Why Philippines

The Philippines is the most Strategic EMS region in Asia. Here’s why.

The EMS industry is not new to the Philippines. In the 1990s, the Philippines was recognized as the preferred LCR (Low Cost Region) in Asia. During this time period, the Electronic Industry shifted to the Philippines with Japanese companies leading this charge by setting up factories and utilizing Philippine based EMS companies. Global OEMs from the USA, Singapore and Europe also set operations in the Philippines. At the same time, Mexico was also seeing a boom in the Electronic Industry with the newly established NAFTA treaty. All of this changed, and suddenly, with the admission of China to the WTO (World Trade Organization). China’s instant domination of the EMS Industry has spanned over 15 years. Today, China’s costs and operational advantages have grown less attractive.

Today, the Electronic Industry has begun a steady exit out of China to other regions. As a result, the Philippines is now experiencing a huge increase of business and investments. Japan and South Korea are two countries who are in leading the trend by making major transfers of operations from China to the Philippines. 

The Philippines has Re-Emerged as the most strategic LCR region in Asia.

Philippines’ EMS Comparative Analysis The Philippines has gained global attention as preferred High Volume/Low Cost EMS region. In a comparative study of Asian countries with emphasis on Labor costs, Engineering, Infrastructure, Business Ethics and Government Benevolence reveals of the Philippines’ attributes is realized.

Although the Philippines does not have the least expensive Labor force it all of Asia, it is certainly less expensive than all of the other developed nations.

A report by the Japan External Trade Organization shows the minimum monthly wage of a worker in China rose from $328 in 2010 to over $500 in 2015. Today, China is more expensive than other neighboring LCR countries: Philippines ($349), Vietnam ($101 to $146), Cambodia ($145), India ($325), and Pakistan ($77). Industry projections have China’s labor minimum wages rising approximately 13% annually in the near future. 

Adding to the Labor advantages of the Philippines are a multitude of factors which makeup the unique value proposition of the Philippines

The following are features tied to the Philippines EMS profile:

  • Philippine labor rates are generally less expensive than China’s
  • TAC (Total Acquired Cost) for Philippines manufacturing is the same or lower than China.
  • Philippine based EMS companies are stable and experienced servicing global OEMs.
  • Free import duty to USA via GSP (Generalized System of Preferences) status.
  • World-class quality, a derivative from supporting Japanese OEMs for years.
  • Full IP protection advocated by Philippines government.
  • Business law in the same realm as American business law.
  • Strong engineering education and resources.
  • Education system strengthens its work force.
  • Filipino is the official national language of the Philippines.

Below is a Comparative Matrix Analysis of the Philippines versus Asian Countries. Also included in this study is Mexico. Our findings are based on a variety of inputs and industry feedback. The results were tabulated in June 2015.