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Friday, August 11, 2006

Time to export

Exporting is the best way to widen your market and increase your sales, but you'll have to get ready for it.

By Lumen P. Balboa and Jaclyn Lutanco-Chua

Feel like exporting? A few things you'll want to know: The Philippines ships out $3 billion worth of goods and services every month, and in 2004 it sold $39 billion worth or 9.3 percent more than the year previous. According to the National Statistics Office, 10,000 to 11,000 companies here are in the export business, and the top Philippine exports are still semiconductors (47 percent), electronic products (20.2 percent), garments (6.08 percent), and machine and motor vehicle parts (3.96 percent).

Based on projections by the Philippine Exporters Confederation, electronics will continue to lead this year followed by garments-which will benefit from China's need to import semi-finished materials-and motor vehicle parts. The group is equally bullish on business process outsourcing services such as call centers, animation, medical transcription, and software development-"the brightest spot" in the export horizon because Filipinos have the skills to provide them, says Philexport president Sergio Ortiz-Luis. Not least, Ortiz-Luiz is rooting for beverages and processed food including dried mangoes, bananas, pineapples, and yam-a sector he expects to grow by 10 percent this year.

"The dried fruit market is increasing in the United States, so we have to take advantage of this," he says. Indeed, world demand for fruits, food and food products is huge. In 2004 it reached $85 billion, and it's expected to hit $97.4 billion by 2010 mainly on robust buying by the United States (which spends up to $19.2 billion annually) and Japan (which buys $6.5 billion worth). The Philippines supplies only 1.7 percent of the United States' food imports and only 5.5 percent of Japan's, but its nearness to Hong Kong-which spends a more modest $79 million on food imports, but is the world's fifth largest importer of food products-has allowed it to supply 69.4 percent of Hong Kong's imported food.

The one thing to keep in mind if you decide to export is "mainstreaming"-supplying a product or service that buyers want rather than gambling on something new. "In the past, people started with a product and then looked for a market to sell it," says Jason Lao, assistant director of the Bureau of Export Trade Promotions. "Now it's difficult to create global demand for an unfamiliar product because you have to invest heavily in marketing and advertising."

These days, the trend is exporting ethnic food, snacks, fruits and juices. The idea is to sell fresh and dried fruits and halal or certified products to Muslim Asia and the Middle East; fresh fruits, fresh chicken, dried fruits and fruit juices to Japan; snacks, coffee, juices, confectionery and ready meals to Taiwan; and fresh and processed fruits, fresh and frozen food, and canned meat-based products to China. It's also a good idea to export Filipino food to countries with large Filipino communities: Filipino food like laing, one of the Cebuanos' top contributions to Philippine cuisine.

Ana Manrique thought about exporting laing to increase the income from the family bakery, which had been falling as a result of soaring sugar prices. "My husband and I knew we wanted a product that had a long shelf life and whose ingredients could be bought here so we wouldn't have to spend much importing them," she says. They decided on laing in August 1999, when they put up Moondish Foods Corp. and then researched with the Department of Science and Technology before investing P500,000 to train staff and rent equipment from the department. They eventually acquired their own equipment and put up their own facility in Taguig.

Moondish got its break in November 1999, when it joined the first Asian Ethnic Food Festival and received an order for 700 cases or over 30,000 cans of laing. "Joining trade shows is the best way to market your products," says Manrique. "It's a guarantee that the buyers you meet are well known and legitimate. Today, Moondish exports its laing and new additions Bicol Express and ginataang ampalaya to the Middle East, the United States, Hong Kong, and other countries with large Filipino communities. It's able to produce up to 12,000 cans of food a day.

Still, exporting is stressful business. "Mabusisi lalo na sa packaging," says Manrique. "There are many regulations, and each country has their own set of rules." The United States, for instance, requires food to have nutrition information. "May format pa sila kung anong font ang gagamitin, kung paano ang spacing, kung saang panel mo siya ilalagay. You also have to print the net weight, the name of the manufacturer, and what country it's from. There are many documents to fill up, and if you make one mistake-even if it's just one word-your product immediately becomes questionable." Her advice? Consult with agencies like the Department of Trade and Industry and the Philippine Trade Training Center. "And make sure you don't overlook anything and stay informed and updated."

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