Philippine apparel brands versus super-leaguers: A case analysis of the apparel industry in Southeast Asia

Abstract

As the global recession began to affect countries in Southeast Asia in 2009, a marked difference between very large foreign and Philippine Ready-to-Wear (RTW) apparel firms emerged. Where foreign apparel firms adopted more conservative capital structures and curtailed activities in Southeast Asia, Philippine firms became more aggressive in the region with expanded distribution activities to neighboring countries, supported by debt leveraging. The result of such aggressive capital expenditure programs was a significant increase in sales growth, much faster than those of their foreign counterparts. This chapter presents methodologies in industry analysis that focus on areas of competition, industrial risks, and evident strategies. A sample of seven very large RTW apparel firms and two Philippine firms will serve as a basis for this industry case investigation. The horizon of observation in this discussion spans from 2007 to 2015. Furthermore, this discourse will introduce a Strategic-Asset-Productivity (SAP) Map that allows for the identification of stable, aggressive, lethargic, weak, underperforming, and precarious firms based on capital structure, sales growth performance, and the volatility of sales growth. Areas of competition and findings from the SAP Map serve as inputs to a Five Forces Analysis that describe the intensity of rivalry between these select competitors in Southeast Asian markets.