The Philippines – Sourcing In Asia’s 2nd Fastest Growing Economy
By Michael Joyce, Amazon Sellers Lawyer
The Philippines recently became Asia’s second-fastest growing economy. The country is now an attractive option for Amazon sellers who are looking to manufacture thanks largely in part to the government focusing on fiscal responsibility and adaptation of its people. With a growing labour force, ease of communication and reassuring pace of wage growth, Amazon sellers should consider the Philippines as a manufacturing hub to produce their intellectual property.
Growing Labour Force:
A driving force behind the country’s major gains in business outsourcing is the labour force. The labour force is the economic module of the future as Amazon sellers begin to set up operations in the country. Manufacturing products and intellectual property has become a major reason behind the Philippines being named the BPO capital of the world.
Merrill Lynch projected the Philippines to expand its labour force by over 23%, far greater than any Asia-based competitor. The 23% projection nearly doubled the average labor growth rate of the entire Southeast Asia region, which was expected to grow by 12%. The county has remained consistent in growth and boasts a labour participation rate of over 93% – a number that is over 23 points higher than China
The youth of the Filipino labour force are also a vital part to the country’s growth. With an influx of outsourced jobs in the manufacturing sector flooding to the Philippines, the younger generation of the labour force serves an invaluable role in the lives of an Amazon seller.
Ease of Communication:
One of the two official languages in the Philippines, English provides a unique attractiveness for Amazon sellers that other countries lack. Over 92% of the country’s 100,437,852 citizens speak English as a second language. This number is up dramatically from almost 20 years ago where only 63% of people were able to speak English. This trend is proportionate with economic growth.
Statistics based upon the TEFL also show the Philippines ranking globally at #35 out of a possible 163 countries in terms of non-native English speakers. For an Amazon seller this is advantageous because the country is ranked behind only one other Asian country that cracked the top 50 – India. Even then, there is an 80% gap between English speakers in the Philippines than in India. China was ranked at #105.
By creating a sense of connectivity, the English language bridges the gap between Amazon sellers and their manufacturers. Considering the nationwide expansion of the English language, it is no wonder that the country recently surpassed India as the call-centre focal point of the world.
Growth of Minimum Wage Standards:
Another fact to consider is the slow rise of minimum wage standards in the Philippines. At the rate of current growth, wages will only rise a couple of percentage points per year and does not appear to be a future headache for cost-reductive Amazon sellers.
Projections had the country’s wage growth rate at around 3.5% annually but the actuality of the situation proved to be more beneficial to investors. The growth rate was actually lower than 3%. This number is nearly half the projected growth of other countries in Southeast Asia.
Cost of Sourcing in the Philippines vs. Cost of Sourcing in China
In terms of economic responsibility for an Amazon seller, minimum wage standards in the Philippines are considerably lower for manufacturing. The average operational cost in the Philippines is nearly £210.00 per calendar month, less than that of the minimum wage standard in China, making the Philippines cost-efficient for Amazon sellers.
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