This article is an excerpt from Sourcing From: the Philippines, a series of reports that provides buyers sourcing information from alternative manufacturing hubs in Asia.
The Sourcing From series is produced by the Hinrich Foundation, a development organization that aims to promote sustainable global trade by, among others, helping create jobs in emerging Asia. It also produces industry-specific sourcing reports through Online Developing Country Sourcing.
Searching for prospective suppliers in the Philippines should not be too difficult, but it is always a good idea to do initial research in your home country before going on a buying trip. A supplier‘s list can be obtained from the Philippine embassy or trade commission in your country.
From the list, you can make an initial selection. The embassies and trade commissions usually maintain a library or information center, which has a collection of trade directories and publication prepared by government agencies and private organizations. You can even meet with the trade commissioner or one of the staff to discuss your requirements before visiting the Philippines.
While getting the names of prospective suppliers and their addresses may be easy, determining their reliability as well as checking prices, quality and available packaging can be difficult. Even if you commission an agent to handle the purchasing, there is no substitute to scrutinizing all aspects of the deal personally to make sure that everything is according to your plan and needs.
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Selecting your supplier
When ordering goods for the first time, it is strongly advised that you visit the Philippines. Your trip will not only be highly informative but will also inspire confidence and goodwill, which are primary ingredients to successful sourcing in any part of Asia. Experienced buyers share the following reasons why it pays to meet a supplier, agent or trader in person:
- No amount of research, correspondence or long-distance communications can take the place of meeting suppliers and making sure you have a good gut feeling about them.
- Buyers who don't do their groundwork, starting with personally sizing up their Filipino contacts are likely to lose money.
- The meeting gives you a chance to build up profitable "pakikisama" (rapport) with your supplier or middleman.
- Buyers can meet alternative sources and evaluate their products for suitability, particularly for non-standard items.
Philippine embassies and trade offices
The Philippines has embassies and trade offices worldwide working together with the Department of Trade and Industry (DTI) to facilitate foreign trade. Most trade offices are attached to the embassies and can assist you in finding the right suppliers. Many have displays of Philippine products, library facilities with directories and trade publications and staff to answer inquiries about export products, suppliers and manufacturing centers. The staff can also direct you to contacts in the Philippines, including government agencies that assist foreign buyers and trade associations.
There are more than 20 Foreign Trade Services Corps offices located in various countries. The FTSC explores and develops the potential of Philippine products abroad and matches these products with international demand. The agency is tasked to monitor commercial, industrial and general economic and non-economic conditions affecting Philippine products in different export markets.
FTSC representatives also participate in international conferences relating to international trade and trade policies.
Philippine Exporters Confederation Inc.
In the Philippines, start your search by visiting the Philippines Exporters Confederation Inc. (Philexport), the largest exporters' organization.
Philexport is a non-stock, nonprofit, umbrella organization that is mandated to strengthen the country's export industry through export promotion and development programs. Philexport has 2,848 members representing all product sectors and companies in the export industry.
Bureau of Export Trade Promotion
The Bureau of Export Trade Promotion (BETP), under the DTI, formulates and implements plans, programs, projects and strategies to develop, expand, and diversify Philippine exports. Buyers unfamiliar with the export policy and procedure in the Philippines and in need of suppliers can benefit from BETP's various services. Among other things, the bureau:
Philippine International Trading Corporation
The Philippine International Trading Corporation (PITC) is the international trading arm of the government. It imports and exports new or non-traditional products and trades with markets not normally pursued by the private sector. PITC has the resources to supply foreign buyers with a broad range of Philippine products that meet international quality standards.
PITC's operations mainly involve the trading of consumer goods and commodities including raw materials and industrial products. It also provides support services for market development, promotion and trade financing, common customs bonded warehouse, shipping/chartering, countertrade, packaging and research and development for new products. PITC can also act as agent for buyers.
Foreign chambers of commerce
Foreign chambers of commerce in the Philippines and even in your country can give valuable contacts and insight on doing business in the Philippines. These organizations often hold meetings, maintain libraries with important information on the Philippines and release publications on new developments affecting trade and investment in the country. In some cases, the staff can arrange introductions between suppliers and buyers.
Trade publications and directories
A number of magazines and buyers guides are published in the Philippines and circulated around the world. These publications and directories are found in Philippines trade offices and embassies and are designed to give foreign buyers the latest information in Philippines products.
Trade directories listing manufacturers and exporters are also available.
Trade associations
Trade associations represent almost all types of industry. In turn, these associations have hundreds of members and tend to group the majority of manufacturers of export products.
Associations in key export-oriented industries sometimes offer services that can prove helpful to you. Many are prepared to attend to trade and investment inquiries. They can link up prospective buyers with local manufacturers and arrange buyer-seller meetings. They also conduct market surveys and organize overseas trade missions. Many associations have publications that can be useful to both manufacturers and overseas buyers. You can begin your search by contacting the Philippine Chamber of Commerce and Industry.
Checking on your supplier
Checking a supplier's background is necessary but can be difficult to do, as there are many short-lived traders or manufacturers who accept an order without the resources to make a timely delivery. The threat of being taken to court or looming bankruptcy is sometimes dealt with by simply closing shop without leaving a forwarding address.
Determining the supplier's capacity to deliver the ordered goods on time is just part of the game. You also need to verify the nature of suppliers' businesses, their status as an exporter and their creditworthiness before placing an order.
It might become necessary to check on your prospective supplier's financial standing, especially when a large amount of order is involved. One reason is to determine whether the supplier is capable of handling your order and is not in danger of going bankrupt. A close examination of a supplier's finances will indicate whether the supplier has the means to make good on promises. Given the country's bureaucracy, however, it is not easy to conduct a satisfactory check. Nevertheless, options exist:
- Government and private agencies like BETP, PITC and Philexport, which can supply data on request
- The exporter's agent, if any, in the buyer's country
- A foreign trade consultancy, which will undertake the necessary check for a fee
- Major credit-checking companies
Hiring an agent
Some foreign buyers choose to hire an agent in the Philippines to handle the purchasing in their behalf. Getting an agent might be the best option if you do not want to spend a lot of time with the details of sourcing in the Philippines or with follow-up work. Agents can locate products and suppliers, and can also perform other groundwork. They can follow up orders that have been placed.
Choosing an agent who is familiar with all facets of trading can ensure that the goods are delivered on time. You will need to check the agent's experience. A reliable agent knows how to deal with the problems inherent in the exporting system and can suggest various alternatives in case your supplier fails to deliver your order promptly or correctly.
