Philippines attracts firms diversifying from China supply chains

The Philippines is becoming a popular choice for companies looking to move their operations away from China. This trend is partly due to a new trade policy from the United States that imposes a 20% tariff on all imports from China. Philippine Economic Zone Authority (PEZA) Director General Tereso Panga stated that investors from China and other nations expressed interest in the Philippines during recent investment meetings. He noted that the “China+1” strategy is evolving into “China+1+1,” with the Philippines being seen as the favored destination in Southeast Asia. Panga highlighted that while Vietnam initially attracted attention due to its proximity to China, the tariffs from the US have pushed many companies to consider new locations for their supply chains. This includes not only Vietnam and Mexico but also the Philippines. He mentioned that several small and medium-sized Chinese businesses are interested in setting up operations in PEZA economic zones. These companies are looking to sell their products not only to the US but also in the local market. One notable investment is from TE Connectivity, which plans to invest P1.7 billion to produce components for data networks. This investment is expected to create over 2,000 jobs. TE Connectivity is also expanding its IT and business operations in the Philippines. Furthermore, other multinational companies in the electronics and automotive sectors have begun to relocate parts of their operations to the Philippines. Prospective firms like Hithium and Penyao, specializing in energy storage and wastewater treatment, are looking for local partners to bring their innovative technologies to the country. So far, PEZA has registered 118 companies from mainland China with investments totaling P28.7 billion, resulting in over 16,300 jobs for Filipinos. There are an additional 78 companies from Hong Kong also investing.