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Thawing China-Philippines Ties Fuels Power Generation Imports

With businesses across the Philippines on an avowed mission to build, build, build, Chinese companies have been swift to see the emerging possibility of ramping up exports of mainland-sourced manufacturing and construction equipment.

Photo: As the Philippines manufacturing sector soars, so too does its demand for imported machinery.
As the Philippines manufacturing sector soars, so too does its demand for imported machinery.
Photo: As the Philippines manufacturing sector soars, so too does its demand for imported machinery.
As the Philippines manufacturing sector soars, so too does its demand for imported machinery.

The 13th China Machinery & Electronic Brand Show (Philippines) took place against a backdrop of steadily improving relations between the host nation and the homeland of the many exhibitors. China, after all, is now the Philippines' biggest trading partner, having overtaken Japan last year.

For its part, fueled by its fast-growing economy, the Philippines has been on an import spending spree, one that appears to be still accelerating. In 2017, it imported US$98.5 billion (HK$769.6 billion) worth products, an increase of 49.9% when compared to 2013. Of the 2017 figure, US$17.8 billion – 18% – was sourced from China, with electronic equipment ($3 billion) and machinery ($2.9 billion) the two largest import categories. Indeed, it was this perceived surge in demand that had very much shaped the focus of this particular event.

Explaining how this had been determined, show organiser Wang Guiqing, Vice-president of the China Chamber of Commerce for Import and Export of Machinery and Electronic Products, said: "We are one of the largest business associations in China and have nearly 10,000 members across 25 different manufacturing fields. Every year, we poll our members and ask them what they are interested in. This year, they told us they were interested in the Philippines, particularly its power equipment sector – hence our focus.

"On top of that, we also have representatives from the construction vehicles and working tool sectors. In terms of new products, we also have several exhibitors who are offering the latest generation of electric bicycles."

Powerful Potential

The Philippines' status as a developing nation is, of course, a major draw for Chinese power generation companies, not least Fujian Jinlong Power Machinery, a debutante at this year's event. Explaining the appeal of showcasing the company's generator range in Manila, Sales Manager Selina Xie said: "We see the Philippines as having great potential for us as it has a large population, but parts of the country still don't enjoy a reliable electricity supply. It is also vulnerable to certain natural disasters, such as typhoons, which means emergency generators are often in demand."

Another debutante at the event was Xinghua Zhongxing Electric Manufacturing, a water pump manufacturer based on China's central eastern coast. Explaining just what had triggered the company's 4,000km round trip to Manila, Sales Director Susanna Ma said: "We are really just here to check out the market and find out what people need here. We are already exporting to Thailand and Indonesia, so we may look to find a distributor here."

Warming Relationship

Overall, many of the exhibitors cited the increasingly warm relationship between the Philippines and China as one of the key factors in their decision to attend. One of the companies setting particular store by this was The Davidson Works, a Nanjing based of manufacturer of hand tools for professional and industrial use, which it sells under a variety of proprietary brand names, including Vanquish, Real Steel, Iron Mammoth and Jager.

Maintaining the company hadn't really considered the potential of the Philippines market in the past, Senior Purchasing Agent Vivian Cao said: "We really don't know much about this market, but we decided to attend because our two countries now have a very good relationship. At present, we sell mainly in the US and Europe, although we also have a small number of domestic sales.

"All of the products we are selling at this show have already proved successful in our existing export markets and, we believe, we could replicate their success here. Ideally, we're hoping to find a suitable local distributor at this show. That would be perfect as they would already know the market. Failing that, we are open to selling direct."

Another Chinese company looking to taking advantage of the improved relationship with the Philippines was Update Belt Road Tech. The company is a subsidiary of the Shanhu Group, a large Hangzhou-based manufacturer of mining production line equipment, including crushers, motors, conveyor belts and trucks.

Outlining how Update Belt Road Tech could tailor its products to exactly meet then needs of Philippine end-users, Sales Representative Jet Li said: "As a group, we can supply clients with a whole mining production line if required. Update Belt Road Tech, though, has more of a focus on exporting eco-friendly products to Asian countries along the route of the Belt and Road Initiative, such as recycling systems and electric motors. We source these products from India or elsewhere in South-east Asia and look to work with local governments on product development.

"We are particularly interested in the youth market, as they tend to want new things, as well as more individualized products that allow them to show off their own sense of style. The electric bikes we have on offer this year are a prime example of the kind of thing we are thinking of – riders can visibly display their style with what they wear, whereas in a car they are hidden from view."

Driving Sales

Not every company participating in this year's event was new to the Philippines market. Indeed some, such as Fujian Century Sea Power, which trades as CSC Power, has already established its own niche in the country.  At present, it is seeing demand continuing to increase for the range of ice-making equipment it produces, including flakes, tubes, block and cube ice machines, as well as various types of cold rooms and refrigeration systems.

Photo: Fujian Jinlong Power Machinery’s generator range.
Fujian Jinlong Power Machinery's generator range.
Photo: Fujian Jinlong Power Machinery’s generator range.
Fujian Jinlong Power Machinery's generator range.
Photo: T-King: Trucking good value from China.
T-King: Trucking good value from China.
Photo: T-King: Trucking good value from China.
T-King: Trucking good value from China.

Clear as to why the company has already met with success, International Sales Manager Sucy Ruan said: "This is our second time at this particular show, but we are already exporting a wide range of products to the Philippines. Our most popular item, perhaps understandably, is our ice making machine. The Philippines is very hot all year round, so ice is widely used, particularly in the hospitality industry.

"As electricity can be unreliable outside the big cities and the areas where resorts are based, however, we also provide ice-making equipment that can linked to a local generator or solar power supply. As we have a wide range products and prices, we can closely match the specific load demand, ensuring the customer does not have to pay for excess capacity."

It's not just Chinese companies that are exploiting the thaw between the two neighbours, with many Filipino businesses quick to see the benefit of establishing links with their mainland counterparts. As a result, several of the exhibitors at the event were actually the locally-based importers / distributors of competitively-priced China-sourced machinery and equipment.

Clearly ahead of the curve in this regard was Central Luzon-based QSJ Motors Phils, which has been selling mainland-origin heavy machinery and vehicles for five years now. Seeing the China imports as representing a perfect fit with the country's needs, Branch Manager Loella Ruzett Capistrano said: "The Philippines is embarking on a major infrastructure programme – Build, Build, Build – so there is a lot of construction underway. As a result, we are getting a lot of opportunities and we see particularly good prospects ahead."

This year, the company was keen to promote the T-King brand of small commercial vehicles. Manufactured in Shandong, its range of trucks are said to be already widely used in Thailand, Vietnam and Pakistan. Explaining their popularity, Capistrano said: "They are already making significant inroads into the Philippines market and this is largely because, in price terms, they compare very favourably with someone like Isuzu, the current leader.

"We've been stocking the range since 2014 and we've already sold more than 500. Ultimately, it all comes down to the cost – a brand new T-King is now about the same price as a second-hand Isuzu."

Photo: The 2018 China Machinery & Electronic Brand Show (Philippines): Political and commercial harmony.
The 2018 China Machinery & Electronic Brand Show (Philippines): Political and commercial harmony.
Photo: The 2018 China Machinery & Electronic Brand Show (Philippines): Political and commercial harmony.
The 2018 China Machinery & Electronic Brand Show (Philippines): Political and commercial harmony.

The 2018 China Machinery & Electronic Brand Show (Philippines) took place from 18-20 August at the Metro Manila's SMX Convention Center.

Marilyn Balcita, Special Correspondent, Manila

Content provided by Picture: HKTDC Research
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