Trade Insights for Importers of Goods from the Philippines by Sarita Jackson

Trump to Visit the Philippines Next Week: Trade Insights for Importers of Goods from the Philippines

On November 13-14th, President Trump will conclude his trip throughout the Asian region with a visit to the
Philippines. He will meet with Philippine President Rodrigo Duterte and attend the U.S.-Association of Southeast
Asian Nations summit. According to a November 8th Inside US Trade report, Trump will “continue his call for ‘fair and reciprocal treatment,’ [a senior administration] official said. That includes, the official added, ‘fully embracing an international trading system, which is rules-based and respects high standards; achieving fair and equitable trade relationships through the removal of unfair trade barriers; and the reduction of chronic trade deficits and adherence to market-based growth.’” Against this backdrop, what opportunities exist for U.S.-based importers purchasing goods from the Philippines? What should exporters from the Philippines know about finding buyers and
competing in the U.S. market?
They should understand tariffs/customs duties, or taxes placed on goods imported from another country. (Tariff and duty are used interchangeably in this piece.) Since the United States and the Philippines do not have a bilateral
trade deal that eliminates duties on the majority of goods traded between the two countries, this piece focuses on
those programs that create opportunities for goods from the Philippines to enter the United States duty-free.
Beyond looking at such programs, it is also important to understand the kind of research data that will help both an
exporter and importer, regardless of industry, to take advantage of such programs.
For this reason, the blog post is organized into the following sections: 1) the types of programs that offer goods from
the Philippines special access to the U.S. market; 2) names of key importers from the Philippines; 3) top goods and
services that the United States imports from the Philippines; and recommendations for developing a competitive
import/export strategy.

U.S.-Philippines Trade Policy (Tariffs and Special Access Programs)
The United States and the Philippines have not signed a bilateral free trade agreement, which would allow for the
easier flow of goods and services between the two countries. Goods, for example, could be traded between the two
countries duty-free. Without such a deal, any good entering the U.S. market from the Philippines will face duties,
which, in turn, adds to the cost of that same good. For instance, as discussed below, electrical machinery and equipment (HS 85) is the number one U.S. import category from the Philippines. Specific commodities, such as wires and cables, face duty rates that can range from 3.5% to 5.3%, with a few duty-free exceptions. However, special access programs provide substantial benefits to goods imported from the Philippines. Unfortunately, these long-standing programs receive little attention and many importers are unaware of their existence. Consequently, these importers miss out on opportunities to save on the cost of importing. One such program is the Generalized System of Preferences (GSP). The GSP provides duty-free treatment to specific products from eligible countries. Since the Philippines is a beneficiary of the GSP, items, such as wires and cables, enter the United States duty-free, thus giving exporters from the Philippines somewhat of a competitive edge. Furthermore, importers from the Philippines can reduce their transaction costs. In July 2017, the United States expanded the program to include travel goods from the Philippines, which originally faced duties ranging from 6 to 20%. 1/6

The next focus is for exporters from the Philippines to gain insight into who is actually buying certain goods from the country and for importers to be able to identify other firms selling similar products in the U.S. market. The following section offers insight into U.S. importers of a specific commodity from the Philippines.
U.S. Importers of Goods from the Philippines (Firm-level)

