Philippines - Country Commercial Guide
Selling Factors and Techniques

Identifies common practices to be aware of when selling in this market, e.g., whether all sales material need to be in the local language.

Last published date: 2021-09-11

Trade Promotion and Advertising

The Philippines is a brand-conscious market. Advertising plays a significant role in promoting the sale of most consumer goods. Most of the leading advertising agencies in the country are affiliated with international agencies.  Advertising in the Philippines has evolved beyond traditional tri-media outfits (print, TV, and radio). Local advertisers now also use electronic billboards, web advertising, mass transit or public transport advertising, special events and product launches, direct marketing, social media promotion, and other tools to promote their products. Although some advertisements utilize Western image models or concepts, many market segments are “localized” versions of product advertising and brand-building. The use of celebrity endorsers or other high-profile personalities is a well-tested and well-received formula for local advertising.

The National Telecommunications Commission (NTC) reported that broadcast media in the Philippines comprises 417 AM radio stations, and 1,214 FM radio stations as of 2019. The NTC also indicates that six major television networks operate 588 stations.

Print media includes more than nine daily newspapers, 40 national tabloids, over 100 regional newspapers, and more than 100 magazines and publications covering a diverse range of themes (for example, entertainment, leisure and lifestyle, sports, hobbies and recreation, business and trade, religion, fashion, culinary, specific market segments, health, travel, IT, agriculture, etc.). These publications are distributed weekly, bimonthly, monthly, bi-annual or annual issues.

Provincial newspapers and regional publications are also available.

Internet penetration has increased but is still relatively low compared to Asian neighbors such as Singapore, Taiwan, and Japan. Online advertising is gaining popularity as social networking/marketing captured the younger Filipino market. Web-based advertising is typically placed on the most-visited local websites (online news and entertainment media, regional search portals, etc.). Although most of the Philippines’ significant companies maintain their websites, the content quality, level of sophistication, and interaction with site visitors vary.

Text messaging (also referred to as SMS or short message service) is a viral advertising medium since it is relatively inexpensive and allows businesses to reach highly targeted consumers. The Philippines has 159 million mobile subscriptions with the ability to receive text messages.  Large companies often send promotional messages via SMS, which serves as an effective marketing strategy.

Other social networks such as Facebook, YouTube, Linked-in, Instagram, Tiktok, and Twitter have also gained momentum in reaching niche markets for consumer brands, especially among young people.

Over the last few years, local organizers have developed numerous industry-specific trade shows and exhibitions. These trade promotion activities cater to a wide array of sectors, including construction, clean energy, health and lifestyle, furniture and home décor, food and food equipment, regional products, giftware, franchise opportunities, education, industrial goods, automotive, maritime and defense, sporting goods, apparel, telecommunications and IT, among others.

Popular venues for trade fairs and expos include shopping malls (SMX Convention Center attached to the SM Mall of Asia complex), trade halls (World Trade Center, and the Philippine Trade Training Center, among others) and convention centers.  CS Philippines participates in some of the more prominent local trade shows and regularly informs U.S. companies when they arise.

CS Philippines can connect U.S. companies to appropriate advertising and trade promotion service providers such as:

Local Fair and Trade Show Organizers:

  • Fiera de Manila                                                
  • Global Link Philippines                                  
  • Primetrade Asia Incorporated                                            
  • Worldbex Services International                                            

Major Local Newspapers:

  • Businessworld                                                 
  • Manila Bulletin                                                
  • Manila Standard Today                                                  
  • The Manila Times                                                          
  • The Philippine Daily Inquirer                                        
  • The Philippine Star                                                         
  • The Business Mirror

Major TV/ Radio Stations:

  • ABS-CBN (TV) / DZMM (Radio)  
  • ABC- TV5 (TV5)/ DWFM (Radio                
  • CNN Philippines (TV)                                                     
  • GMA (TV) / DZBB (Radio                                           
  • People’s Television-PTV4 (Govt. channel)

The Consumer Code of the Philippines covers the legalities of direct selling and direct marketing. Firms interested in either direct selling or direct marketing can coordinate their activities with the Department of Trade and Industry (DTI).

