The Philippine Economic Zone Authority (PEZA) said a number of multinational companies (MNCs) with operations in China have transferred to, or are planning to expand their operations in the Philippines as part of their China Plus 1+1 strategy.
PEZA Director-General Tereso Panga said in a press statement on Monday the agency’s board has approved the P1.7-billion capital investment of an American-Irish company,TE Connectivity, for the production in the Philippines of electro-optical components and devices, which could generate more than 2,000 direct jobs.
TE Connectivity is just one of the companies that are expanding or transferring some of their operations to the Philippines, based on information gathered at the Philippine-China investment meetings in Xiamen, Chongqing, Shenzhen and Dongguan on March 17 to 21, the PEZA head said.
Panga said TE Connectivity, a global industry leader in connectors and cables for Digital Data Networks, has committed itself to undertaking more projects, including the expansion of its information technology-business process management
operations in the Philippines. The company has 20 production facilities in China alone.
Additional expansion plans for the year were indicated by Bocheng rubbers, Panhua steel, and HYS metal plastic in separate meetings, Panga said, without giving more details.
Hithium, a global industry leader in energy storage solutions based in Xiamen, and Penyao, a Shanghai-based company with more than 40 years of experience in the advanced waste water treatment industry in China and across Asia, are looking for Filipino partners to deploy their cutting-edge technology in the Philippines, Panga said.
He added that following a visit to its smart factory in Shenzhen, as part of the mission, officials of the TCL Technology have indicated plans to set up operations in Philippine ecozones for the manufacture of a pioneering technology product for export.
Panga also said the Dongguan-based Aoxing Group, an original equipment manufacturer or OEM supplier for projector equipment, projector screen and audio-visual products for global brands like HP, Epson and Skyworth, has chosen the Philippines for its redundant manufacturing facility intended for the US export market.
In the pipeline are projects from new investors or global industry leaders out of China, such as one of the largest producers of vitamins and dietary supplements, the biggest producer of solar cells/panels with the highest efficiency rating in the market, and one of the biggest manufacturers of TV monitors and projector screens. Panga did not name the companies nor provide the projects’ specifics.
“Under the current Trump 2.0 trade regime, the China+1 strategy seemingly has evolved into China+1+1 (or China + 2), with the Philippines now being regarded as the new ‘plus one’ preferred destination in Asean by relocating companies from China. The Philippines is touted to be the next preferred destination in Asean with the emerging China+1+1 business strategy… in the light of the imposition of a 20-percent tariff on all imports from China,“ he said.
The PEZA head quoted think-tank reports’ estimates that the Philippines barely captured 10 percent of the manufacturers moving out of China during the first wave of the US-China trade war.
With the higher tariff imposed on China-originated products, most of the export manufacturers in China have moved production to neighboring Vietnam for tax avoidance.
“The resulting global supply chain diversification by global MNCs has become more pronounced with the recent imposition of additional import tariffs by the US government against China, Mexico and India. 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 hotspots in the region (other than Vietnam and Mexico) to mitigate the impact of US tariffs directed at Chinese imports,” Panga said.
