What garments industry?

"The local garments industry is dead," Philippine Star's Lifestyle editor Millet Mananquil matter of factly informed me the other day as we talked about my column about Bench. Millet and I were classmates in journ school and the only ones in our class still in active journalism. She has all the right to tell me I had not been nosy enough on this one.

So there she was patiently explaining to me what the garment business is all about. Most of the leading garment retailers here have their stuff done abroad, Millet explained as she wondered how come I didn't know that fact of business life in the fashion industry.

I guess that's the difference between the lifestyle section writers and those of us in the business section. There is this tendency for business writers to deal with macroeconomics. The lifestyle writers go down to the micro level. Put another way, we see the factories and the mass of faceless workers. They see the beautiful dresses. Putting it in still another way, they see the beautiful clothes the models are wearing in a fashion show. We see the models and wonder how they'd look without the clothes.

Well, I have always been under the impression that the garment industry is one of our large dollar earners. I realize they have had serious problems of late, something I learned from a cousin of mine who was once deeply into garments exporting. I also know they have problems related to competitiveness, with our higher labor costs compared to say, Vietnam and China. But I didn't know the local industry is dead. I thought it was just comatose.

Furthermore, when Mar Roxas and some local manufacturers launched the Buy Philippines movement, the impression was given that what is left of the local garment industry can be saved if consumers patronized locally made garments. An admonition was made to check the labels of garments we buy and make sure it is proudly Philippine made.

That in brief, explains my utter surprise and disappointment when I found out the Bench shirt I bought was made in India. Ben Chan couldn't make the lunch meeting, but his partner and brother-in-law, Virgilio Lim was around to explain that they don't have much of a choice. The stuff they sell in local stores are all locally designed but some are made in places like India not only because of cheaper labor but because India has a textile industry.

A company like Bench has to compete with multinational labels. Their unit cost must compare well with labels like Giordano, Esprit, etc. But right now, they have a smaller market, the Philippines. They cannot afford to order fabrics in large quantities for processing here, as Levis would. In India, Bench can buy the quantity they need and can afford. It will be silly to bring that fabric here for sewing. Manufacturing in India helps them benefit from the lower cost of labor.

But, Mr. Lim explains, they still manage to have as much as 80 percent of their stuff made in the Philippines. Their contractors still employ about 3,000 Pinoys in local factories. The shirt I bought that was made in India is part of the remaining 20 percent. It is too bad, he explained that the Philippines no longer has a textile industry or one that can produce textile with world class quality and cost. A healthy textile industry is the basis of a garments industry. Without it, we can't have a thriving garments industry either.

I guess it is like having a steel industry. Without an integrated steel mill, we can't have much of the various industries that use steel as basic raw material. Without a thriving textile industry, we won't have a real garments industry. What we have are garments retailers and while that may generate some employment, it won't be in the scale we used to know, when we were a primary source of garments sold worldwide.

What they are trying to do in Bench, Mr. Lim explained, is to maximize the Filipino talent for design and merchandising. They are about to open their first international store in Guam, in Lucio Tan's Micronesia Mall. But they already have agents selling some of their products in various countries in the Middle East where there are Filipinos. Their dream is to break into the mainstream in the foreign market for garments. It shouldn't matter where those garments may be actually made.

But now I am bothered to know that the local garments industry is dead or dying. That means all those who used to work there are now part of our unemployed. The social implication is scary. Wow! Mar Roxas has one hell of a big headache, is all I can say.

Shanghai consulate

The Philippines is opening its consulate in Shanghai next week. Too bad Vice President Tito Guingona decided not to preside over the ceremonies.

It could have been his last significant official act as Foreign Secretary. The opening of the consulate is a recognition of the important role Shanghai will play in the economic relations between China and the Philippines.

Curiously, the part of the initial cost of getting the consulate up and running will be shouldered by the private sector. On top of the list of donors is Metrobank. It seems that George Ty is totally committed to the development of business potentials by Philippine-based entrepreneurs in China. Apparently, it was too late to include the opening of the consulate in DFA‚s regular budget.

Weeklong festivities, to be capped by the performance of the Bayanihan Dance Troupe, no less, will mark this new milestone in Philippine-China relations. There should be many areas of opportunities for entrepreneurs from both countries to exploit. With a consulate in Shanghai, trade should be facilitated.

Credit cards

It is just as well that the Bangko Sentral is asking local banks to review their marketing policies covering the credit card business. The P50 billion exposure of local financial institutions in terms of past due bills of credit card holders is worrisome enough. But the banks are mostly to blame for this problem.

It seems to me that the issuance of credit cards has been pretty indiscriminate. They are practically shoving credit cards on shoppers at the malls. Worse, they send unsolicited credit cards to people who have not applied for them nor want them. In my case, I still have to take the time to return them. What if these unwanted cards get lost in the process?

Actually, you have to be very careful about those credit cards. I have cut down my cards to just two precisely because there is a tendency to miss due dates and the banks love putting all sorts of charges if you forget to pay your bill on time. And the interest rate they charge is atrocious.

There ought to be a law banning banks and card companies from sending unsolicited credit cards. That practice is a real pain.

New definitions

Corporate sleaze is big news in the United States and has continued to feed investor cynicism. This is why that conference the other day on corporate responsibility with speeches delivered on corporate governance is very timely. In the meantime, here are new definitions of accounting terms and corporate titles I picked up from the Washington Post column of Robert Samuelson.

• EBITDA: Earnings Before I Tricked the Dumb Auditor

• EBIT: Earnings Before Irregularities and Tampering

• CEO: Chief Embezzlement Officer

• CFO: Corporate Fraud Officer

• EPS: Eventual Prison Sentence

(Boo Chanco's e-mail address is [email protected])