2008 Financial crisis to test strength of exporters, weed out weaklings
TO survive the global financial crisis, it is better for small exporters to align with larger companies, said an official of the Confederation of Philippine Exporters Foundation (Cebu) Inc. (Philexport-Cebu).
Philexport Cebu advocacy officer Jun Abines said the deepening global financial crisis will be a sort of “weeding out process” for exporters.
“Only the strongest and the fittest will survive,” he said in an interview Thursday. Sadly, he said, many exporters in Cebu are weak. He noted that many exporters lack knowledge of the export business and their markets, and nearly 90 percent do not have an export marketing plan.
He noted that more than half of Cebu exporters do not have strong domestic markets.
“Ideally, they should first strengthen their domestic market base. But for many, it’s the other way around. They focus on export right away, eager to get bigger profits,” he said. Worse, many local exporters focused on the United States, which is described to be heading towards a recession.
Abines said many exporters in Cebu no longer have orders next year, which could lead to more closures and displacement of workers.
Expected
Sabino Dapat, European Chamber of Commerce of the Philippines-Cebu Business Council chairman, said the difficulties experienced by many exporters are expected.
“The demand will go down because the buyers of their products are no longer there,” he said in an interview yesterday.
He said furniture exporters in Cebu that consider the US as their major market are the ones hurt most because the crisis in the world’s biggest economy started in the housing sector, specifically the sub-prime mortgage market.
The US Mortgage Bankers Association reported that more than four million American homeowners, or nine percent of borrowers with a mortgage, were either behind on their payments or in foreclosure at the end of June this year.
The Associated Press, citing Realty Trac data, reported that for October alone, 84,000 properties in the US were repossessed.
But unlike some businessmen in Makati who responded to a poll earlier, Dapat does not believe that the Philippines will be in recession next year.
“They should be careful about what they say. Recession is two consecutive quarters with negative growth. The forecast is that there will still be growth, but a slow one,” he said.
He urged businesses to “wait for things to improve” but said the recovery “would take a long time.”
In the meantime, exporters have to “re-think and re-strategize,” said Abines.
“What is needed here is a paradigm shift,” he said, adding that exporters—as well as other businesses in the
country—should no longer compete for the same market.
“It is better to join forces. (With the softening of markets), exporters should not compete for buyers,” he said.
He said Philexport will help educate exporters about how they can weather the present financial storm.
On Dec. 3 to 4, Philexport will hold a seminar that will help exporters find buyers during the crisis. (LAP)
