Asia's gifts and premiums industry records higher revenue in 2014Monday, March 16, 2015 > 11:59:31
This report provides an analysis of the performance of the gifts and premiums industry across two key Asia markets last year, and offers forecasts for this year. It is produced by the Hinrich Foundation, a development organization that aims to promote sustainable global trade by, among others, helping create jobs in emerging Asia.
Export performance of the gifts and premiums industry in two of Asia's emerging economies ended 2014 on a high note. The Philippines and Vietnam recorded increases in foreign revenue compared with the previous period as demand from the US continued to strengthen. In the former, the sector has registered an annual growth of almost 51 percent over the past five years. In Vietnam, where the line is divided into six distinct segments, all component categories expanded in terms of earnings as well.
Vietnam's gifts and premiums sector is composed of paper products, wood products, plastic products, handbags, purses, suitcases, headgear and umbrellas, textiles and garments, and ceramic and porcelain. Of these textiles and garments contributed the most to turnover as it expanded by 20 percent last year, equating to shipments worth $11.5 billion. Handbags, purses, suitcases, headgear and umbrellas was the fastest-growing line, surging by 38 percent.
Although the industry in the Philippines has performed well in recent years, the government is encouraging suppliers to not depend entirely on the current top markets. As such, local makers are urged to expand to alternative markets in the Middle East and Eastern Europe. In Vietnam, trade organizations are advising enterprises to coordinate training and projects among individual companies, particularly for designing and promotion.
Industries in both countries are banking on different product design strategies. In the Philippines, the emphasis is on sustainable models because of foreign buyers' interest in earth-friendly items. Plant-derived components such as Manila hemp, raffia, buri and sinamay are commonly adopted. They are woven and crafted into various items, including gift pouches and wine bags. Being natural fibers, they are biodegradable and have a minimal adverse impact on the environment.
Plantation wood varieties such as mahogany and beech are mostly employed to offset the existing logging ban in the country. Known for their versatility, these types of timber are employed in gifts and novelties such as figurines, miniatures, trinket boxes and religious statuettes.
To further help in conserving forest resources and lessening wastage, manufacturers incorporate recycled paper in gift boxes, posters, notebooks and planners. Scrap metal is adopted as base material and frame of tabletop accessories.
In Vietnam, the dominant style trend is the utilization of imported materials, which offer better durability and provide more flexibility for designs. Fabrics used for promotional caps, shirts and novelty items include acrylic and wool. They are mainly procured from Canada and boast a wider array of colors and thickness. Cotton and polyester are purchased from China to take advantage of their lower cost.
Hardwood such as oak and pine are normally sourced from the US, Canada and Europe. Lumber from these locations typically come in varieties that have higher grades than those bought elsewhere. Imported oak and pine are used for upscale home decor, including miniature boats and cars, painting frames, jewelry or decorative boxes, and other tabletop accessories.
Importing materials pushes up production expenditure by at least 10 percent. Suppliers, however, have seen a shift in buyer preference in which clients are increasingly opting for handmade, environment-friendly and durable models instead of mass-produced ones.
The most crucial difficulty faced by the industry in 2014 was intense price competition from neighboring sourcing centers, particularly mainland China. Because of this, products are quoted less than the ideal level with respect to the desired profit margins. In some cases, suppliers have to close down due to their inability to keep up with their rivals' capabilities.
Problems with raw material availability are also hounding the sector. Makers of wooden items are most commonly affected by this obstacle since governments typically enforce logging restrictions or bans. For the most part, enterprises are left with no recourse except to source lumber from other countries. Because importation raises costs, this difficulty is invariably tied with companies' low level of competitiveness.
Manpower shortage is another hurdle that hampers development. Since improving economies result in upward mobility even in rural areas, workers that used to have limited options in terms of employment can now choose to pursue other careers, which can be higher-paying in comparison. As such, the pool of artisans and other workers skilled in the manufacture of gift items and handicrafts has been diminishing in recent years.
Inadequate knowledge regarding market and production trends is another challenge that needs to be addressed. Since most makers are small or midsize, they typically do not have access to information and emerging product developments abroad. As a result, they are unaware about the prevailing design and manufacturing preferences in the overseas markets they cater to.
The gifts and premiums industry is divided as to the direction prices will take this year. Some makers intend to adjust quotes higher to cope with rising production expenditure. Others will keep prices unchanged to ensure competitiveness and to attract repeat customers.
Export prospects for 2015 remain sunny despite the difficulties pushing against the industry. The bullish sentiment is attributed to solid demand from the US, Japan and the EU, specifically the UK and the Netherlands. New markets in the Asia-Pacific such as Australia and New Zealand are also expected to make significant contributions to revenue.
Elaborate and colorful designs will dominate production lines this year. They will be combined with texturized surfaces, which come in a variety of fabrics and materials. The eco-friendly trend will also continue to have a considerable influence on companies' design initiatives.
For more information about the Hinrich Foundation's industry-specific sourcing reports spanning seven different countries in Asia, visit Online Developing Country Sourcing.