Philippines Market Overview
The Philippines boasts a resilient and rapidly growing economy, characterized by robust consumption, a young population, and a thriving services sector. With a GDP growth rate averaging around 6% in recent years, the country presents ample opportunities for both domestic and foreign investors.
One of the Philippines’ greatest assets is its young and dynamic population, with a median age of just 25 years. This demographic dividend fuels consumer spending and drives demand for a wide range of goods and services, making the country an attractive market for businesses looking to capitalize on a growing consumer base.
Filipino consumers are known for their brand loyalty and preference for value-oriented products. With a burgeoning middle class and increasing disposable incomes, there is growing demand for premium and niche products across various sectors, including food and beverages, fashion, electronics, and healthcare.
Setting up Your Business in Philippine
There are 8 steps in setting up business in Philippine.
1. Choose Your Business Structure
Decide on the most suitable business structure for your venture, such as a sole proprietorship, partnership, corporation, or branch office. Consider factors like liability, taxation, and ownership requirements.
2. Register Your Business Name
Conduct a business name search with the Securities and Exchange Commission (SEC) to ensure your desired name is available. Once approved, register your business name and obtain a Certificate of Registration.
3. Secure Necessary Permits and Licenses
Identify the specific permits and licenses required for your business activities. This may include barangay clearance, mayor’s permit, Bureau of Internal Revenue (BIR) registration, and specialized permits depending on your industry.
4. Register with Government Agencies
Register your business with relevant government agencies such as the SEC for corporations, Department of Trade and Industry (DTI) for sole proprietorships and partnerships, BIR for taxation purposes, and Social Security System (SSS) for employee benefits.
5. Comply with Taxation Requirements
Familiarize yourself with the Philippine tax system and fulfill your tax obligations, including income tax, value-added tax (VAT), and withholding tax. Register for a Tax Identification Number (TIN) and keep accurate records of your financial transactions.
6. Open a Business Bank Account
Open a business bank account with a reputable bank in the Philippines to facilitate your financial transactions and separate your personal and business finances. Prepare the necessary documents, including your business registration papers and identification.
7. Establish Business Operations
Set up your physical or virtual office, acquire necessary equipment and supplies, and establish operational procedures and systems. Consider factors like location, accessibility, and infrastructure when selecting your business premises.
8. Stay Compliant and Updated
Regularly monitor changes in regulations, tax laws, and compliance requirements to ensure ongoing compliance with legal obligations. Maintain accurate records, file necessary reports and renewals on time, and seek professional advice when needed.
Choose Your Overseas Supplier
After setting up your business, the next step is choosing the right overseas supplier. This can be a lot of issues ranging from language differences to payment methods. But if you follow simple strategies on this article, these issues can be easily resolved.
Firstly, research and shortlist the potential overseas suppliers. Ask them for a quote and other related documents. Check among the suppliers’ list who can meet high standards and date consistency within the right price. If possible, visit the suppliers to inspect their operations and make rigorous inquiries about compliance, manufacturing practices, and reliability.
To avoid financial risk, consult your bank to know the financial status of the overseas supplier you want to opt for. Choose the option that ticks most of your boxes. After you enter an agreement, do not forget to check your supplier’s regular performance.
Provide Sample Product and Quality Check Services
After deal an agreement with the overseas supplier, ask for a sample product to make a quality check. It is a fundamental process, as approving a shipment with defective products can seriously provide a dent in your business and tarnish the company name. Follow this steps to achieve this seamlessly:
- Avoid the cherry-pick samples provided by the overseas supplier that they know will meet your requirements. By using the acceptance sampling method, pick random samples to get a fair report of your shipment.
- Check whether the products match the proper specifications you provided to the supplier and match the quality standard you have asked for.
- Many products are often found damaged to the point where they are unsellable due to poor quality packaging. Make sure to verify the packaging quality before distributing your products in the market.
- Defects are typically classified into three categories: critical, major or minor. If you find any defect after inspection, report the right category to the supplier quickly. They are bound to make the required necessary changes before the distribution of products.
- At least try to conduct one on-site testing of the product if possible. It can provide key insights into any factor that can affect the product’s performance, safety, or functionality.
Work with a Freight Forwarder to Understand the Costs of Importing your Product
The freight forwarder will take care of import, export, and distribution of your business needs. They will contact their known third-party service providers, who will handle the necessary services. The key areas on which the cost will depend are:
Cargo Type
You will have a fair idea of the cargo you want to import. Understand and check the associated cost rate to avoid unnecessary surprises. Note, that the rates will be high for oversized, perishable, or hazardous products.
Weight and Volume
The volumetric and actual weight of your cargo are compared to determine the shipment cost. The lightweight goods that occupy more space are expensive compared to something dense and small.
Packaging
Filling up shipping containers properly requires proper palletization and packaging. Freight forwarders ask for an additional charge for this service. Make sure to work with one who understands the legislation of the e-commerce Philippines.
Container Cost
A full container load (FCL) is not required for most shipments. Freight forwarders often combine other shipments in a single unit and charge you only the space taken up by your products.
Carrier Cost
The rate for shipment varies by which carrier you want to import, land, sea, or air. Consider two factors while calculating this cost, the distance traveled and the route popularity.
Documentation Fees
Out of several documents, the freight forwarder knows exactly the documents you need to attach with your shipment and their fees while importing.
Insurance and Administrative Charge
Freight forwarders charge insurance fees as an add-on service. Again, some of them include the insurance charge while mentioning their quote. The administrative charge is the deserved fee for handling the shipment process in a hassle-free manner.
Additional Charges
Some additional charges can come up before, during, or after the shipment is processed. Common among them are Currency Adjustment Factor (CAF) and Fumigation fee.
Compare Sea and Air Freight Options
The debate and dilemma in choosing a suitable freight carrier are never-ending. Both Air freight and Ocean freight come with their pros and cons. But here are some factors to consider that will help you decide your choice.
Cost
The cost of shipping is one of the most important factors to consider when it comes to business. It is obvious that ocean freight offers extensive capacity with less expense than air freight.
But in the case of small packages that do not fulfill the container’s load, the shipping cost in ocean freight can be more than air freight. For this reason, you must thoroughly compare and calculate before choosing the shipment type.
Time
If the issue is time-sensitive, then air freight beats ocean freight on all counts. Long journeys, port hold-ups, customs, and weather conditions are the major factors that cause delays for ocean freight.
Type of Cargo
Air freight provides a long list of items that cannot get shipped, including objects that contain gases, flammable objects, toxic and corrosive objects, and many more. The ocean freight has no restrictions and can even carry the bulkiest of items hassle-free.
Safety
Safety is of utmost importance, leaving time and cost aside. In both these modes of transportation human factor plays a crucial role. Multiple things can go wrong in any sphere, from handling to securing goods. Freight forwarders must adhere to the guidelines provided by the mode of shipment to avoid any kind of accident.
Accessibility
The well-defined procedures and shorter time frame required in air freight make it more accessible and connected compared to ocean freight. Heavy traffic in seas port, which gives rise to detention and demurrage charge, can put a dent in your company budget.
Getting Started to Expand Your Business in Philippines Now
AsiaCommerce is a procurement company that provides several services such as comprehensive market research, arranging partnerships in local industry, and creating sales programs based on market research.
Our Market Insight Research, Business Partnership Engagement, and Business Registration and Establishment services can help you expand and develop your business, register and establish your products and company.
Our strategy consulting services domain focuses on supporting private sector clients with comprehensive and specialized development regarding the company’s needs and also on the public sector for a broader scope.
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