Juan Carlos Eusebio

BRIEFER ON THE PHILIPPINE FOOTWEAR INDUSTRY A. Introduction Philippine footwear manufacturers are geographically dispersed in the islands of Luzon, Visayas and Mindanao. Most of the industry players are located in NCR, Central Luzon and CALABARZON. They are classified as either micro, small, medium and large enterprises (MSMEs). They manufacture leather and non-leather footwear products including sports footgear, special use shoes, sandals, slippers and footwear accessories. Most of the Philippine footwear manufacturers are considered as micro and small enterprises. A micro enterprise employs about one (1) to nine (9) workers while a small enterprise employs ten (10) to ninetynine (99) persons. The Philippines used to have a sizeable number of footwear manufacturers that are usually home-operated enterprises. But they were deeply decimated over the recent years as the continued influx of cheap, foreign-made footwear products which adversely affected the local footwear manufacturing sector. MSMEs in footwear accepts subcontracting arrangements from foreign and large domestic companies that produce popular branded products but only a handful of them are venturing on exports. Among the active footwear manufacturers association in the country are as follows: (1) Philippine Footwear Federation, Inc (PFFI) (2) Filipino-Chinese Footwear and Allied Industries Association (FCFAIA) (3) Samahan ng Magsasapatos sa Pilipinas (SMP) (4) Marikina Shoe Caravan Livelihood Program Inc.; (5) Likhang Liliw Laguna Footwear Producers Cooperative; (6) Binan Laguna Bags & Footwear Products, Inc.; (7) Marikina Small and Micro Footwear Makers Association (8) City of Gapan Footwear Multipurpose Cooperative. B. C. Some exporting companies engaged in the manufacture of footwear and registered under investment promotion agencies (IPA) 1. Rikio Southeast Asia – manufactures Chikatabi shoes 2. Valencia Rubbertex – walking shoes and rubber boots 3. Sakurain International – shoes, sandals, footgear and sports glove 4. Mindanao Forge Company (MPC) Inc. – Horseshoeing 5. Choose your Shoes (Philippines) – Orthopedic shoes 6. Sportsfocus, Inc. – Leisure leather foot gear 7. Vulcanized shoes – American Brand: Vans, Ked, Sperry European Brand: Hugo Boss, St. Martens 8. Holdsun Philippines 9. Datian Subic Shoes Other identified exporters by DTI - EMB 1. Borsik Antonio Shoe Manufacturing - Ladies shoes, boots 2. Conqueror International Inc. 3. Foot Plus Manufacturing Corp. 4. Shoe Extraco Corp. 5. Stefano Footwear Corp. D. -Men’s/Ladies/Children’s/Sports/Sandals/Slippers (casual, formal, basic, school and nursing shoes) - Men’s PVC rainboots, men’s utility shoes, men’s casual shoes, men’s office/work shoes, men’s steel toe safety boots, men’s white rain boots and Ladies casual and safety shoes - Ladies high-end and leather shoes, comfort shoes and dancing shoes - Ladies, Men’s and Children’s shoes Locally-manufactured footwear brands supplying the local market 1. Gibi Shoes – Stefano Footwear Corp. 2. Rusty Lopez 3. Centropele 4. Scasini 5. Bare Strap and Walk Over – Conqueror International Inc. 6. Maine Wood – Foot Plus Manufacturing Corp. 7. Michaelangelo and Sara – Shoe Extraco Corp. E. Supply Chain Gaps There is an identified supply chain gap in having a stable source of raw materials to manufacturers of local footwear products such as leather, rubber including raw materials in the production of polyurethanes (PU synthetic leather), thermoplastic rubber (TPR), and Ethylene-vinyl acetate (EVA). According to the Philippine Footwear Federation Inc. (PFFI), they are competing with the export price of traditional raw materials such as leather and rubber parts. They claim that manufacturers of leather and rubber raw materials would rather export their goods since the price abroad is higher compared with the local demand. For the raw materials of footwear covering PU, TPR and EVA, the PFFI said that the Philippines has yet to have a local manufacturer of these raw materials. Hence, they are positioning for the decrease of tariff duty for all raw materials being used in the manufacture of footwear. F. Imports and Exports Year 2017** Exports* 196,227,612 Imports* 196,227,612 - 259,470,629 208,493,366 37,992,846 39,037,412 26,901,000 21,473,644 15,877,400 25,958,272 259,470,629 208,493,366 199,947,009 155,062,346 128,951,011 133,005,028 80,595,730 55,529,645 Notes: *Value is in US$ **Data for the months of January to September 2017 only Reference: Department of Trade and Industry Top 4 Market Destination of Philippine Footwear Exports for 2017 (Value in US$) Rank Country Value 1 European Union (EU) 26,179,011 [Germany, Czech Republic and UK Great