In December 2016 alone, more than 1,000 shipments ordered by various companies located all throughout the
United States came from the Philippines. Three companies–Sumitomo Electric Wiring Systems, Lear, and Roper
Corporation–account for the top 10 dollar values of the import of electrical machinery and equipment. Sumitomo
represents a 51% share of the top 10 dollar values. (Figure 1).
Figure 1: Companies Representing Top 10 Import Values of Electrical Machinery and Equipment from the
Philippines (December 2016) (US$)
Each company reported a shipment on different days in December 2016. These shipments accounted for the top 10
dollar values of imports, as noted above. Some of the values were represented by the same companies, as in the
cases of Sumitomo Electric Wiring Systems and Lear (Table 1).
Table 1: Top 10 Importers of Electrical Machinery and Equipment from the Philippines (US$)
2/6
U.S. Imports from the Philippines (Country-level)
This section highlights the demand for goods and services from the Philippines. Businesses gain from knowing
which goods and services from the Philippines are growing in the U.S. market.
This year, the United States mainly imported manufactured goods from the Philippines. The top three imports
include electrical machinery and equipment, machinery and mechanical appliances, and knit apparel and clothing
accessories (Fig. 2). The imports have increased in each of these three categories between March and August
2017, which demonstrates the increased demand for these items from the Philippines within a six month period.
More importantly, these figures show growth, although the United States is now under a new administration with a
different approach to international trade than the previous one.
Figure 2: U.S. Top Three Imports from the Philippines (Goods) (March-August 2017) (US$thousand)
3/6
From 2014 to 2016, electrical machinery and equipment showed import growth. Machinery, mechanical appliances,
etc. and apparel and clothing accessories demonstrated a decline in imports (Fig. 3).
Figure 3: U.S. Top Three Imports from the Philippines (Goods) (2014-16) (US$thousand)
Other commodities have demonstrated quicker growth rates reaching a little over 90% growth from 2014 to 2016.
Two examples of the high import growth rate include mineral fuels and footwear (Fig. 4). 4/6
Figure 4: Goods Among U.S. Fastest Growing Imports from the Philippines (2014-2016) (US$thousand)
Services are also a key component of international trade. The United States has seen significant growth in terms of
the import of various types of services, especially commercial services, from the Philippines in recent years (Table
1).
Table 1: U.S. Imports of Services from the Philippines (2012-2016) (US$thousand)
5/6
Although this piece focuses more on goods, it is still useful to speak to the opportunities presented for service
providers. Recommendations
So what then of this information? The early stages of building a competitive strategy requires understanding how to
translate this information into a formula that is strictly applicable to one’s company, product, or service.
Well, here are a few easy next steps for firms looking to import from the Philippines into the United States or export
from the Philippines to the United States:
Gather international trade data highlighting the shifts in U.S. imports of your specific product (agricultural or
manufactured);
Conduct an analysis into how to take advantage of special access programs that offer duty-free treatment
on particular goods from the Philippines entering the U.S. market;
Identify the key importers and exporters of goods (agricultural or manufactured) and analyze their
performance over a period of time;
Collaborate to turn research data into a customized competitive strategy;
Join personalized strategy sessions. GRIIT provides detailed market information, tips, resources, and training information in its free monthly newsletter. Subscribe quickly and easily at www.griit.org.
Sources: All data are based on statistics collected from the World Trade Organization (WTO), United Nations (UN),
and U.S. Customs.
© copyright 2017 – All rights reserved
GRIIT Blog: Internationa

“The Filipino-American. That’s a market, a community & an opportunity. Yes! 3.5 million of them and still growing.


Very glad to have connected with the Filipino-American Chamber of Commerce of Greater Nevada. Please read the newsletter from FACCGN.

Filipino American Chamber of Commerce of Greater Nevada
Source, Ship and Sell Event, June 29, 2017, 9am to 12:30 noon
Asian Culture Center, Las Vegas,NV
Discover how to effectively Source, Ship and Sell Philippine Products to the USA.
This highly informative event was produced by the Pangasinan Brotherhood-usa, in collaboration with the Philippine Consulate Office of Los Angeles, Filipino American Chamber of Commerce of Greater Nevada (FACCGN), EC Ferrer CHB, Inc & APCL, Provenance Holdings Corporation dba Planet63 and Luna Design
International, Ltd.The event was attended by 30 participants from the different sectors of trade and government from retailers, manufacturers, small business owners, e-commerce practitioners, community advocates and trade service professionals.

Gracing the event was the Honorable Adelio Cruz, Consulate General of the Philippine Consulate in Los Angeles who did a presentation of the current and future economic and trade prospects under the Duterte Administration and the exponential benefits of a continually expanding Filipino-American trade. There were key topics coming from expert resources with Ferdinand B. Soriano talking about Product Sourcing in the Philippines, Eddie C. Ferrer on US Customs & Freight Forwarding, and Olive Enriquez discussing Product Packaging & Social Media Marketing Strategies. A keynote was delivered. The Welcome Remarks & Purpose was delivered by Mellie Soriano of PBUSA
and Christian Bato, from the Office of Nevada Senator Catherine C. Masto. These were the key highlights we learned from the presentations:
The Top 10 exported products from the Philippines Up and coming products and services from the Philippines (Products and BPOs) Simple overview of how to efficiently ship your products from the Philippines
You got the product…how do you sell it or market it using design, social media marketing and digital marketing?

“The Filipino-American.

That’s a market. That’s a community. That’s an opportunity. Yes! 3.5 million of them and still growing.” How to create your own eCommerce site. Product sourcing using online directory product portal “www.planet63.com”. In summary, the seminar offered a “nuts and bolts” presentation of how to find those products, sell and ship from the Philippines to the USA with the US exporters who want to market to the Philippines and importers who wants to make it easy to import the right way. In a nutshell, in the age of online retailing and the easing of geographic and cultural barriers, this Seminar fulfills its basic goal to help navigate the growing digital commerce terrain and at the same time, promote Philippine products and develop the Filipino-American entrepreneurs and trade. We thank the sponsors (Philippine Long Distance Telephone), ad cooperators, notably Mr. Ferdinand Soriano of Planet63, Eddie Ferrer, Consul General Adelio Cruz, the Asian Culture Center, FACCGN, presenters and attendees for making this a success.
By:
Olivia Enriquez
Luna Design/FACCGN
Photo credits:
Jose Enriquez
Luna Design Intl

