Ayala Corp. is in talks to provide land to a Chinese company planning to build one of the world’s biggest tire factories in the Philippines to avoid having to pay US tariffs, Chairman and Chief Executive Officer Jaime Augusto Zobel said.
A company based in the Chinese province of Guangdong is looking for 100 hectares (247 acres) of land in the Philippines from where it can set up a manufacturing base, he told Bloomberg Television’s Rishaad Salamat on the sidelines of the New Economy Forum in Singapore. Zobel didn’t identify the company.
The move may illustrate the latest example of how manufacturers are increasingly turning to Southeast Asia as an alternative to China amid tensions between the world’s two biggest economies. About a third of more than 430 American companies in China have or are considering moving production sites out of China, according to an August 29 to a September 5 survey.
The Philippines’ oldest conglomerate, which has interests in property, banking, telecommunications and infrastructure, is betting the consumer-driven economy can sustain robust growth amid higher interest rates, Zobel said.
A manufacturing retreat from China to avoid US tariffs is gathering pace.
With US levies on $200 billion of Chinese products set to balloon to 25 percent in 2019, companies on the mainland making everything from car parts to cameras are lining up other production facilities across Southeast Asia.
Fujifilm Holdings Corp., which makes its popular Instax cameras near Shanghai, said it may shift that process to Thailand or the Philippines “if the situation is going to be really serious.”
Lower-level manufacturing in China is attracting less investment and that process is being accelerated because of the trade dispute, Kerry Logistics Network Ltd. Chairman George Yeo said in an interview at the New Economy Forum.
About a third of more than 430 American companies in China are considering moving production out of China, according to a survey in August and September.
“On the electronics side, we’ve had a number of companies both from Taiwan and China looking to start manufacturing in the Philippines for the global market to get out of that tariff cycle,” said Ayala’s Zobel.