Hong Kong-based toy makers consider moving to the Philippines



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REUTERS

HONG KONG-based toy makers are considering moving to the Philippines, the Board of Investment (BoI) said on Wednesday.

At the same time, a survey by Standard Chartered found that companies based in the United States and Europe are considering the Philippines as part of their expansion plans in Asia.

The BoI in February met online with representatives of the Hong Kong Toy Manufacturers Association, whose 250 members have operations in Hong Kong and mainland China.

“(The) toy manufacturers association recognized the rising production costs that its members have been experiencing and therefore are seriously considering the Philippines for a possible relocation and expansion of their operations,” BoI said in a press release on Wednesday.

Despite the pandemic, the toy industry in some countries grew, and sales in the United States increased 16% to $ 25.1 billion compared to the previous year. This was partly due to an increase in demand for skateboards and fashion figures, the NPD group said in a report published in January.

“An important theme in 2020 was the growth of online shopping. Some retail closures and consumer hesitancy toward in-store purchases led to an increase in online toy sales, ”the report said.

The Undersecretary of Commerce and CEO of the BoI, Ceferino S. Rodolfo, said that the lockdowns declared to contain the coronavirus pandemic have led to a shift towards home entertainment and online education, which in turn boosted the demand for video games and digital education tools.

“While some traditional toy categories have seen an increase in 2020, the long-term trend is reflected in the strong repositioning of toy industry players as providers of entertainment across multiple platforms,” ​​he said.

To attract investors, Mr. Rodolfo promoted the reduction of corporate income tax in the country under the recently ratified Corporate Recovery and Tax Incentives Act (CREATE). The Philippines, he added, also has free trade agreements and preferential trade rates with countries such as Japan, India, Australia, New Zealand and some European countries that can expand access to Hong Kong’s export market.

“In addition to market access, the Philippines can also provide a broader production network for toy manufacturing, given the existing manufacturers in the Philippines, as well as the sources of raw materials that FTAs ​​(free trade agreements) can provide,” He said. .

Several toy manufacturers operate in the Philippines, along with suppliers of plastics, rubber, cotton and textiles.

The BoI said 125 toy-making companies have registered with the agency since 1989, all of which amount to P450 million in investments. The largest contribution was P39 million from Mattel Philippines, Inc.

The Philippines’ toy exports in 2019 amounted to $ 171.6 million compared to $ 487.3 million in imports, most of which came from China and Hong Kong, BoI said. These exports include traditional toys and video game consoles, but not video game applications and in-game transactions.

FIRM EYE EXPANSION
Meanwhile, the Philippines is among the top five markets in Southeast Asia that European and American companies are considering expanding over the next six to 12 months, according to a study by Standard Chartered.

“With regulations flagged as the top concern among respondents looking to expand abroad, it could suggest an opportunity for the Philippines to increase foreign investment through increased awareness of the ease of doing business locally,” said Standard Chartered. it’s a statement.

More than 85% of those surveyed in the study are already operating, implementing or considering business activities in Asia.

In Asian markets, US and EU companies identified Japan (42%), China (36%), Australia (34%) and India (24%) as priority countries for expansion plans.

For the President of the European Chamber of the Philippines, Nabil Francis, the main strength of the Philippines is its relatively young, dynamic and highly literate workforce.

“The Philippines has made some progress in improving the ease of doing business, as well as opening the market to more foreign investment,” Nabil said in a Viber message.

However, economists said the Philippines needs to make improvements to attract more investment.

“The Philippines, as an investment destination, has long been in the portfolio of companies in the US and the EU due to its diverse market and relatively lower labor cost, not to mention the continued infrastructure development that the US is undertaking. government ”, Graduated from the Colegio de San Juan De Letran, said the dean of the school Emmanuel J. Lopez in an email.

“Despite the pandemic, the Philippines is also a good destination for these companies, particularly offshore services, due to our unique advantage in services trade. The Philippines just needs to improve its infrastructure to take advantage of this opportunity, ”Asian Institute of Management economist John Paolo R. Rivera said in a text message. – Jenina P. Ibáñez Y Luz Wendy T. Noble



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