Philippines - 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: 2020-07-22

Trade Promotion and Advertising

Include web links to local fair or trade show authorities and local newspapers, trade publications, radio/TV/cable information, and your BSP, FUSE or single company promotion services.

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 132 AM radio stations, and 349 FM radio stations as of December 2015. The NTC also indicates that six major television networks operate 285 stations.

Print media includes more than nine daily newspapers, 19 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 163.7 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) 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 offers web-based information and advertising services for U.S. companies, including:

•   The Featured U.S. Exporters (FUSE) is a catalog of U.S. products featured on websites of U.S. Commercial Service offices around the world. FUSE enables U.S. companies to target specific country markets in the local language of business. Catalog advertisements are currently offered free of charge to qualified U.S. exporters seeking trade leads or representation in over 30 markets worldwide. Information on how to join the FUSE program can be found at: https://buyusa.gov/.

•   Local Fair and Trade Show Organizers:

Global Link Philippines https://www.globallinkmp.com/

Primetrade Asia Incorporated http://www.primetradeasia.com

Worldbex Services International http://www.worldbex.com

Fiera de Manila http://www.fmi.com.ph

•   Major Local Newspapers:

Businessworld http://www.bworldonline.com

Manila Bulletin http://www.mb.com.ph

Manila Standard Today http://www.manilastandardtoday.com

The Manila Times http://www.manilatimes.net

The Philippine Daily Inquirer http://www.inquirer.net

The Philippine Star http://www.philstar.com

The Business Mirror http://www.businessmirror.com.ph

•   Major TV/ Radio Stations:

ABS-CBN (TV) / DZMM (Radio)      http://www.abs-cbn.com – FrANCHISE ON HOLD

ABC- TV5 (TV5)/ DWFM (Radio     http://www.tv5.com.ph/

CNN Philippines (TV) http://www.cnnphilippines.com

GMA (TV) / DZBB (Radio) http://www.igma.tv

People’s Television-PTV4 (Govt. channel) http://www.ptv.ph/

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

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 percent of invoice value, but markup percentages can range from a minimum of 7 to 10 percent for regulated goods such as glass, aluminum, etc., to 10 to 15 percent for most consumer goods, and as much as 30 percent 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 percent 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 percent 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 is extremely important to the Philippine market. Philippine partners expect U.S. vendors to provide adequate support during and after the warranty period in order to provide utmost customer satisfaction and strengthen the brand name.

The 2016 Revised Implementing Rules and Regulations of Republic Act (RA) 9184 or the Government Procurement Reform Act (GPRA), 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 one percent (1%) but not to exceed five percent (5%) of every progress payment, or a special bank guarantee equivalent to at least one percent (1%) but not to exceed five percent (5%) of the total contract price.

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

Major U.S. and global accounting firms, law firms, and insurance companies have active offices and partners in major cities in the Philippines. In addition to Commercial Service Philippines, U.S. firms interested in doing business 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/). This list 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. http://www.amchamphilippines.com/

The American Chamber of Commerce of the Philippines, Inc. assist 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 Corithian Plaza Building,

Paseo De Roxas, Legaspi Village,

Makati City, Metro Manila

 

Chemical Industries Association of the Philippines http://spik.com.ph

The Chemical Industries Association of the Philippines promotes the Philippine chemical industry, assist its members in manufacturing quality products and effectively addresses government and global opportunities.

Contact:

Ms. Gretchen Enarle

President

President, Atlantic Coatings, Inc.

Email: spik.secretariat@gmail.com; secretariat@spik.com.ph

Tel: (632) 8753-1752

Unit 2201 Cityland 10 Tower I

6815 Ayala Avenue North

           1226 Makati City, Philippines

Direct Selling Association of the Philippines http://www.dsap.ph

The 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

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, Metro Manila

Makati Business Club http://www.mbc.com.ph/

The Makati Business Club foster and promote 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 bring 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, 1229 Makati City, Philippines

Philippine Chamber of Commerce and Industry http://www.philippinechamber.com/

Philippine Chamber of Commerce and Industry (PCCI) advocate 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 1634

U.S. Asean and Business Council https://www.usasean.org/

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:

Elizabeth Magsaysay-Crebassa

Senior Country Representative - Philippines

Email: em.crebassa@usasean.org

Tel: (632) 8860-9820 local 7615

Ascott Bonifacio Global City Manila

Room 808, 8/F Ascott BGC, 5th Avenue corner 28th St.

Bonifacio Global City, Taguig City 1634, Philippines

Limitations on Selling U.S. Products and Services

The 11th Regular Foreign Investment Negative List (FINL) https://www.officialgazette.gov.ph/downloads/2018/10oct/20181029-EO-65-RRD.pdf of October 2018 lists investment areas/activities that are reserved for Philippine citizens. It also specifies the percentages of foreign equity participation in areas/activities that are open to foreign investors.

List A of the 11th FINL enumerates areas/activities where foreign ownership is prohibited or limited under the Philippine Constitution and specific laws, such as the practice of certain professions; contracts for the construction of defense-related structures; and contracts for the supply of materials, goods and commodities to government-owned or controlled corporations, agencies or municipal corporations. List A may be amended any time to reflect changes brought about by new laws.

List B contains the list of 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. The Philippine government allows up to 40 percent foreign equity in areas/activities in List B, which includes manufacture, repair, storage, and/or distribution of products and/or ingredients requiring Philippine National Police or Department of National Defense clearances. 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 release of the Philippines Foreign Investment Negative List (FINL) in October 2018 had minimal impact to the business community which expected more important changes. While they appreciated small victories such as the 100 percent 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.

Government procurement requires a foreign firm to have a local partner, with very few exceptions. Please see Selling to the Public Sector section under Selling U.S. Products Service and; 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. (https://www.gppb.gov.ph/assets/pdfs/Updated%202016%20Revised%20IRR%20with%20Table%20of%20Contents.pdf) for information on the few circumstances where foreign companies can bid directly on government tenders.