MANILA: The Philippines is emerging as a preferred destination for companies seeking to diversify their supply chain beyond China, amid a new Trump trade policy imposing a 20% tariff on all imports from the world’s second-largest economy.

“This is the affirmation we got particularly from Chinese and multinational investors that attended the Philippine-China investment meetings in Xiamen, Chongqing, Shenzhen and Dongguan,” Philippine Economic Zone Authority (Peza) director general Tereso Panga said in a statement.

Panga said that as the “China+1 strategy” had evolved into “China+1+1”, the Philippines is now emerging as the preferred “plus one” in South-East Asia.

He acknowledged that Vietnam had initially stood out among its regional peers due to its shared border with and proximity to China.

The resulting global supply chain diversification has become more pronounced with the imposition of additional tariffs by the United States on goods from China, Mexico and Canada, he said.

“Certainly, this has put pressure on export manufacturers in China to shift parts of their supply chains and production processes away from China’s factory hubs and into new investment hot spots in the region, other than Vietnam and Mexico, to mitigate the impact of US tariffs directed at Chinese imports,” said Panga.

During the investment forum in Xiamen, from March 17 to 21, Panga said several Chinese small and medium enterprises expressed an interest to establish operations at Peza economic zones.

“Other than exporting to the United States, they want to sell their finished products to the domestic market,” he said.

These firms include TE Connectivity, a leader in connectors and cables for digital data networks, along with Bocheng Rubbers, Panhua Steel and HYS Metal Plastic.

Pangas said that the Peza board had recently approved TE Connectivity’s 1.7 billion peso investment for the production of electro-optical components and devices, which is expected to create more than 2,000 direct jobs. — The Philippine Daily Inquirer/ANN