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.