US-China tariff war seen to bring diversifying firms to PH
The Philippines is emerging as a preferred destination for companies seeking to diversify their supply chain beyond China, amid a new Trump trade policy imposing a 20 percent tariff on all imports from the world’s second-largest economy.
“This is the affirmation we got particularly from the Chinese and [multinational] investors that attended the (March 17 to March 21) Philippine-China investment meetings in Xiamen, Chongqing, Shenzhen and Dongguan,” Philippine Economic Zone Authority (Peza) Director General Tereso Panga said in a statement.
Panga said that as the ‘China+1 strategy’ had evolved into ‘China+1+1’, the Philippines is now emerging as the preferred “plus one” destination in Southeast Asia.
He acknowledged that Vietnam had initially stood out among its regional peers due to its shared border with and proximity to China.
The resulting global supply chain diversification has become more pronounced with the imposition of additional tariffs by the US on goods from China, Mexico and Canada, he said.
“Certainly, this has put pressure on export manufacturers in China to shift parts of their supply chains and production processes away from China’s factory hubs and into new investment hot spots in the region, other than Vietnam and Mexico, to mitigate the impact of US tariffs directed at Chinese imports,” said Panga.
During an investment forum in Xiamen, Panga said several Chinese small and medium-sized enterprises have expressed interest to establish operations at Peza economic zones.
“Other than exporting to the United States, they want to sell as well their finished products to the domestic market,” he said.
These firms include TE Connectivity, a global leader in connectors and cables for digital data networks, along with Bocheng Rubbers, Panhua Steel and HYS Metal Plastic.
Pangas said that the Peza board had recently approved TE Connectivity’s P1.7 billion investment for the production of electro-optical components and devices, which is expected to create more than 2,000 direct jobs.
The American-Irish company with 20 production facilities in China has also committed to invest in the expansion of its information technology and business process management operations in the Philippines, he added.
Panga added that several multinational corporations, particularly in the electronics and automotive sectors, have already relocated parts of their operations, including some contract manufacturers, to the Philippines.
Other major prospects include Hithium, a global leader in energy storage solutions. Another is Penyao, a Shanghai-based wastewater treatment company.
Both companies are seeking Filipino partners to introduce their “cutting-edge” technology to the Philippines, said Panga.
To date, Peza has registered 118 mainland Chinese companies with total investments of P28.7 billion, creating 16,327 direct jobs for Filipinos. On top of these, there are 78 locators from Hong Kong.
