A rattan tale

Not many know that the rattan chairs used in the Starbucks chain in Japan are made in the Philippines, specifically by Demex Rattancraft, Inc.

Japan accounted for 90% of Demex’s total exports of P56 million in 2001.

It wasn’t always so.

Demex started out in 1976 as Dela Merced Sales, a trader of construction materials initially capitalized at P10,000. Two years later, the company began shipping baskets and smaller handicraft items to the the United States under the name, Dela Merced Exports. From its first shipment of $10,000, the business grew to $200,000 when it began to producing rattan furniture for export.

It became Demex Rattancraft Inc. in 1984, the year Narciso dela Merced joined the company as its president. Demex is part of the Dela Merced group, which includes Delta Motor Sales and the Guadalupe Commercial Center.

"Exporting rattan is like the Olympics. Everyone is your competitor," he said.

Within the country, the big players are exporters based in Cebu and Pampanga, which ship 90 containers a month compared to the 10 containers a year shipped by Demex.

Worldwide, Philippine competitors are Malaysia and Indonesia in Asia and Spain and Italy in Europe.

"The two advantages of the Filipino rattan maker are his artistry and his highly developed sensitivity to what would be acceptable to other markets," said dela Merced. "We saw the possibilities in raffia (natural leaves) and seagrass when our competitors in the world could not even imagine combining these materials with rattan."

Expansion

Positioning itself in the high-end market, Demex took out a P35 million from Planters Development Bank two years ago to upgrade and expand its factory and warehouse in San Jose del Monte, Bulacan. The P35 million loan–its fourth from Plantersbank–is payable in seven years with a two-year grace period.

Factory workers currently number 130. "We measure efficiency and productivity in terms of total sales per worker. Since we sold P56 million of rattan products in 2001, that means the productivity level of each of our 130 workers was worth about P431,000 a year," he said.

On the average, Demex sales has been growing by 20% a year. The growth in sales could be traced in part to export musts such as having a good product to sell and making sure that the product is delivered on time. "In this business, it’s important to find out the trends and what clicks in the foreign markets. You cannot just keep producing the same thing every year. You have to keep adjusting your product to what is needed and what is in with the times," he said.

In the case of Demex, it has certainly found out what the Japan market wants.