Contacts:

Ms. Ruth B. Castelo

Undersecretary, Consumer Protection Group (CGP)

Department of Trade and Industry

2F, UPRC Building, 315 Senator Gil J. Puyat Avenue, Makati City

Tel: (632) 824 4779

Fax: (632) 824 4780

Email: RuthCastelo@dti.gov.ph     

 

Mr. Ireneo Vizmonte

Undersecretary, Management Services Group (MSG)

Department of Trade and Industry

5F Trade and Industry Building, 361 Senator Gil J. Puyat Avenue, Makati City

Tel: (632) 791 3242, 751 0384 loc 2537

Fax: (632) 890 4870

Email: oamsg@dti.gov.ph   

Website: http://www.dti.gov.ph         

Pricing

Typical retail markups average 30% of invoice value, but markup percentages can range from a minimum of 7% to 10% for regulated goods such as glass, aluminum, etc., to 10% to 15% for most consumer goods, and as much as 30% for high-end or luxury items. These rates enable distributors, wholesalers, and retailers to recover expenses incurred in importing equipment, raw materials, or finished goods, such as import duties, Value Added Tax (VAT), discounts to customers, commissions to company-employed agents and independent provincial dealers, warehousing fees, shipping charges (some are charged to the importer), and other Bureau of Customs fees.

Retailers typically earn a 20% to 30% profit margin on most non-food retail items, but margins may vary widely depending on mutually agreed sale terms and conditions.

Generally, all transactions involving the sale of goods, properties and/or services are subject to VAT. VAT is imposed on the gross selling price (for sale of goods) and gross receipts (for the rendering of services). Since February 2006, the Expanded Value Added Tax (EVAT) Law increased VAT from 10% to 12% across the board. The VAT on imported goods is based on the total value used by the Philippine Bureau of Customs in determining tariffs and duties.

In most cases, VAT is already imputed in the final invoice price as it is billed to the buyer, unless the exporter stipulates that it is not included. Typically, a foreign exporter will collect VAT from his Filipino buyer and remit the tax to the government. If the Philippine buyer re-sells the product locally, such as in a distributor relationship, the local re-seller passes the VAT onto the local buyer in the invoice price.

Sales Service/Customer Support

After-sales service and support are extremely important to the Philippine market. Philippine partners expect U.S. vendors to provide adequate support during and after the warranty period to provide utmost customer satisfaction and strengthen the brand name.

For the procurement of goods, in order to assure that manufacturing defects shall be corrected by the supplier, a warranty security shall be required from the contract awardee for a minimum period of three (3) months, in the case of Expendable Supplies, or a minimum period of one (1) year, in the case of Non-expendable Supplies, after acceptance by the Procuring Entity of the delivered supplies. The obligation for the warranty shall be covered by either retention money in an amount equivalent to at least 1% but not to exceed 5% of every progress payment, or a special bank guarantee equivalent to at least 1% but not to exceed 5% of the total contract price. The said amounts shall only be released after the lapse of the warranty period or, in the case of Expendable Supplies, after consumption thereof: provided, however, that the supplies delivered are free from patent and latent defects and all the conditions imposed under the contract have been fully met.

U.S. firms typically provide after-sales service through their local representatives. Those with substantial sales in the Philippines establish a branch office, which further strengthens the support given to their local distributors or resellers. The strategy of having a local presence provides a competitive advantage. Another alternative is supporting the Philippine market from a regional Asian office.

Local Professional Services

U.S. and global accounting firms, law firms, and insurance companies have active offices and partners in cities in the Philippines.  In addition to Commercial Service Philippines, U.S. firms interested in doing in the country may reach out to the American Chamber of Commerce (http://www.amchamphilippines.com)  for more information.

