The local holiday décor industry's strengths are the natural materials available in the country and the ingenuity of local crafts persons. The industry is labor-intensive since products are mainly handcrafted and relies on a network on subcontractors, raw materials suppliers and gatherers. Product lines include handcrafted ornaments and decorations for Christmas, Halloween, Easter and other festive celebrations. Most items produced by the industry are Christmas ornaments, such as tree balls, lighting sets, trimmings, wreaths and other handcrafted articles. The sector's focus is primarily the export market where Christmas Décor items are the main product line.

The Department of Trade and Industry (DTI) estimates that there are about 2,000 producers of holiday décor throughout the country employing around 250,000 workers. About 50 of these companies are considered big producers; the rest range from micro, small and medium-sized firms. Most firms are family-owned and may be informal in structure. Holiday décor firms are located mainly in different areas of Luzon including Metro Manila, Southern and Central Luzon and the Bicol Region. There are also some enterprises in Cebu. The industry shares some common materials and production processes with the handicraft sector, and some enterprises produce both holiday décor and houseware items. The sector has a trade association, the Christmas Decor Producers and Exporters Association of the Philippines (CDPEAP). Some firms are also members of the Philippine Chamber of Handicrafts Industries (PCHI) and Home Accents Group of the Philippines (HAPI), two of the country’s houseware associations.

World demand for holiday décor has slowly risen over the past years, averaging a modest 6% average yearly growth for the period 2002 to 2005. In 2005, world imports of holiday décor amounted to US$ 6.4 billion. Sixty-four percent of these consisted of articles for Christmas festivities. This was followed by articles for Easter activities and lighting sets for Christmas trees.

The United States remains the largest market for holiday décor items, accounting for slightly more than half (52%) or about US$3.3 billion of holiday décor world imports in 2005. Other importing countries have relatively smaller shares of the market although steady increases were noted in imports of holiday décor by some members of the European Union (EU25) from 2002-2005. Imports of holiday decor by the EU25 reached about Euro1.5 billion in 2005.

China continued to be the largest holiday décor supplier for four consecutive years, from 2002 to 2005. It accounted for 52% of world exports and supplied 90% of the US imports of holiday décor in 2005. China also accounted for sixty-six percent of EU25's holiday décor imports for the same year.

Philippine holiday décor exports have been lethargic over the past few years. It has declined by an average of about 9% yearly from 2000 to 2006, with significant shortfalls in the early part of the period. Industry exports reached US$57 million by the end of 2006. The bulk of Philippine exports in 2006 consisted of articles for Christmas festivities, which accounted for about 97% of total industry exports. The US was the largest market for Philippine holiday décor throughout the past years, absorbing about half of exports.

The downtrend in industry exports reflects a decline in competitiveness of local holiday decor products caused by a variety of factors affecting the sector’s value chain. At the inbound logistics part of the chain, there are problems in maintaining raw material quality due to lack of skills, quality standards and technology among materials suppliers. Information on sources of raw materials is also insufficient. In terms of quality control, there is a lack of standards in receiving, warehousing and inventory control of inputs. This often leads to rejected materials. There is also inadequate proper storage and warehousing facilities for raw materials. This has led to damaged raw materials and further rejects.

The industry relies heavily on manual means of production. However, worker productivity generally remains low. There is also a lack of proper tools and equipment which can improve the flow of production processes. Firms lack proper procedure and layout that conform to good engineering practices. A number of companies are also unaware of global standards such as those related to quality, health and safety, environmental and sizing requirements.

Subcontracting is prevalent in the industry but the quality of work by subcontractors fluctuates, as these are usually home-based family operations with insufficient equipment or quality control systems. Production standards are not set industry wide and depends more on the companies’ needs. Formal quality control systems are also not widely used.

Local holiday decor firms have some advantage relative to competitors in the caliber of their designers and the use of indigenous materials. However, there are not enough designers outside the major urban centers. Product development can also be greatly improved if there were more R & D on the pre-processing, treatment and manipulation of raw materials. The link between design, market trends and production considerations also needs to be strengthened. There is also a need for firms to be more knowledgeable of the environmental, technical, sizing and other global standards for materials that can help them become more competitive overseas.

The outbound logistics show that the inventory systems, shipping and delivery schedules are not integrated with other systems such as finance, marketing and production.  Order placement to order fulfillment should be properly integrated to enhance productivity.  Packaging is a great concern of most firms.  Better packaging material in terms of costs and product protection is needed. The sector also continues to experience high inter-island shipping rates and irregular shipment schedules.

Holiday décor firms continue to rely heavily on trade fair participation to get buyers and promote their products. However, going to such events, especially in Europe or the U.S. is costly and beyond the reach of most small enterprises. With the stiff competition coming from China, companies have to develop a better strategy to generate sales given their limited resources for marketing. The industry should use ICT more extensively in their marketing efforts.  In after sales service, most firms do not properly document and record buyers' requests for product repairs in servicing clients.  There is no systematic manner in handling customers' complaints.

Over the medium term, the holiday decor industry needs to push exports back on a consistent positive growth trend. A shift in marketing to the medium and high end segments of the markets abroad need to be sustained. Competing in terms of design, quality and other product features should be emphasized. The industry also has to seek out other buyers to reduce their dependency on the U.S. market where China predominates. Together with these marketing programs, the sector needs to make the necessary adjustments and improvements in its production operations. Research and development need to be expanded, investments in tools and equipment increased and worker productivity upgraded. Further down the holiday decor value chain, quality of output and reliability of subcontractors have to be raised and raw materials wastage and rejects signficantly reduced.


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