Saves Fuel, Saves Your Engine and Saves The Earth

I have always been fascinated by things that are innovative, “cool” and can possibly benefit a lot of people in their daily life. There is a product that is all that. A company called IC Motoring Technologies Inc. based in Cerritos, Ca came up with such a product that did just that. One of their numerous automotive products is an oil additive. This oil additive significantly improves and maximizes engine efficiency and performance to optimum level and consequently conserve fuel consumption as well as minimize carbon emission. This product could possibly help solve  or answer some of the pressing issues of our time-climate change and rising cost of fuel. This product is currently listed on www.planet63.com. Please click the link. http://planet63.com/directories/ic-motoring-technologies-inc/.

The IC Motoring Technologies oil additive has won awards at the

  • INPEX show in Pittsburgh, PA
  • IENA 2015 (sponsored by IFIA (International Federation of Inventors Association)
  • Filipino Inventors Association

The IC Motoring Technologies oil additive is a

  • Superior lubricating agent that provides a thin film between moving parts to create a sealing effect that allows increase in power performance and efficiency
  • Protectant for corrosion of engine components, oxidation of the oil and contamination through condensation and combustion by products
  • Cleaner for the engine.
  • Product that maintains cooler operating temperature because it helps reduce the friction of the engine parts

The IC Motoring Technologies oil additive will

  • Help reduce carbon emission
  • Cut maintenance costs of your automobile
  • Create fuel efficiency in the operation of your vehicle

This certainly in the eyes of many can be seen as a unique product and can possibly disrupt the status quo. The true secret is in the natural ingredient. The company is currently looking for distributors to market the product worldwide. It’s a product with a strong potential market growth.

  • Do you love maintaining your car and having it perform at its best? Or
  • Do you just like saving money by reducing maintenance cost of your vehicle? or
  • Generate income by helping others maintain their cars and helping the environment

Please visit their listing on www.planet63.com .

(please this link http://planet63.com/directories/ic-motoring-technologies-inc/)

Things To Consider When Entering A New Market

Here is an article that I found useful for anyone who is interested in importing products from the Philippines or exporters who want to market their products to the Philippines. The article is based on the perspective of U.S. manufacturers wanting to market their products outside of the United States.  I hope you enjoy it and find it useful.

What Are Some Challenges That Firms Face for International Marketing?

by Brian Hill

 

Identifying a True Market Need

A key to success in business is offering products and services for which customers have a compelling need. The customer has a problem that needs to be solved, and the product or service provides the solution in such an effective way that its benefits are not difficult to communicate. Identifying the true needs of large numbers of people in a foreign country is not easy. Not having lived in their culture experiencing their day-to-day lives, American marketing executives can err by assuming that what people in other countries want or need exactly matches the wants and needs of American consumers.

Dilution of Brand-Name Power

Due to the Internet, movies and other forms of entertainment, American culture and the corporate symbols of that culture–brand names–are well known across the globe. This does not mean the American companies’ products will be popular when introduced in other countries. Being aware of a brand name isn’t the same as preferring it. It can be a long and expensive process to gain the trust of consumers who have used their own local companies’ products for years or even generations. The American companies can be perceived as attempting to take over the position long held by local companies, causing resentment.

Cultural Nuance

Consumers are influenced to purchase products by marketing messages delivered through the media, including print media such as magazines. Humor is often used in commercial messages to get the consumer to pay attention. But what is considered extremely funny in one culture can be perceived as confusing or insulting in another. To produce effective advertising requires more than accurate translation of the message from one language to another. It requires a deep understanding of the culture, customs, morals and even religious views that predominate in that country. What motivates consumers to buy products varies from country to country.

Communication Style

Business executives from different countries can encounter several barriers to effective communication besides obvious language differences. The traditional pace of business negotiations can be different. Americans sometimes want to hurry negotiations along, whereas in some other countries emphasis is placed on building relationships before a business deal is seriously considered. Executives from other countries may place a higher value on things such as facial expression instead of just the words that are being said.

Distance and Time

Even with technologies such as video conferencing, executives in other countries may prefer to establish relationships on a personal level. For a smaller American company, this can mean a significant investment in travel costs and having key executives out of the office for extended periods. Time zone differences can make it difficult to coordinate projects where collaboration is required. Executives on the West Coast of the U.S. are just getting to work in the morning when their European counterparts are winding down for the day.

Finding Reliable Partners

American firms often establish relationships with distributors located in the countries whose markets they are seeking to enter. They hire sales reps based in those countries. They may engage local marketing and public relations firms to assist them. Because the American firm might have no prior experience in that country, finding people who are trustworthy and competent can be a challenge.