The U.S. Embassy website has a list of lawyers that can be referenced: https://ph.usembassy.gov/u-s-citizen-services/attorneys. The list is updated on a request basis and interested firms can submit information via: ACSInfoManila@state.gov. The Commercial Section also has a list of lawyers that can be provided to clients upon request.  

Principal Business Associations

American Chamber of Commerce of the Philippines, Inc.

The American Chamber of Commerce of the Philippines, Inc. exists to serve the interests of Philippine and American businesses through the participation of members in promoting their long-term objectives while contributing to the civic and economic development of the Philippines.

Contact:

Mr. Ebb Hinchliffe. AmCham, Executive Director

Email: amcham@amchamphilippines.com

Tel: (632) 8818-7911

2/F Corinthian Plaza Building,

Paseo De Roxas, Legaspi Village, Makati City, Philippines 

 

Direct Selling Association of the Philippines (DSAP)

https://www.dsap.ph

Direct Selling Association of the Philippines (DSAP) is composed of companies engaged in the business of direct selling and networking marketing. DSAP works with the government regarding methods of production, marketing and servicing by its members as it promotes a high standard of merchandising and servicing practices. 

Contact: 

Mr. Josefino J. Sarmiento, Chairman 

Email: info@dsap.ph  

Tel: (632) 8638-3089 

Unit 606 Cityland Shaw Tower, 

 

Shaw Boulevard corner St. Francis Street, Mandaluyong City, 1552, Philippines 

Health and Dietary Supplement Association of the Philippines (HADSAP)

https://hadsap.org

The Health and Dietary Supplement Association of the Philippines (HADSAP) aims to promote growth, protection, and welfare of its members and consumers. They educate the Filipinos on the benefits of health supplements and they coordinate with government agencies to ensure compliance to existing laws and regulations on health supplements.

Contact:

Ms. Leni P. Olmedo

President and Head of Communications Committee

Email: info@hadsap.org.ph

Phone: (632) 8814-8181, (632) 8635-1809

4/F Kentek Bldg. 828 A. Arnaiz Ave.,

San Lorenzo Village, Makati City, 1223 Philippines 

 

Healthcare Technology Association of the Philippines (HTAP)

The Healthcare Technology Association of the Philippines (HTAP) is composed of multinational medical device companies that aims to explore avenues of mutual interest and cooperation in public policy for the medical device industry.

Contact:

Mr. Lih Chyun Yeong, President

Email: lih_chyun.yeong@bbraun.com

Institute of Integrated Electrical Engineers of the Philippines, Inc. 

http://iiee.org.ph   

Institute of Integrated Electrical Engineers of the Philippines, Inc. (IIEE) is composed of electrical practitioners with 47,000 members. IIEE cooperate with the government mainly through the Professional Regulation Commission in the continuous upgrading of electrical engineering practice and education. 

 

Contact: 

Mr. Noel Fernandez, National President 

Email: myleen.iiee.technical@gmail.com  

Tel: (632) 3414-5626 local 230 

41 Monte de Piedad Street, Brgy. Immaculate Concepcion, Cubao ,Quezon City, 1111 Philippines

 

Makati Business Club

http://www.mbc.com.ph/

The Makati Business Club fosters and promotes the role of the business sector in national development efforts, both in planning and the implementation of policies. It has become the leading private forum for meetings that brings together business, government, and community leaders in the country.

Contact:

Mr. Coco Alcuaz

Executive Director

Email: makatibusinessclub@mbc.com.ph

Tel: (632) 7751-1137 to 38

2nd Floor, Aim Conference Center

Benavidez Street corner Trasierra Street

Legaspi Village, Makati City, 1229 Philippines          

Pharmaceutical and Healthcare Association of the Philippines

www.phap.org.ph

The Pharmaceutical and Healthcare Association of the Philippines (PHAP) represents the research-based pharmaceutical sector of the country. It is composed of 42 local and international companies advocating for policies and practices that encourages access to innovative and life-saving therapies for all Filipinos.

