The Electrical Appliances consist of domestic electric appliances such as refrigerators and freezers, dishwashers, laundry equipment and other domestic electric appliances such as electrical instantaneous storage or immersion heaters, electrothermic hair dressing appliances; electric smoothing irons, space heaters and household type fans, cooking appliance and plate warmers. It also includes television receivers (including video monitors and video projectors), whether or not combined in the same housing with radio-broadcast receivers or sound video recording or reproducing apparatus, record players, cassette players, disc players, other sound producing apparatus and airconditioners.
Brown Lines White Lines Convenience Items
Television Sets Refrigerators Stoves
VCD Components Freezers Oven toasters
Radio Cassettes Beverage Coolers Ranges
LCD Air conditioners Rice cookers
VCD Washing machines Flat irons
DVD Microwave ovens Electric irons
Vacuum cleaners Electric fans
The appliance industry are mainly sold to the domestic market which accounted for almost 90% of the products sold to domestic consumers and 10% are exported or sold to exporters. Philippine consumers prefer the “basic appliances” such as Television, refrigerators, stoves or ranges, electric irons and electric fans.
With the global increase in basic production inputs of oil and steel, manufacturers were forced to increase prices. The price increase was limited by intense competition among existing players. Part of this competition was the introduction by the manufacturers of new and more desirable features together with value-added services.
There is growing popularity of mid and premium brands of domestic electrical appliances among Filipino consumers and demand highly innovative, stylish, health promoting and energy-efficient products.
Mid-priced brands such as Sharp, Sony, Panasonic, Samsung, Imarflex and Philips maintained their strong foothold in the domestic electrical appliances market in the country, having established themselves as affordable yet quality brands with reliable after-sales service. The growing middle class and their awareness that in the long-run it is more cost effective to buy mid-priced goods in lieu of cheap Chinese brands has likewise boosted their sales.
The following are the non-price factors that affect consumer demand for electrical appliances :
1. Power costs. Increasing power costs may discourage consumers from buying more appliances, since some of these appliances—like air conditioners and refrigerators are energy intensive.
2. Technology. Continuous product innovation, particular in the brown lines category which include television sets, VCD, DVD, etc. , may cause some products to be replaced by new and improved products. For example, VHS players have been replaced by DVD players as the preferred audio-video products due to their added capabilities.
3. Service centers. Buyers want products with longer life. Manufacturers with reliable service centers in accessible locations that offer affordable rates have an edge.
4. Branding. Most of the major players have already been in the industry for a long time, and therefore have more opportunities to induce brand loyalty. Increased spending for advertisements also increase the possibilities for product differentiation. Hence the reliability of the brand in itself would be a factor in the decision of the consumers.
The electrical appliances preferred by the Filipino consumers include refrigerators using inverter technology, air conditioners with a good sleep mode and washing machines utilizing an innovative steam technology.
In the City residents’ families, the consumption of electrical appliances focuses of refrigerators, electric cooker and smoke exhauster. The three types of electrical kitchen appliances have the highest penetration rate in the city households, implying that the three types will become mainly the replacement products in kitchen appliances in the future. Although the consumption of dishwasher, microwave oven, disinfecting cabinet and water dispenser have a lower penetration rates compared to the three types, they have had averagely annual double-digit growth rates in the recent years, indicating they may be the next hot consumer products.
With the rising cost of energy in the Philippines, consumers are shifting towards more energy-efficient electrical appliances. The recent economic downturn in Asia provides a new opportunity for introducing energy-efficient electrical appliances.
The raw materials for the electrical appliances industry include iron and steel electronics, and fabricated metal products. Manufacturers produce and /or assemble the parts to make their product using their technological know-how.
Although some large firms produce product parts such as plastic and metal parts and printed circuit boards, most firms prefer to import parts because of lower costs and better quality, or because the needed parts are not available locally. Hence, the industry is highly import-dependent for its raw materials . The supply of appliances is also dependent on technological changes. A lot of technical expertise is needed to conceive and construct these products. A company’s technical-know how is important for its products to be up-to-date with the demand of the market.
The Philippines has sophisticated retail distribution channels. Metro Manila alone has more than 40 shopping malls sprawling across the city. Driven by a robust consumer market, shopping malls are springing up in other major cities.
The industry has been experiencing competition from imports ever since tariffs for these products were greatly reduced. Imports surge of appliances include refrigerators, air conditioners, washing machines, televisions sets, etc. Consumer electronics consist of audio-video products, household appliances, and other consumer electronics has increased considerably. Moreover, the country has been importing more audio-video products than home appliances. The imports are generally lower in price than locally made products, most come from China, Korea, Taiwan and other neighboring Asian countries. Chinese products are generally cheaper because of China’s lower cost of labor. An industry player related that although Filipinos generally prefer appliances with known brands, those who have low income or are in rural areas buy unknown brands because these are cheaper.
