Enterprising from scratch

Described as hampas lupa, this once struggling accountant, together with his wife, built a multi-million export handicraft business
By Doris C. Dumlao

He was a struggling accountant from Romblon who, at one point, tried working abroad to make a better living, but he was never content being a salaried employee. She, on the other hand, was a sultry Bicolana who once dreamt of marrying a seaman so that she could hoard all the dollars she wanted to splurge in sight-seeing and shopping around the world.

Neither had formal entrepreneurial training nor parental subsidy to start from but both are smart, diligent, and highly-motivated individuals who put themselves through college in Manila. All they had was each other but as it turned out, it was all they needed to build a successful enterprise from scratch.

These days, husband and wife Salvador and Loida Rapal run a medium-sized handicraft export business whose products are carried by huge multinational retailers such as U.S. store-chains Wal-Mart, MarMaxx, Target Store, TJ Max, Michael’s, Freight and Barrel, and Family Dollar Store. In retrospect, they have far exceeded their own childhood dreams.

The Rapals’ RH Excelcrafts & Gen Merchandise Enterprise, which has manufacturing hubs in Cavite and Romblon as well as sub-contractors in Bicol, Bulacan, Pampanga, Cebu, Bohol, and Quezon, now ships out 200 containers a year and employs about 300 people.

Their showroom in Las Piñas is bustling all year round, laden with handicrafts fashioned out of indigenous materials such as abaca, vines, buri, bamboo, and paper pulp.
Their business is like Boracay—there’s hardly an off-peak season. Between October and February, they are busy producing spring and Easter products while between March and August, they are in a rush to stockpile for yearend holidays like Halloween and Christmas.

Entwined
Bhuds and Loids met in a commuter bus plying the Sta. Mesa-Divisoria route when they were working students in the 1980s. He was then taking up accounting at PUP and she was a business administration student at NCBA. Most of Loids’ kin didn’t think Bhuds was good enough. One of her sisters described him as “hampas-lupa” (dirt-poor).

He supported himself through college working for a Filipino-Chinese businessman engaged in a handicraft enterprise in Quezon City, supervising all aspects of the supply delivery chain including quality control. After he passed the CPA board exams in 1987, he started accounting practice at SGV & Co.

On the other hand, Loids was working for Sto. Niño Catholic House, Inc., a retailer of religious artifacts owned by long-time family friend Fernando De Leos who would eventually be the couple’s ninong or principal wedding sponsor. She would continue working there even after college and through the initial years that she and Bhuds had tied the knot.

Loids helped her ninong grow the retailing business and there learned the basics of running an enterprise. It was there that she developed a knack at people management and a nose for products that will sell like hotcakes.

After three years with SGV, Bhuds quit to work as an auditor in Saipan, wishing to provide a better life for his young family. But it wasn’t to his liking and he scrambled back home at the first chance he got. Once back in the Philippines, he had many job offers, but decided he couldn’t be a wage earner anymore.

With a start-up capital of P40,000, which Bhuds earned from working in Saipan for one year, the Rapals put up RH (which stands for Rapal’s Handicraft) in 1990.

Bhuds’ mother, a long time ago, had a cottage handicraft business in Romblon. It didn’t hit big-time nor was sustained for long but some of the artisans in the hometown still recognized Bhuds’ business as a progeny of their former employer. Some agreed to relocate to Manila to work for him.

At the start, the Rapals had only a handful of people and Bhuds himself did some manual work like weaving (their bestsellers were reindeer and sleigh) in order to lead by example. Loids, on the other hand, had become the resident product designer, discovering she had ample creative juices.

She haggled to acquire an 80-square meter property in Sta. Mesa Heights that became their first showroom, production hub, warehouse, and housing (for themselves and for their employees) rolled into one.

RH started out selling only to the domestic market, sub-contracting for other exporters. After a year, Loids felt it was time to go global. There wasn’t enough volume to sustain the business if they were to rely on domestic demand, she realized. He kept on prodding Bhuds, who didn’t even know how to use letters of credits (L/Cs) then.

Given limited resources and zero overseas connection to start from, there wasn’t room for trial and error. But they followed their instincts. Bhuds conducted market research and wrote about 500 letters to various trade embassies and Philippine commercial attachés abroad to make a pitch for their products. They had to borrow Sto. Niño’s showroom to establish credibility among visiting clients.

A buyer from New Jersey became their buena mano immediately placing a large order. Offshore market sales grew from there and pretty soon, they were running a multimillion-dollar business.

But as start-ups, without any asset to use as collateral, they relied on cash advances from buyers and their friendship with the De Leos family to bankroll their fledgling business. Aside from lending his showroom during buyers’ visits, ninong De Leos was kind enough to tap Sto. Niño’s credit line from banks to help the Rapals raise the P5 million additional capital needed when they started expanding capacity to cater to the offsore market. (But as the Rapals’ business prospered years later, the couple would eventually get the chance to return the favor to their patron in a bigger way.)

It was much easier to expand business and manage cash flows back then, as it was customary for buyers to make a down payment equivalent to 50% of the purchase order value. As volume grew, the Rapals always had to transfer to a bigger production sites. From La Loma, they moved to Parañaque, Tandang Sora, and Malinta. Finally, to avoid rising costs in Metro Manila, they put up a much bigger production complex in Trece Martires in Cavite.

To date, most of the original workers recruited from Romblon are still with the Rapals, who provide free housing facilities for their people. Bhuds attributes their success in building an enterprise to a combination of hard work and good luck.

“It was the right timing when we entered the export business,” Bhuds says. “At that time, importers from the US were looking for direct manufacturers and no longer wished to go through middlemen.” Loids adds, “This business is good because cash turnover is fast. In three to four months you can generate profits.”

Challenges
Running this mid-sized enterprise for the last 16 years is no walk in the park. These days, for instance, buyers no longer advance cash for their orders, so the manufacturers’ cash flow is sometimes tight when orders bunch up. It’s thus a must to stay liquid.

As Western buyers started to rationalize operations, they got rid of warehousing in their own countries. Thus they no longer allow staggered shipment. Suppliers like the Rapals have to stockpile and send everything straight to the buyers’ stores.

China’s emergence as a manufacturing powerhouse has also altered the rules of the game. To stay competitive, the Rapals are thus constantly coming up with new designs and diversifying input content. “You have to be innovative. There must always be an element of surprise for the buyers,” Bhuds says,

It also helps to invest in sound logistics. When the Rapals realized that they were spending so much on transportation costs, for instance, they decided to buy their own truck head so they could move out their products anytime they need to, thus putting themselves in control to meet deadline commitments.

But the most important lesson is the basic: know the market. “Before I jump into a river, I’d like to make sure that there’s no crocodile in it,” Bhuds says. “Find out what the market wants, generate the demand, and make the product. If you make the product first and the market doesn’t like it, you end up with nothing.”