 

Contact:

Mr. Tedoro Padilla

Executive Director

Email: phap7346@phap.org.ph

Tel: (632) 8865-5600

Address: Unit 502 One Corporate Plaza, 845 Arnaiz Avenue, Makati City, Philippines

Philippine Association of Medical Device Regulatory Affairs Professionals (PAMDRAP)

www.pamdrap.org

The Philippine Association of Medical Device Regulatory Affairs Professionals is a Filipino association for regulatory affairs professionals in the medical industry. They serve as a dialogue partner and resource for all information of appropriate government agencies in the implementation of medical device regulations.

 

Contact:

Mr. Rhoel S. Laderas

President

Email: secretariat@pamdrap.org

Philippine Chamber of Commerce and Industry

The Philippine Chamber of Commerce and Industry (PCCI) advocates for the growth and sustainable development of entrepreneurship, chamber development, international trade relations and business innovation. PCCI works with the government, local chambers, and other business organizations to promote Philippine enterprises globally.

 

Contact:

Amb. Benedicto V. Yujuico

President

Email: secretariat@philippinechamber.com

Tel: (632) 8846-8196

3F Commerce and Industry Plaza 1030

Campus Ave. cor. Park Ave. McKinley Town Center

Fort Bonifacio Taguig City, Philippines

 

U.S. - ASEAN and Business Council

https://www.usasean.org/

The U.S. – ASEAN Business Council, supports the efforts of the American business community to do business in the Philippines. By working with the government, the Council has successfully advocated for the Philippines to adopt policy reforms to permit greater foreign investment in domestic energy sector, liberalize the telecommunications industry and address issues related to corruption and governance.

Contact:

Ms. Elizabeth Magsaysay-Crebassa

Senior Country Representative - Philippines

Email: em.crebassa@usasean.org

Tel: (632) 8860-9820 local 7615

Ascott Bonifacio Global City, Taguig City, Philippines

 

Limitations on Selling U.S. Products and Services

The Foreign Investment Negative List (FINL) contains two lists of economic sectors where foreign and participation in the Philippines are regulated. List A enumerates areas/activities where foreign ownership is prohibited or limited under the Philippine Constitution and specific laws, and List B specifies the areas/activities where foreign ownership is limited for reasons of security, defense, risk to health and morals, and protection of small- and medium-scale enterprises.

List A may be amended any time to reflect changes brought about by new laws while amendments to List B can only be made once every two years in accordance with Republic Act. No. 7042 or the “Foreign Investments Act of 1991.”

The Philippines is currently implementing the 11th Regular Foreign Investment Negative List (https://www.officialgazette.gov.ph/downloads/2018/10oct/20181029-EO-65-RRD.pdf) which was released in October 2018.  The 12th Regular FINL is being drafted and might be issued in the last quarter of 2021.

The release of the 11th Regular FINL had minimal impact to the business community which expected important changes. While they appreciated small victories such as the 100% foreign investment in internet and investment businesses and a foreign equity cap increase on foreign participation in infrastructure work for locally funded public projects from 25% to 40%, the community and the private sector, in general, had commented that genuine reform requires legislation. Philippine Congress must consider passing laws that will allow less restrictions on foreign ownership and investment in the Philippines.

The Philippine government procurement law requires a foreign firm to have a local partner, with very few exceptions.  Section 23.4 - Eligibility Criteria for procurement of goods and infrastructure projects, Section 24.3 - Eligibility Criteria for procurement of consulting services and Appendix 9 - Guidelines in the Determination of Foreign Suppliers, Contractors and Consultants to Participate in Government Procurement Projects of the Revised Implementing Rules and Regulations of Republic Act No. 9184 or The Government Procurement Reform Act. (Updated 2016 IRR_31 March 2021.pdf (gppb.gov.ph)) for information on the few circumstances where foreign companies can bid directly on government tenders.