Cibaduyut shoe industry's heyday is on the skids
Cibaduyut shoe industry's heyday is on the skids
By Kafil Yamin
BANDUNG (JP): Smart travelers with a head for making money
once would not leave Bandung without buying several pairs of the
well-known Cibaduyut shoes.
Those in the know would buy shoes directly from the makers in
the small Bandung district to save tens of thousands of rupiah on
retail prices.
Later, they sold the shoes to friends and colleagues at small
profits.
The area became a mecca for shoe shopping. Its popularity
reached neighboring countries -- Singapore, Malaysia and Brunei
Darussalam.
The family businesses, in which nearly all members had their
role, would enjoy periodic windfalls when shoe retailers came in
and bought up their stock.
"Shoemaking is a family business here. Just like large
businesses in this country," said shoemaker Roni Syahroni.
Yet the luster is fading fast today as shoemaking, once the
pride of West Java, slips from its pedestal.
Shoes and other footwear products ranked third in West Java
exports and accounted for 4.8 percent of the province's export
volume in 1993.
They dropped to 3.07 percent in 1994, and fell further to 2.76
percent in 1996. In the first quarter of this year, the volume
rose to 3.25 percent.
Data at the Cibaduyut Technical Assistance Unit shows at least
986 business owners.
They employ some 6,300 shoemakers and produce 5.5 million
pairs of shoes per annum, bringing in an annual Rp 46 billion.
The industry supports some 20,000 people.
But profitable transactions are scarce and prices have
plummeted to their lowest levels.
Recently, thousands of shoemakers lost their jobs after
around 75 shoe enterprises went bankrupt.
"Some 8,000 workers lost their jobs," confirmed Suparman,
another Cibaduyut shoe producer.
Hundreds of pairs of shoes are piling up in the storerooms of
surviving companies. Most firms are forced to sell the shoes at
low prices.
Many factories are mired in debt since equipment and
production tools were bought on credit.
Conditions are expected to worsen in the first quarter of next
year. A gloomy prediction holds that as many as 13,000 Cibaduyut
residents risk losing their jobs in the next few months.
Marketing
Many locals blame a get-rich-quick focus in their community
for their current problems.
The downturn started in 1990, they say, when the economic boom
enticed a new generation of shoe entrepreneurs bent on profit.
Lured by success stories and believing it was a "simple"
business, younger shoemakers established their own family
enterprises. The number of shoe producers tripled in 1990, and
doubled each year after that.
Staying in business has turned out to be more difficult than
they had anticipated.
"The younger generation made good shoes with competitive
qualities, just as their seniors did. But when it came to
marketing and business strategy, they proved to be laymen,"
Syahroni said.
Jojo, 28, one of the new entrepreneurs, said he had difficulty
in setting feasible prices due to the absence of a common
standard.
"If I set a certain rate, somebody else will offer a lower
price for the same product type. New entrepreneurs live in cut-
throat competition. They find dumping practices to be the only
way to survive."
In this business climate, buyers and shopowners are becoming
more discerning about the price.
"Everybody is trying to set their standard of price below what
their competitors offer...buyers (then) notice the real price of
your product," Syahroni explained.
In turn, price variations are controlled by shopowners.
Syahroni, also a local community leader, pointed to the lack
of any cohesive business strategy among the new entrepreneurs.
"This is a problem of the quality of human resources."
Easy money was partly to blame, he said. Cibaduyut residents
could earn at least Rp 10,000 a day for making several pairs of
shoes during the golden business days.
The young were reluctant to go to school.
"And their parents did not pay proper attention to this
phenomenon," Syahroni added.
"Now you can see the young entrepreneurs riding in luxurious
sedans, living in comfortable mansions, but when they are engaged
in business transactions, it's clear their knowledge and
educational background do not match up."
Young entrepreneurs fail to see the necessity of an
organization to establish common pricing.
"People here see each other as competitors, not as partners,"
Jojo said. "Nobody can convince them that such an association is
important. We badly need this type of body."
Despite the decline in the past several years, the problem has
only recently come to the attention of the local administration.
According to Akatiga, a Bandung-based non-governmental
organization focusing on social research, the decline in the
Cibaduyut industry is related to monopolistic business trends.
"The government is very lenient about monopolistic practices,"
said Akatiga senior researcher Indrasari Tjandraningsih.
"Cibaduyut shoemakers are now facing raw material shortages due
to this practice."
Large suppliers, she alleged, had no choice but to buy leather
from a major conglomerate which provides leather for shoe soles.
"Once the monopolistic system (in leather) was adopted, prices
of raw materials started rising. Prices are now under their
control. It just drives them (traditional shoemakers) crazy,"
Tjandraningsih said.
Shoe entrepreneurs were then forced to hike the prices of
their products.
Tjandraningsih also faulted the government for allowing large
foreign shoemakers to compete with domestic firms.
"This is just unfair competition. The government should
protect the people's business.
"We know the government needs to improve foreign investment.
But since relocation of foreign investment is aimed at building
the people's welfare, what have clearly fed such a large
community should be preserved."
She said one of the best ways to ensure survival of the
Cibaduyut shoe industry would be to dismantle the monopolistic
system.