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 Today, Marikina still has 600 registered shoemakers–but most are tiny outfits making shoes with hand tools and outdated equipment.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 have closed, and exports are steadily falling. Geronimo Santos, whose grandfather was one of those taught by Kapitan Moy, has closed his retail shoe shop in Marikina. It’s now a canteen. His late brother’s shoe-manufacturing business is now a bakery. Roger Py, executive director of the Philippine Footwear Federation, says the big issue is cost. “It’s hard to fight the Chinese,” he says. “No one can match them in terms of price,” especially given that wages in the Philippines (about $150 a month) are double those in China. “China can produce cheaply,” adds Py, “because they make all product components themselves. Here, we have to import the buckles.” The situation is so grim, he says, many of the country’s best shoe designers have moved to China.
Leonida Quirante, the owner of Needs, contends that the Chinese are “dumping” their shoes on the market at illegally low prices. She and other shoemakers want the government to start imposing duties on Chinese imports. “The Philippines is not ready for globalization,” says Quirante. Government aid is not likely. During a recent electronic town meeting with employees from various parts of the country, President Gloria Arroyo blamed the industry itself for its woes, saying: “The mode of production in Marikina hasn’t changed. They haven’t modernized, and that’s necessary to reduce costs.”
What’s scary is that, after China joins the World Trade Organization, restrictions on Chinese imports in many places will be lowered. China’s shoe industry could get even stronger. “It’s going to be hard for Asia to adjust to this,” says Mangione of the U.S. footwear group. “But then, Asia has been adjusting to China for thousands of years.” Maybe Kapitan Moy saw all this coming. After he pulled his English shoes apart, Moy went to Escolta, an elite shopping center in Manila, to watch the shoe repairmen at work. They were Chinese.
