Wearables rebound to depend on US market access

Wearables rebound to depend on US market access

By Justine Irish D. Tabile, Reporter

THE Confederation of Wearable Exporters of the Philippines (CONWEP) said that the key to a rebound in Philippine wearables exports, which have declined 20%, is improving access to markets like the US.

“Key to the industry’s survival is market access to the US. Philippine (wearables exports) to the US without preferential tariff treatment remain uncompetitive at a duty of 17%- 32%,” CONWEP Executive Director Maritess Jocson-Agoncillo said in an e-mail.

“Orders were simply not coming in in the second or third quarter of 2023. The stores were cutting down on inventory. Even at the height of the Christmas season, a major brand pulled out and moved production to Vietnam,” she said.

Ms. Jocson-Agoncillo has said the Philippine apparel industry typically banks on spring and summer orders which start shipping between September and November.

However, exports declined sharply last year as consumer confidence in key markets took a hit as prices rose, and wars pressured supply chains for many goods.

CONWEP reported that wearables exports fell 20.1% in the 11 months to November to $1.22 billion.

“The wearables sector continues to swim through a critical distressed phase, considering the double-digit drop in our 2023 export performance,” she said.

In November, wearables exports declined 18% year on year to $99.94 million.

If the downtrend is confirmed over the full year, it would break the two-year run of export growth. Shipments grew 29% and 8% in 2021 and 2022, respectively.

Apparel, CONWEP’s top export item, declined 17% to $635.8 million in the first 11 months, while leather goods and handbag exports dropped 23.6% to $501.21 million.

Textiles exports fell 13.5% in the first 11 months to $231.16 million.

“Footwear (exports were valued at) $78.4 million in the 11 months to November,” Ms. Jocson-Agoncillo said.

“The industry’s competitive advantage was significantly eroded by the consecutive increases in mandated minimum wages after COVID and the cost of utilities such as power,” she added.

“During the second to third quarter of 2023, we experienced major downsizing of firms and a few closures,” she added.

Due to the closures, Ms. Jocson-Agoncillo said CONWEP’s current workforce estimate is a maximum of 200,000 from about 280,000 in 2019.