Abstract
This paper analyzes the production strategies of local footwear manufacturers in the Philippines against the inflow of foreign cheap products into the local market since mid-1990s using macro and micro fieldwork data. Most previous research has insisted that the reason why Philippine footwear manufacturing has been declining since the beginning of WTO is mainly due to their low-tech production. This is partly correct when considering the lower class market but incorrect when applying an analysis to the middle class market. At the level of the middle class market, many local manufacturers are still operating in spite of an increase of the inflow of cheap foreign products. Analysis shows that their production strategies are determined by the scale of production. Smaller manufacturers tend to continue with manual production and less investment so that they can maximize their profits. On one hand, they take strategies that minimize their risks in footwear manufacturing but they are also likely to diversify into other businesses. On the other, bigger manufacturers donʼt stop to compete with foreign cheap products, which shows that they are willing to invest in machinery and use outsourcing to strengthen their competitiveness. This paper shows that instead of diversification, they tend to concentrate on footwear manufacturing in order to build good relationships with good buyers and some achieve vertical integration with retail businesses.
