The Philippine footwear industry is composed mostly of smalland medium-size enterprises producing various items including Leather Footwear, Non-Leather Footwear, Slippers and Sandals, Sports Footwear, Parts of Footwear and Consigned Footwear products. These categories cover dress (formal) shoes, sports shoes and casual footwear made from a variety of materials ranging from leather, rubber and plastics to textiles, abaca and other components.

Government (DTI) estimates put the total number of footwear enterprises in the Philippines at more than 2,100, with total employment generation of about 25,000. Majority of the manufacturers (about 43%) are found in the National Capital Region, where the major production center has been, for decades now,the city of Marikina. The towns of Pateros and Taguig, known for their garments trades, are also footwear centers. The other significant footwear-producing regions are Central Luzon, Southern Tagalog and Central Visayas, especially Cebu.

The larger firms in the industry may be found in the export processing zones, manufacturing footwear under contract from foreign brands. Large and medium sized companies that sell domestically may have their own stores, boutiques or stalls inside the various malls or department stores. The smaller enterprises use traders or similar channels to market their products. Some of these micro and small firms may also be subcontractors of the larger footwear manufacturers.

World imports of footwear products totaled US$62 billion in 2004. The United States is the larget market for footwear, accounting for 29% of global demand for the same year. Exports of footwear worldwide was estimated at US$53 billion in 2004. China is the biggest supplier, comprising 28% of total world exports for 2004. Other major exporters are Italy and Hong Kong.

Exports of Philippine footwear was estimated at almost US$26 million in 2005. Over the past few years, the industry has performed dismally in the global market. Since 2001, footwear exports have declined substantially, dropping to only a third of its peak levels attained during the start of this decade. Competition in the form of cheap footwear, mostly from China and Hong Kong, have continued to erode the market share of the industry.

Japan and the United States are the biggest markets for local footwear products, accounting for 45% of total industry exports in 2005. Other main export destinations include Mexico and the Netherlands. Philippine footwear exports are concentrated in only about two product lines. These are sport shoes and non-leather footwear. Collectively, these product categories comprised almost 90% of total footwear exports in 2005.

The weak performance of local footwear in the global market stems from a decline in the price competitiveness of the sector. Local manufacturers are beset by a host of problems at the various stages of their production process – from the sourcing of raw materials to the inadequate manufacturing technologies employed and the low productivity of their workforce. These factors pushes up product cost, making footwear products more expensive than those from the major world suppliers.

A persistent problem for the industry is the quality of leather from local tanners. The causes of this problem are deeply rooted within the value chain of the tanning sector. Local animal hides processed into leather are often of low quality caused by defects in the slaughtering and flaying methods used. Footwear firms often have to resort to imported leather to meet their needs. Cost of imported components and accessories used in footwear are also increasing, further adding to the final product cost.

In production operations, the industry’s technologies and processes are basic, mostly manual with some semi-mechanized processes. Firms usually suffer from low worker productivity caused by lack of updated skills. At the supervisory and management levels, personnel lack appropriate skills and expertise in production planning, monitoring and control. The use of information technology in helping manage operations is also limited.

Besides losing market share abroad, the footwear sector also needs to deal with the increasing influx of cheap imported shoes into the domestic market. Based on data from the DTI, imports of footwear products totaled more than US$42 million in 2005. This is significantly more than what the industry exported for the same year. Given their relatively high cost structure, local footwear firms can hardly compete with the low prices of shoes from China and other low cost producers.

For the near term, footwear manufacturers need to arrest the decline in their market share, both globally and in the local market. The sector needs to strengthen their expertise in product design
and innovative use of materials. Investments in time and resources also need to be done in terms of updated technologies, equipment and worker training. Some intervention is also needed in making
workers more receptive to further skills development. Some consolidation may take place in the industry as the highly competitive market environment favor the more efficient and innovative manufacturers. However, this may also be an opportunity to evolve a leaner and more competitive footwear sector over the medium to long term.


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