2023 Foreign Trade Emerging Markets, What's the Potential for the Philippines?

In the first half of 2023, the scale of China's import and export exceeded 20 trillion, the total import and export of goods reached 20.1 trillion yuan, a record high for the same period in history, of which exports increased by 3.7%.

In terms of export markets: in the first half of China's exports to ASEAN increased by 1.5% year-on-year, exports to the EU fell by 6.6%, exports to the United States fell by 17.9%, exports to Japan fell by 4.7%; exports to Russia soared by 78.1% year-on-year, and exports to Africa increased by 15.4%.

At present, foreign traders can clearly feel that Europe and the United States and other traditional market growth is weak, then, where are the new business opportunities?

China is the Philippines' largest trading partner, top source of imports and third largest export market.

For the whole year of 2022, the total value of China's import and export with the Philippines amounted to 585.28 billion yuan, with a cumulative growth of 10.6% over the same period of the previous year. Among them, China's exports to the Philippines amounted to 431.93 billion yuan, a year-on-year increase of 17.0%.

China's dominant commodities exported to the Philippines are mainly concentrated in the categories of electric motors, iron and steel categories, machinery and apparatus, plastics, vehicles, mineral fuels, furniture, shoes, and garments.

Philippine market potential

1. The overall consumer demand in the Philippines is relatively strong. According to Euromonitor, per capita consumer spending in the Philippines will be 2,616 USD in 2022, much higher than Vietnam's 2,104 USD. FMCG, daily necessities, fashion consumption, daily necessities and other small expenditures, especially on the online e-commerce consumption side, the potential consumption power of young Filipinos has become the focus of businessmen.

2. High social media usage. As the social media capital of the world, Filipinos spend more than four hours a day on social media, the longest in Southeast Asia. Data shows that 60% of brands in the Philippines use live streaming to attract customers, and 66% of social media users follow at least one online celebrity.

E-commerce is growing rapidly, with e-commerce turnover in the Philippines growing by 25.9% in 2022. Statista data also shows that the Philippine e-commerce market will grow at a CAGR of 12.4% from 2023-2027, higher than the US's 11.29% and the UK's 7.77%.

4. Dividends from RCEP. As RCEP comes into effect, China and the Philippines will form a closer collaboration, more quality agricultural products and raw materials from the Philippines will be exported to China, and China will also increase its supply chain layout in the Philippines, promoting more brand-name enterprises to penetrate into the Philippine market.

Philippine Trade Regulation

The Philippines classifies imports into three categories: free imports; restricted imports; and prohibited imports.

(1) Prohibited imports include: firearms and ammunition; immoral prints, negatives, films, and works of art; articles and advertisements used for illegal abortions; equipment and paraphernalia used for gambling; articles made of gold, silver, or other precious metals or alloys; counterfeit and substandard foodstuffs or medicines; opium or other narcotics and their synthetics; synthetic or finished salt; opium straws and accessories; and articles and accessories prohibited from importation under Philippine law. articles and accessories the importation of which is prohibited by relevant Philippine laws.

(2) Restricted imports, which can only be imported with import permits issued by Philippine government agencies such as the Department of Agriculture and the Food and Drug Administration, mainly involve more than 130 types of automobiles, tractors, cars, diesel engines, gasoline engines, motorcycles, consumer durables, news publishing and printing equipment, cement, and products related to health and public safety, accounting for about 4 percent of the total number of imported goods.

(3) Freely imported goods are goods other than the prohibited and restricted goods mentioned above.

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