Strong peso prompts exporters to cut cost

As the peso strengthens further against the US dollar, exporters are now considering radical changes in the way they do business hoping to get the better of the negative effect brought about by the currency’s upsurge.

“We have to change how we do business by cutting our production cost, we have to be a low cost producer at any given market, whether we are producing for high-end or low end markets,” said PhilExpot-Cebu president Jay Y. Yuvallos.

The peso closed at P42.795 on Friday, it is expected to go up further until end of December as dollar remittance from the OFWs is expected to flow in during the Christmas season despite threats from their part of hoarding their dollar earnings.

According to Yuvallos, even if the peso will settle to its mightiest level, exporters will have to prepare in outsmarting its negative impact, by being a low-cost producer at the same time avoiding retrenchment strategies.

Furniture makers and other home furnishing exporters are challenged to produce quality and high-end products to hit the increasing high-end market in the world. However, Yuvallos believed that in these difficult times exporters have to attract all market segments, whether high-end or low-end.

“High-end is just a concept. We should adjust to the market,” Yuvallos said adding that Cebuano producers are not limiting themselves to produce only for the sophisticated and upscale consumer base, but are now trying to enter the highly competitive furniture market for mainstream consumers.

In the past, Yuvallos said most Cebuano exporters were doing business through traditional channels, such as selling bulk products to middlemen. Now, he said it is wiser for producers to go directly to the retail giants.

Although, the entire US economic is not robust, Yuvallos said there furniture markers are seeing growth in the US market, as the retail outlets for furniture, basketry, GTH (gifts, toys and housewares), have expanded, with drugstores now selling home furnishing products.

If exporters will be able to find ways to cut its cost of doing business, amid the strong foreign exchange rate, Yuvallos said furniture and home furnishing exporters can still reap good business returns.

“The drive now is to be a low cost producer. We have to adjust the needs of every market segment,” he said explaining that exporters are now also considering attracting low-end furniture market, which is dominated by Chinese furniture markers.

According to Yuvallos, the Philippines is not anymore competitive, because of pricing level. Philippine produce furniture is more expensive compared to other products made in other countries like China.

“The disparity of price is too much. We have to change the way we do business,” Yuvallos reiterated.

He added that the world market for furniture is now going up, because of increasing demand from other markets like Europe, however, costly furniture pieces continue to hamper the growth of the Philippine furniture industry.