Introduction
The global manufacturing landscape is in a major shakeup—one that’s redefining where and how the world’s goods are made. For decades, China stood at the center of global production, but that dominance is being challenged as multinational companies rethink their strategies in the face of growing risks.
Trade tensions between China and the West, rising labor costs, and the shockwaves of the COVID-19 pandemic have exposed just how fragile single-source supply chains can be. Add to that the rising geopolitical uncertainty in the Indo-Pacific region, and it’s clear why the “China +1” strategy—diversifying operations to one additional country—has gained traction.
But companies aren’t stopping at just one. To build true resilience and stay competitive, many are now adopting a “China +1+1” approach—spreading their operations across multiple countries to avoid disruption, reduce costs, and respond faster to global demand. This shift isn’t a temporary trend—it’s the future of global manufacturing.
For emerging economies like the Philippines, this creates a once-in-a-generation opportunity to step up, attract new investments, and carve out a more dynamic role in the international supply chain. The question is no longer if companies are leaving China—it’s where they’re going next, and whether the Philippines is ready to answer the call.
This transition offers the Philippines a golden opportunity—if it can overcome persistent structural challenges and position itself strategically.
Why “China +1+1” Matters
For years, global companies relied heavily on China as the world’s factory. But trade wars, rising wages, and the chaos of the COVID-19 pandemic made them rethink that dependence. That’s how the “China +1” strategy took off—shifting some operations to countries like Vietnam, India, or Mexico to spread out the risk. It wasn’t about leaving China entirely, but about having a backup plan in a more stable or cost-effective location.
Now we’re seeing the next step: “China +1+1.” Companies aren’t just picking one alternative anymore—they’re building networks across two or more countries to stay flexible and resilient. This strategy helps them manage uncertainty, avoid disruptions, and stay competitive in a fast-changing world. For the Philippines, it’s a rare opening to become part of that new network—if it can prove it’s ready to play a bigger role.
The global supply chain reset won’t wait for anyone—and the Philippines can’t afford to be a bystander. Other countries are moving quickly, improving their systems, cutting red tape, and grabbing investor attention. The good news is that the Philippines has real strengths: a young and tech-savvy workforce, strong English skills, and a strategic location in Asia.
But those strengths need to be backed by action—better infrastructure, smarter policies, and serious reforms. If the country can rise to the occasion, it won’t just be someone’s “+1+1”—it can be a vital link in the world’s next big supply chain story.
What the Philippines Must Do
1. Upgrade Infrastructure and Logistics
World-class infrastructure is the bedrock of modern industrial economies and a critical magnet for foreign direct investment. The Philippines continues to suffer from chronic infrastructure deficiencies—frequent power outages, inefficient ports, and substandard roads—that drive up logistics costs and frustrate supply chain reliability. While the “Build Better More” program, launched in 2022 as the successor to “Build, Build, Build,” is a commendable initiative, its success hinges on timely, transparent, and corruption-free implementation (Asian Development Bank, 2019). Accelerating infrastructure rollout with a focus on quality, connectivity, and maintenance will significantly enhance the country’s appeal as a manufacturing and logistics hub in the Indo-Pacific.
2. Make Investment Easier and More Attractive
Investors prioritize predictability, speed, and simplicity—and the Philippines still lags in all three. Despite reforms such as the Ease of Doing Business and Efficient Government Service Delivery Act of 2018 and the CREATE Act (which reduced corporate income tax from 30% to 25%), implementation is inconsistent, especially at the local level (World Bank, 2020). A decisive shift toward digital governance, streamlined permitting, and transparent regulatory practices is urgently needed. Lowering friction in the investment process will not only boost confidence but also encourage long-term commitments from global firms seeking to diversify beyond China.
3. Develop a Robust Local Supply Chain
No country can thrive as a manufacturing hub without a dependable and integrated domestic supply chain. The Philippines’ overreliance on imported raw materials—especially in electronics, apparel, and construction—undermines its ability to anchor global value chains (Philippine Statistics Authority, 2025). Strengthening strategic industries such as semiconductors, textiles, and basic metals—through incentives, skills development, and R&D support—can boost backward linkages and reduce vulnerability to external shocks. A well-developed local supplier ecosystem is essential to improving reliability, lowering production costs, and positioning the country as a serious “+1” location.
4. Leverage and Expand Trade Agreements
Trade agreements are not just about access—they are about alignment and long-term strategy. As a founding member of the Regional Comprehensive Economic Partnership (RCEP), the Philippines gains reduced tariffs and wider market access across 15 Asia-Pacific economies (ASEAN Briefing, 2023). However, to maximize benefits, the country must strengthen institutional readiness and actively pursue additional bilateral free trade agreements, especially with the EU and India. A robust trade policy, coupled with business education and export support, can integrate the country more deeply into Asia’s expanding production networks.
5. Tackle Long-Standing Challenges
Structural weaknesses, such as corruption, weak institutions, and policy unpredictability, continue to hinder Philippine competitiveness. The country ranked 115th out of 180 in Transparency International’s Corruption Perceptions Index in 2023, reflecting ongoing concerns about governance (Transparency International, 2023). These systemic issues elevate business risks and discourage long-term investment. Only through sustained political will, institutional reform, and the promotion of rule-based governance can the Philippines create an environment that attracts and retains global investors.
Conclusion
The world is redrawing its manufacturing map, and the Philippines has a real shot at becoming one of its key destinations—if it moves quickly and decisively. The pieces are already on the table: upgraded infrastructure, simplified regulations, stronger local industries, smart trade diplomacy, and above all, good governance.
These aren’t just policy suggestions—they’re the foundation of a more competitive, resilient, and inclusive economy. Countries like Vietnam and Indonesia are already making bold moves; the Philippines must do the same, or risk being left behind.
What’s at stake is more than foreign investment—it’s the chance to create better jobs, boost innovation, and give the next generation of Filipinos a meaningful role in the global economy. The “China +1+1” moment won’t last forever, but with vision, political will, and a sense of urgency, the Philippines can turn this global reset into a national breakthrough. The time to act isn’t tomorrow. It’s now.
References
ASEAN Briefing. (2023). Philippines Ratifies RCEP Agreement: Opportunities for Businesses. https://www.aseanbriefing.com/news/philippines-ratifies-rcep-agreement-opportunities-for-businesses/
Asian Development Bank. (2019). Improving Public Infrastructure in the Philippines. https://www.adb.org/sites/default/files/publication/525971/adr-vol36no2-6-public-infrastructure-philippines.pdf
Philippine Statistics Authority. (2025). Highlights of the Philippine Export and Import. https://psa.gov.ph/statistics/export-import/monthly
Transparency International. (2023). Corruption Perceptions Index 2023. https://www.transparency.org/en/cpi/2023
World Bank. (2020). Doing business 2020: Comparing business regulation in 190 economies. https://www.doingbusiness.org/content/dam/doingBusiness/country/p/philippines/PHL.pdf
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