3 Elements to Incorporate Into Your Business Expansion Strategy in the Philippines

In Southeast Asia, the Philippines is among the top countries with the fastest-growing economies.

According to the report by Deloitte, the Philippines’ GDP increased by 6.2% in 2018 and 6.4% in 2019, with fixed foreign investments accounting for 31% of the entire GDP.

This creates a good environment for foreign businesses to enter the Philippine market and introduce their services to Southeast Asia.

If expanding to the Philippine market is in your future plans, we want to share with you a few important elements you need to incorporate into your business strategy expansion in this country.

1. Open a Physical Office

The first thing you need to incorporate to bring your business to the Philippines after obtaining all the necessary permits and filing for a trademark is opening a representative office or a branch office.

Opening a branch office is for the businesses that want to extend their head office to the Philippines and earn revenue in this country.

However, if you’re still unsure if you’re ready to invest in the Philippines and want to research the market, you can open a representative office.

A representative office is an office opened by a parent company. In the Philippines, a representative office cannot participate in any commercial activities or get any revenue.

Nevertheless, you need this office to perform business activities, such as finding logistics partners. The Philippines is an island nation relying mostly on domestic produce, thus, depending on your service, you will need to find local vendors to partner with).

What do you need to open a representative office in the Philippines?

According to the Philippine law firm Carpo Law & Associates, all foreign businesses need to submit a list of documents to open a representative office, such as name verification slip, financial statements, registration data sheet, etc.

Besides, according to the source, a foreign company should transfer 30,000 USD to the corporate bank in the Philippines to open a representative office. The same amount should be refilled annually to cover operating expenses if you plan to further expand your business in the Philippines.

To have all the operations run smoothly, all the foreign businesses are required to have local representatives in the Philippines.

Let’s take a closer look at this requirement.

2. Hire Local Business Representatives

In the Philippines, foreign businesses commonly hire local agents and distributors.

Besides, according to the U.S. International Trade Administration, Philippine law requires all foreign businesses to have a local partner.

These partners will be responsible for visiting the agents and distributors and strengthening the relationships with them. They are also responsible for assessing the local competitors.

Who is eligible to become your local business representative?

The Revised Implementing Rules and Regulations of the Republic of Philippines include certain eligibility criteria for the local representatives of foreign businesses:

  • duly licensed Filipino citizens and sole proprietors
  • Philippine-based partnerships, with at least 60% of interest belonging to the citizens of the Philippines
  • Philippine-based corporations, with at least 60% of interest belonging to the citizens of the Philippines

The same rules also state that in case you cannot find a person who will have enough experience and knowledge you need to grow your business, you can hire a foreign representative under an alien employment permit, including a person from your own country.

How to find a local business representative?

U.S. businesses willing to expand to the Philippines can contact the local U.S. Export Assistance Center or use international partner search, and get the list of fitting candidatures within 30 days.

A local business representative in the Philippines can also help you better understand the local market and the needs of your new target audience.

Among their duties, a local business representative can also help you find partners, to whom you can outsource certain tasks while you grow your business in the Philippines.

3. Outsource Business Operations

Speaking about outsourcing, it is the most cost-effective way to expand your business in the Philippines and become competitive in this market.

How can you benefit from outsourcing?

Hiring a local agency to outsource some business operations is common in the Philippines. You probably already noticed that, given that we spoke earlier about how foreign businesses are encouraged by the government to hire local agencies and partners.

Outsourcing business operations to the local Philippine agencies gives you a lot of benefits:

  • It’s cheaper. Expanding a business to a foreign country is already a costly strategy, so you need a source of local labor that will help you save funds to continue growing your business. Hiring local experts is less expensive than bringing your own.
  • You get better risk management. Local experts know their native market more than anyone else, so outsourcing any task to them, whether it’s accounting or customer support will give you peace of mind.
  • Easy business registration. Outsourcing business incorporation in the Philippines will also help you register your corporation in this country faster and help you avoid unnecessary bureaucratic operations, which can be done for you.

For your business to run smoothly and remain competitive, you can, for example, outsource your customer support to the ventures, where employees speak both English and Filipino to cater to the needs of all potential customers.

Remember that your main strategy should be about inclusivity, you will have to partner with local vendors and logistics specialists to run your business in the Philippines. And outsourcing can be one of your key strategies to help expand your business in the Philippines and earn the trust of the local consumers.

Over to You

Bringing your business to the Philippines is a good idea to grow your international influence. The country’s economy is growing steadily and it becomes more and more attractive to foreign investors.

Of course, there’s a lot to consider before expanding your business there, including opening an office branch or a representative office, hiring a local partner, who will help you find new connections and partnerships, as well as outsourcing some of the operations to help your business run smoothly.

Although it seems difficult, this investment is worth your time and effort. Hopefully, the tips and resources we provided you in this article will help you successfully bring your business to the Philippines.