A Shoe Industry's Slow Death.(China taking over industry from Philippines)(Brief Article)

Shoes mean a lot to the Philippines, and not just because Imelda Marcos once owned 3,000 pairs. In the 1880s, a wealthy landowner in the town of Marikina, a suburb of Manila, took a trip to England and brought back a pair of handsome shoes. But the landowner, Laureano Guevara (better known as Kapitan Moy), didn't wear them. Instead he took the shoes apart and taught himself, and others, how to make shoes. Thus was born the Marikina footwear industry, which has been vital to the Philippine economy for decades. In the mid-1980s, the Philippines was a major shoe exporter to the United States and other countries. In 1997, the country's shoe exports earned nearly $200 million.

That's not the case anymore. Today, Marikina still has 600 registered shoemakers--but most are tiny outfits making shoes with hand tools and outdated equipment. That's left them vulnerable to Chinese competition, and now Marikina's industry is dying. The Needs Footwear Co. is one of many Marikina companies that is suffering. Five years ago Needs employed 30 people and made 1,000 pairs of shoes a week. Today, production is down to 400 pairs weekly, and there are only four to 10 workers in the factory, depending on orders.

Eager to take advantage of liberal investment rules and China's low wages, foreign companies (mainly from Hong Kong and Taiwan) have poured billions into China's shoe industry in the past decade, mostly in the provinces of Guangdong and Fujian. "Factories in China are models of efficiency," says Peter Mangione, president of the Footwear Distributors and Retailers of America. As a result, Chinese shoe factories churn out more than 5 billion pairs of shoes annually--and control half the global market. More than a billion pairs are sold to the United States alone each year, where Chinese-made shoes account for roughly 80 percent of all footwear imports.

Unable to compete, many Philippine factories ...