PH furniture exporters suffer as canceled orders rise

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MANILA, Philippines — Local furniture exporters have received an unprecedented volume of overseas order cancellations amid fears of a recession that has altered spending patterns and dampened demand in two of the biggest markets. from the Philippines.

Robert Young, president of the Overseas Buyers Association of the Philippines (Fobap), told the Inquirer on Wednesday that they now expect furniture orders from the United States and Europe to fall by 25% this year, compared to around $200 million in 2021.

Before the pandemic, Philippine exports of furniture, such as wooden tables, chairs, desks and cabinets, were worth $300 million, according to Young.

“Recession fears in the United States are causing our customers to order less. People are now trying to save on shopping expenses,” Young said in a mix of English and Filipino.

Fobap is a 44-year-old association whose members represent buyers of furniture, clothing and other products made in the Philippines for export. Some of their biggest customers include Ikea, a Swedish conglomerate known for ready-to-assemble furniture with more than 400 stores in around 50 countries, including the Philippines; Crate and Barrel, an Illinois-based international home décor store with approximately 100 stores in the United States and Canada and franchises in Europe, and Massachusetts-based Crabtree and Evelyn, a former home goods retailer. house that has moved to an online-only format.

Uncertified wood

Young said one of the issues limiting export growth was the lack of international certification of wood used to make furniture products.

This is done by the Forest Stewardship Council (FSC), a German-based non-profit organization established in 1993 to promote responsible management and sustainability of the world’s forests through certification recognized in many countries as part of their environmental policy. FSC certification ensures that wood products come from responsibly managed forests that provide environmental, social and economic benefits. It has certified more than 80 million hectares of forests in more than 100 countries.

Since the majority of local furniture suppliers in the Philippines obtain wood from non-FSC-certified sources, Young said progressive countries such as the United States and those in Europe would not buy furniture made with these materials. materials.

Young lamented that Filipino furniture makers wishing to tap into export markets have to source wood from neighboring countries such as Vietnam, Indonesia and Malaysia where FSC certification is available.

“We have no certification to show if we don’t import wood. If we don’t have it, our exports will not pass UK and US compliance,” he said.

Government intervention

Young urged the government to step in and help the industry by coordinating with the FSC to set up a local office in the Philippines to ease the regulatory burden on exporters.

The Fobap official said it would help eliminate or at least reduce the need for local furniture makers who plan to export their products to import FSC-certified wood from other countries.

“The government must understand that this certification is like a quota. Without that, we can’t sell anything in those markets,” Young said.

He said the Philippines also continues to struggle to get local furniture makers to fully accept this certification requirement, unlike those in other Asian countries which have fully embraced this requirement from buyers from the United States and Europe.

“We need them to have more exposure to the international market and to have ongoing training on its importance,” he said.

“Our government’s strategic planning needs to be long term and not just every six years. Look at Vietnam FSC, it was planned in 2006 and they are now exporting FSC acacia wood,” he added, noting that importing imposes an additional 5% cost on local furniture makers looking to export.

new market

The European Chamber of Commerce in the Philippines, through its Fairs & More Inc. marketing initiative, earlier suggested that local manufacturers also focus on opening up China as a destination for Philippine furniture exports. .

He said China imports $11 billion worth of furniture annually and its proximity makes it an ideal destination for the country’s furniture exports. The United States and Japan account for about 60 percent of total Philippine furniture exports, while shipments to China only account for 5 percent, he added.

The Philippines has some 15,000 furniture companies, over 80% of which fall into the small and medium-sized enterprise (SME) category, employing some 800,000 workers. They are concentrated in the National Capital Region, Cebu and Pampanga.

Industry figures showed that Philippine furniture exports peaked in 1999 when local companies shipped more than $381 million to overseas buyers. This has followed a downward trend due to a global financial crisis which has dampened global demand and increased competition from other countries such as China.

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