In our last column we explored the entry of foreign brands in the Philippine retail landscape, and how supply chain has to keep up. We ended with one question: how about local products?
Specifically, how about local manufacturers? Local retailers? Local producers?
Yes, I did say a healthy mix of foreign and local brands is a good thing, providing more choices for consumers. But the risk of local brands being pushed out in the long run is still there, especially the smaller players.
Yes, local can compete, but consumers won’t buy local just because it’s local. Not everybody thinks along patriotic lines. We all buy what we think is of good value — not just price, but also quality and availability. For example, I often buy clothes at Uniqlo lately, partly because the fabrics feel good on my skin, but mostly because they have outfits for people my size. I could buy Bench or Penshoppe, but their outfits seem to only fit their models, not people on the wider size of the scale.
But those are the big players. They have positioned themselves to be competitive in the face of foreign brands, due to scale of economies and preferential deals with suppliers. Some foreign players surely source some of their items from local manufacturers, too. Still, it does not change the risk of smaller local players being pushed out to the fringes — and that applies to fashion, to food, to furniture, and everything else in between.
A long-standing challenge for our government is strengthening our producers – our farmers, our manufacturers, our small businesses. Efforts have long been underway to ensure this: providing support to entrepreneurs, improving regulations to allow for faster transfer of technology, enhancing connections between producers, sellers and consumers.
Yet our agriculture sector is still underperforming. Our manufacturing sector is still hobbled by challenges such as power costs and conflicting regulations. And, with our economy becoming more and more integrated with the rest of the world’s, our own producers are struggling to catch up with what some may call more economical options from outside our borders.
Local producers are at risk of becoming mere novelties. For some, this works to their favor. Think of delicacies found in particular regions. I recall the talk given at last May’s SCMAP Mindanao Supply Chain Conference by Dr. Viel Jose of Vjandep Bakeshop, the manufacturer of the famous pastel, long seen as a product of Camiguin (and, by extension, Cagayan de Oro). He stated that they limit selling of their products in other cities such as Cebu and Manila for two reasons: quality control, and also to promote the pastel as a delicacy that you can only get when you fly into Cagayan de Oro.
In other cases, “local” becomes a selling point, emphasizing quality and craftsmanship, a push against the increasingly global (and anonymous) sourcing of materials in the manufacture of our products. However, in most cases, it’s not clear who benefits from the local tag. I can’t help but think there’s an obsession with calling something locally-sourced just so they can jack up the prices. Does it help the source? Perhaps, but perhaps not.
It all goes back to making our own farmers and our own manufacturers more competitive. It all goes back to this challenge. Improve connectivity — not just farm-to-market roads, but also better ports, more options for transport. Improve resiliency — research into what works best considering our limitations and shortcomings when it comes to geography, climate and culture. Improve quality — make it appealing not just to a select few but to as many as possible.
For local players, the entry of foreign brands (and their foreign products) is nothing to be afraid of. If the product is of good quality — and how we get said product is worth the quality — it will always have its fans. Take the Marikina shoe industry, for instance: it has weathered the entry of shoes from elsewhere by capitalizing on its craftsmanship and quality.
However, the challenge is to become more competitive, to ensure that you stand out amongst the crowd – and “I’m from here!” is increasingly becoming less of a come-on. If that was still the case, we would all still be flocking to Marikina — but no longer. As choices increase and consumers become better educated, the criteria evolves. Yes, if you build it, they will come – as long as they know it is worth it.
Henrik Batallones is the marketing and communications executive of SCMAP. A former board director, he is also editor-in-chief of the organization’s official publication, Supply Chain Philippines.
