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PEZA makes pitch to China manufacturers who could relocate to skirt Trump tariffs

by March 24, 2025
March 24, 2025

THE Philippine Economic Zone Authority (PEZA) said is refocusing its efforts on attracting Chinese investment, betting that some companies there will try to ​sidestep US tariffs.

“PEZA counts Chinese investors, including those from Taiwan and Hong Kong, among our best bets for foreign direct investment attraction for this year and for succeeding years to come,” PEZA Director General Tereso O. Panga said.

He said PEZA recently concluded a week-long mission to China for investment presentations to Chinese and multinational corporations.

During his first term, US President Donald J. Trump sought to de-risk the global supply chain and decouple from China, which led many export manufacturers in China to shift production to Vietnam, he said.

“The resulting global supply chain diversification by global MNCs has become more pronounced with the recent imposition of additional import tariffs by the US government against China, Mexico, and Canada,” Mr. Panga said in a statement on Monday.

He added that this pressures export manufacturers in China to shift parts of their supply chains and production processes away from China to new investment hotspots in the region other than Vietnam and Mexico.

“Under the current Trump 2.0 trade regime, the C+1 (China +1) strategy seemingly has evolved into C+1+1 (or C+2) with the Philippines now being considered as the new ‘plus one’ preferred destination in ASEAN by relocating companies from China,” Mr. Panga said.

“This manifestation was made by some Chinese companies during our roundtable meeting with the leaders of the China Chamber of International Commerce-Dongguan (CCOIC-Dongguan),” he added.

In particular, he said that Aoxing group, an original equipment manufacturer for projector equipment, projector screens, and audio-visual products, chose the Philippines for its redundant manufacturing facility to serve the US export market.

“The Aoxing group, together with its supply chain providers, will join the upcoming CCOIC-Dongguan delegation’s visit to the Philippines,” he said.

Mr. Panga said the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act and talent pool of young, English-proficient workforce will be a draw for investors from China.

“We all have these favorable conditions that indeed can make the Philippines the new ‘plus one’ destination for China-based manufacturers wanting to export to the US and European Union,” he said.

“Our strong affinity with the US and being the economy in ASEAN with the smallest trade (imbalance) with the US are compelling factors and top-of-mind considerations for the Philippines by companies relocating from China vis-a-vis our ASEAN neighbors,” he added.

PEZA was in China between March 17 and 21 and met with 220 attendees at Philippine investment presentations in Xiamen, Chongqing, and Dongguan.

“A number of Chinese small and medium companies in various manufacturing industries have expressed their interest to locate in the PEZA zones,” Mr. Panga said.

“Other than exporting to the US, they want to sell their finished products to the domestic market. Moreover, some existing locators that participated in the forum or invited the Philippine delegation for factory visits have announced their additional expansion plans for the year,” he added.

These include global industry leader in connectors and cables for digital data networks TE Connectivity, Bocheng Rubber, steelmaker Panhua, and HYS Metal Plastic and Electronics.

According to Mr. Panga, the PEZA Board recently approved a P1.7-billion investment from TE Connectivity for the manufacture of electro-optical components, which is expected to generate 2,000 jobs.

“TE Connectivity has committed to undertaking more projects, including expanding its IT-BPM operations in the Philippines,” he said.

Meanwhile, a US-Irish company with 20 production facilities in China, as well as a number of MNCs, have transferred part of its operations.

He said PEZA continues to field inquiries from global industry leaders based in China, including companies producing vitamins and dietary supplements, solar cells, and TV monitors and projector screens.

To date, PEZA has registered 118 Mainland companies. These account for P28.7 billion in investments and 16,327 jobs. — Justine Irish D. Tabile

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