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Economy

Philippines' empowered consumers attracting appliance giants

MANILA -- Chinese and Japanese home appliance manufacturers are sharpening their focus on the Philippines, where demand for durable goods is expected to surge.

Haier will focus on more advanced offerings such as these Coton stain removers.

     China's Haier Group will introduce its Aqua brand in the Southeast Asian country this year, Nobuhito Hayashi, president of the Philippines operations, said earlier this month.

     With a population of over 100 million, the Philippines is a market with potential, he said at an event held July 9 in greater Manila, adding that the company aims to triple sales in this country in three years.

     Haier has been strong in low-price appliances, but now is trying to offer more pricey products, too. It seeks to strengthen its image by launching the Aqua brand it acquired from Japan's Sanyo Electric, aiming to cultivate demand for more expensive laundry machines and the Coton stain remover, for example.

     Japan's Hitachi has also started selling more pricey products in the Philippines. In June, it rolled out refrigerators priced between $1,500 and $3,500. The products achieved the June sales target of 5,000 units in just two weeks. "We didn't expect this much consumption power," a Hitachi staffer said in amazement.

     The Japanese company came back to the market after withdrawing in 1986. The country's economic growth and political stability over the past several years prompted Hitachi to give it another try.

     Panasonic, which has been operating in the Philippines since 1963, is also adding more expensive offerings, with the aim of gradually raising the price ranges of its products. In the past, the company made and sold such low-price offerings as twin-tub washing machines. Now, it sells a 90,000 peso ($1,989) fridge made in Japan, among other things.

'Sick man of Asia' no more

The Philippines was once called the "sick man of Asia," weighed down by political turmoil that stalled the economy. Lacking in industries to sustain its growing population, the country fell behind such neighbors as Thailand and Indonesia. Many talked about major disparities between the affluent of greater Manila and the poor majority, and of a tiny middle class. But the tide has changed.

     One major factor has been an abundance of remittance from Filipinos living outside their home country. Fluent in English, Filipino labor is in high demand overseas. About 10 million Filipinos work abroad as nurses and in other occupations. They are increasingly taking well-paying jobs as crew members on Japanese commercial ships, for example. Remittance has been increasing at an annual clip of 6%, bolstering consumption within the Philippines.

     Another factor is well-paying job opportunities within the country. Many Western companies outsource business processes such as clerical tasks to the Philippines. Those who work for such companies earn about 20,000 pesos monthly. And such younger workers are buying appliances and apparel.

     The Philippines' per capita gross domestic product is expected to top $3,000 this year, according to the International Monetary Fund. When an economy reaches this level, demand for durable goods is said to jump among middle-income consumers.

     Japanese apparel giant Fast Retailing launched its Uniqlo casual clothing chain in the Philippines in 2012, and had expanded it to 23 stores by the end of May -- comparable to the scale in Singapore and Thailand.

     Appliance and apparel companies do not appear to view the Philippines as a sick man any longer. Now is the time for the country to catch up with its neighbors by leveraging brisk consumption.

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