Britain and Northern Ireland] 2 Japan 8,937,157 3 United States of America 5,046,872 4 Association of Southeast Asian Nations (ASEAN) 3,151,687 [Singapore, Vietnam, Malaysia, Thailand, Indonesia and Myanmar] Reference: Philippine Statistics Authority Note: Covering January to September 2017 only Rank 1 2 3 4 Top 4 Sources of Philippine Footwear Imports for 2017 (Value in US$) Country Value China 107,395,364 Association of Southeast Asian Nations (ASEAN) 60,514,406 [Vietnam, Indonesia, Singapore, Malaysia, Thailand, Cambodia, Myanmar] Hong Kong 7,470,628 European Union (EU) 5,775,231 [Spain, Netherlands, Germany, Belgium, Ireland Austria, UK Great Britain and Northern Ireland, Italy, France, Greece, Denmark, Poland, Finland, Portugal, Sweden, Slovenia and Luxembourg] Reference: Philippine Statistics Authority Note: Covering January to September 2017 only BRIEFER ON MARIKINA SHOE TOURISM 09 January 2019 History of Marikina’s shoe industry • The history of the Marikina shoe industry is traced back to Don Laureano “Kapitan Moy” Guevarra, who is said to have started it all in 1887, when the city was still an agricultural town. He taught families how to make shoes. It was a skill that was passed on and developed from generation to generation. Sapatos Festival • The city’s Sapatos Festival, formerly known as “Sapatero Festival”, showcases the creativity, craftsmanship, style and quality of shoes, a product Marikina is known for. The festival features parades, cultural presentations, trade fairs featuring shoes made in the city, visits to the shoe museum, among other fun activities. • Among the highlights of the festival is the Tour de Takong, where participants are required to wear stilettos with at least three inches in height instead of the usual running shoes. Since the race started in 2011, it has attracted a multitude of participants from all over the country, and is one of the highly-anticipated events in the city. This year’s Sapatos Festival ended on January 9, 2019. Shoe Museum • Marikina Shoe Museum is a fitting tribute to the city that is known as the shoe capital of the Philippines. It is famous for housing the shoe collection of former First Lady Imelda Marcos that included those that were made from Marikina. It also holds the shoes of several famous people, including a pair from the former presidents of the country arranged in chronological order, as well as those of former mayors of Marikina, celebrities, ambassadors, other politicians, as well as traditional shoes from other countries. Threat of industry decline • The city of Marikina, famed for being the country’s “Shoe Capital”, is walking on a tight-rope, as it presently faces great competition from cheap and increasing shoe and general footwear imports from countries like China, and the influx of foreign-produced footwear in the domestic market. • According to the Philippine Footwear Federation Inc. (PFFI), there are now only 130 shoe factories in Marikina, which is a sharp decline from the 7,000 factories operational in the 1970s. The remaining manufacturers make shoes for their own brands, or subcontract for department stores or other local shops. Others survive on a consignment basis. • The interest among the younger generation in the craft of shoemaking seemed to have been dampened by prevailing market conditions. • The Department of Trade and Industry, as part of President Rodrigo Duterte to revive and strengthen the industry, is extending assistance through a sustainable Shared Service Facilities (SSF) Project with the Philippine Footwear Federation, Inc. (PFFI), that houses machines and equipment that serve as common service facilities for efficient, quality and innovative production. • Among the SSF projects is the High Value Custom-Made Footwear, which intends to capture market that prefers custom-made shoes, featuring new methodologies in shoe engineering, footwear design and manufacturing. It also uses state-of-the-art scanner that automatically produces a 3D model of the foot in seconds for measuring and size estimation. • Marikina City Mayor Marcelino Teodoro said the challenge now is to keep the industry alive through continuous support. Currently, the local government of Marikina has been mounting projects to help the shoe industry, specifically providing all kinds of support to shoe manufacturers and shoe factories. It also advocates training the younger generation to learn the craft. Shoemaking courses are now being offered in schools, specifically in the Marikina Polytechnic College. • According to the “2017 Sapatos Fest Comparative Sales Report,” the shoe industry posted 5 percent growth sales in 2016. This increased to 36 percent in 2017.