Local manufacturers respond to the competition by telling consumers that imported products are usually manufactured to fit the condition of the country of origin. Local products have the advantage of being suited to Philippine weather, electricity fluctuations, etc. Nonetheless, low tariff have contributed to the influx of imports.
Manufacturers also experience competition from substandard and second-hand appliances, and new appliances. Substandard appliances possibly come from small manufacturers that are not members of the Association or those that have illegally bypassed product standards set by the government. Imported appliances that have not undergone product assessment and have entered the country illegally may have substandard quality but attract buyers due to their cheaper prices.
Innovated products, especially in the brown lines category, can also be substitutes for old appliances. For example, demand for DVD players has replaced demand for VHS players due to technological changes in film and tape production. The proliferation of audio-video material in DVD format caused consumer preference to shift to DVD players. Thus, manufacturers are also called to adapt to this changing environment by continuously updating their products.
Philippine Trade Statistics of Electrical Appliances
Philippine Imports of Electrical Appliances
Value — Millions of US$
H.S. Code Product Description/Top 5 Countries 2009 2008
8418 Refrigerators/Freezers 133.662 128.427
Thailand 60.681 56.929
China 19.743 12.869
Indonesia 13.11 10.304
USA 9.719 17.826
Taiwan 3.612 4.362
Others 26.797 26.137
8528 Television sets 115.608 109.015
Thailand 38.168 45.502
Indonesia 22.42 18.382
Malaysia 12.371 11.96
China 10.663 5.645
Singapore 10.399 6.188
Others 21.589 21.338
8415 Air Conditioning 54.432 72.584
China 20.101 20.686
Japan 8.365 16.441
Malaysia 6.803 9.763
Taiwan 6.322 7.926
Thailand 4.493 5.323
Others 8.348 12.445
8422 Cleaning Machines 44.688 64.752
Germany 11.479 14.275
Italy 8.622 7.324
USA 5.253 4.052
China 3.563 5.954
Japan 2.289 4.416
Thailand* 0.832 1.924
Others 12.65 26.807
8524 Recorded Sound Media 39.329 16.716
France 23.418 0.006
Hongkong 4.704 6.446
Singapore 4.435 2.461
USA 1.320 2.089
Sweden 0.999 0.122
Thailand* 0.025 0.081
Others 4.428 5.511
8516 Heating Appliances Home 22.021 28.085
China 11.681 13.278
Italy 1.736 2.453
Japan 1.674 0.748
USA 1.550 2.965
Singapore 1.114 1.917
Thailand* 0.772 0.889
Others 3.494 5.835
8450 Washing Machine, Home 17.074 18.801
China 10.629 9.859
USA 2.361 2.082
Thailand 2.293 4.017
Japan 0.555 0.466
Hongkong 0.336 0.260
Others 0.900 2.117
8521 Video Apparatus 15.168 21.679
China 5.853 5.288
Indonesia 4.014 5.696
Thailand 1.708 1.881
Malaysia 1.008 2.367
Hongkong 0.848 4.363
Others 1.737 2.084
8451 Cleaning, Drying, etc. 5.732 6.756
USA 2.336 2.251
China 1.113 1.292
Austria 0.473 0
Japan 0.470 0.261
Taiwan 0.222 0.347
Thailand* 0.127 0.305
Others 0.991 2.300
8509 Electric mechanical domestic appliances 4.726 5.738
China 2.247 2.272
Singapore 0.656 0.894
USA 0.332 0.866
United Arab Emirates 0.206 0.133
Hongkong 0.186 0.424
Others 1.099 1.149
Source : National Statistics Office and World Atlas
The top Philippine import of electrical products which include airconditioning amounting to US$54.432 million in 2009 a decrease of 33.34% from US$72.584 million in 2008. Cleaning machines at US$44.688 million in 2009 a decrease of 44.90% from 2008’s US$64.752 million. Recorded sound media at US$39.329 million in 2009 an increase of 32.75% from 2008’s US$16.716 million.
The top exporting countries include China, Japan, Singapore, USA and Thailand. Chinese products are generally cheaper because of China’s labor cost and generally Filipinos prefer appliances with known brands, who have low income or are in rural areas buy unknown brands because these are cheaper.
Philippine Exports of Electrical Appliances
Value — Millions of US$
H.S. Code Product Description/Top 5 Countries 2009 2008
8415 Air Conditioning 125.187 146.975
Hongkong 47.776 43.451
Japan 22.327 28.923
China 10.567 12.417
USA 9.011 12.75
Kuwait 6.3 10.729
Thailand* 0.774 1.083
Others 28.432 37.622
8450 Washing Machine, Home 2.37 11.961
Singapore 0.395 0.577
Indonesia 0.344 7.852
Malaysia 0.333 1.522
Vietnam 0.326 0.104
Thailand 0.311 0.249
Others 0.661 1.657
8528 Television sets 7.681 8.052
USA 6.737 6.94
Dominican Republic 0.315 0.173
Taiwan 0.164 0
United Arab Emirates 0.156 0.047
Australia 0.089 0.072
Thailand* 0.072 0.101
Others 0.059 0.098
8418 Refrigerators/Freezers 6.153 7.753
Japan 5.617 6.333
Italy 0.114 0.039
France 0.084 0.051
Taiwan 0.069 0.392
Netherlands 0.068 0
Thailand* 0 0.069
Others 0.201 0.872
8422 Cleaning machines 2.007 5.298
Malaysia 0.394 0.114
India 0.310 0.651
Vietnam 0.278 0.538
Singapore 0.226 0
Lebanon 0.194 0
Thailand* 0.074 3.083
Others 0.531 0.912
8516 Heating Appliances, Home 5.671 3.014
Germany 2.889 0.979
Japan 1.145 1.300
United Kingdom 0.753 0
China 0.466 0.521
Thailand 0.206 0
Others 0.212 0.214
8451 Cleaning, drying, etc. 0.272 0.839
China 0.109 0
Vietnam 0.093 0.147
India 0.039 0
Japan 0.028 0.016
Malaysia 0 0.180
Thailand* 0 0.037
Others 0.003 0.459
8521 Video Apparatus 0.404 0.107
Germany 0.243 0
Australia 0.09 0.069
United States 0.044 0.001
Japan 0.015 0.036
Panama 0.008 0
Others 0.004 0.001
Note : *Thailand shows not on top 5 countries
Source : National Statistics Office and World Atlas
The total Philippine exports of electrical appliances include air conditioning totaled to US$125.187 million a decrease of 17.40% compared in 2008’s US$146.975 million. Washing machine, home at US$2.370 million a decrease of 405% from 2008’s US$11.961 million. Cleaning machines amounting to US$ 2.007 million a decrease of 164% from US$5.298 million in 2008.
Top importing countries include Hongkong, China, Singapore, China and Vietnam.
The industry is basically inward-oriented since its products are mainly sold to the domestic market. Almost 90% of the products were sold to domestic consumers, and only 10% were exported or sold to exporters.
Import Tariff Rates of Electrical Appliances 2010 :
Items Rate of Duty (%)
MFN CEPT
(Most Favored Nations)
Airconditioning machines 10% 0%
Refrigerators, freezers 10% 0%
Dishwashing machines 3% 0%
Household or laundry type washing machines
10% 0%
Microwave Ovens 3% 0%
Electrometric appliances 7% 0%
Television 15% 0%
Source: Tariff Commission
Government Regulations
The Electrical Appliance industry is regulated in terms of product standards by both the Department of Trade and Industry and the Department of Energy. Manufacturers are also members of a technical committee involved in the formulation and development of testing protocols for the products. Other members of the committee from the government, trade organizations, consumer groups, professional organizations and academe.
The Bureau of Products Standards (BPS) acts as the arm of the Department of Trade and Industry in the enforcement of mandatory Philippine National Standards for Electrical Appliances. The Bureau is also in charge of giving third-party certification known as the PS Quality and /or Safety Certification Mark of the manufacturers of these products. Importers should also obtain an import commodity clearance as a prerequisite for release of electrical appliances by the Bureau of Customs.
The Certification program by the Bureau of Products Standards involves factory assessment and product assessment. Factories of the manufacturers are inspected to see if they have established quality management system to maintain product quality. Safety testing conducted at the product assessment end by the Bureau of Product Standards
Testing Center. This is in accordance with the Department Administrative Order which lists product standards for different appliances.
The Lighting and Appliance Testing Laboratory acts as the arm of the Department of energy in enforcing the Philippine Appliance Energy Standards and Labeling Program. The program hopes to eliminate the least efficient household appliances and reduce monthly electricity bill of end users.
Before a product can be sold in the market, it must bear the PS Quality and/or Safety Certification Mark for locally manufactured products, and the ICC Quality Mark for imports, along with the Energy label.
OPPORTUNITIES OF THAI COMPANIES TO PENETRATE AND EXPAND THEIR MARKET IN THE PHILIPPINES :
Thai Companies in the Electrical Appliances should take advantage on the CEPT/ASEAN rate of 0% for all the electrical appliances being imported into the Philippines. The increased in the consumer purchasing power will enable to expand the Thai products in the Philippine market particularly on televisions, refrigerators, airconditioning, etc. Meanwhile, Thai companies should take into consideration the “new models or innovations” of electrical appliances so they will be marketable in the Philippines since consumers prefer the latest technologies.
Likewise, Thai companies can invest in the Philippines for the Research and Development of the electrical appliances. Hence, if there are some new models that Thailand wants to introduce in the Philippine market, they should also invest on the “advertisements and promotions” for the awareness of the Filipino consumers of electrical appliances.
Source : http://www.depthai.go.th