There are four main groups of PR practitioners in the Philippines:

1. Internal, Those who work in corporations (banks, manufacturing firms, utilities, hotels, resorts and fast-food chains, insurance companies, retail chains, real estate development companies, telecommunications firms, hospitals and HMOs, etc.), NGOs and other private organizations.
2. External Counselors, PR agencies owned by advertising agencies, independent PR agencies,
3. Small one-person or two-person consultancies specializing in a particular type of Clientele, e.g. political accounts, show-business personalities, fashion lines, etc.
4. Government Information Officers

In the past, a client would launch a product by presenting it to the dealers, with audio visual material, including a preview of the advertising campaign some song-and-dance routine, and distributing samples among customers in the launch area.

Then, the advertising campaign, which often included a public entertainment show, also referred to as a "roadshow", in key cities sponsored by the client and a parade on the city's main thoroughfares, bannering the new product and again, product sampling.

In this scenario, the public relations firm would be asked only for a press release or a photo story on the launch or as many stories as it can generate on the product itself.

A number of new innovations have been increasingly evident though, including:

The Press Conference

Seldom would a press conference be held just to present a new product (exceptions would be a new car model, a new version of a prominent computer software package, etc.). Instead, a whole presentation would be packaged that would be largely, news, corporate information (new investments, program for next year and beyond, income projections, reading of industry trends, problems and opportunities, etc.), and an introduction of the new product. The PR firm will always try to fashion media-friendly press conferences, preparing useful Press Kits, lining up client officials and resource persons for follow-up interviews after the press conference. The audience is usually a composite of journalists from more than one "beat": business, lifestyle, news, magazines, TV, etc. The PR firm's duty is to insure that there will be interesting stories awaiting them at the press conference. This formula succeeds in generating stories and introducing the client, which is often a business selling products designed for many kinds of people, to a wider cross section of journalists.

Aside from generating news and features, the PR firm or agency establishes, through the press conference, emotional links between the client and some of its target markets. Some agencies incorporate into their press conferences a segment that has the client turning over a meaningful donation (of the new product) to consumers representing its markets; take following examples:

• At a press conference launching a new Prepaid Phone Card, the agency got the client President and the Executive Vice President to hand over donations (of the new Cards) to two high school students, to an Assistant Secretary of the Department of Social Welfare and Development, the Director of the Overseas Workers Welfare Administration, to be used by family members in the Philippines in calling their spouses or parents working abroad, and an official of the Philippine Business for Social Progress, the social development arm of the business sector.

• For a press conference for a medical supply company, an agency had the client technicians taking the Journalist-guests' blood pressure, sugar level count, lung capacity, etc.

PR firms encourage their clients, especially those entering the Philippine market or introducing new products and services, to pay courtesy calls on government officials and community leaders. The Philippines is still basically a small community; taking the initiative to meet and know people in authority is appreciated as a personal gesture of respect and esteem. The following are more examples of Virtusio, Inc., an affiliate of Pinnacle Worldwide, Inc.:

• When a telecommunications client inaugurated an earth station, its President paid a courtesy call on President Ramos at the Malaca�ang Palace, from where he placed a ceremonial call to a faraway town in Mindanao, using client's satellite facilities.

• When the integrity of a medical product was being impugned by competition, a PR agency (apart from the press conference referred to above) arranged a courtesy call by the client on the Bureau of Food and Drugs and Press Statement by the Secretary of Health, attesting to the fact that the product had been available in the local market for more than 20 years. Both the courtesy call and the press statement were publicized.

When introducing products or services to the Philippines, clients routinely are advised to pay courtesy calls on Governors of provinces and mayors of towns and cities whenever they open new outlets or facilities in their jurisdictions. These calls are de rigueur and good PR and good business as well.

Ads and Commercials (For Ad Agencies): Supplements for PR Agencies

PR agencies also often put out "supplements" to inspire good feeling and early acceptance for the new product (or new facility). In Philippine marketing practice, "supplements" are assigned to the PR agencies, while the ads and commercials stay with the ad agencies.

Joint Ventures & Licensing Agreements

An increasingly common method for enterprises embarking on business operations in the Philippines is through joint ventures with local enterprises. Note: Philippine law on joint venture corporations states that where activity to be undertaken is partially "nationalized" (meaning reserved for ownership by Filipino citizens only), the foreign entity is limited to 40 percent equity participation.

The Bureau of Patents, Trademarks, and Technology Transfer under the Department of Trade and Industry is the government body that approves and supervises all licensing/technology transfer agreements.

Direct Marketing

Direct marketing or the multilevel marketing approach is a popular way to sell products and services in the Philippines. This type of business practice is restricted to 100 percent Filipino-owned corporations. However, foreign firms can engage in wholesale activities and then sell to Philippine distributors.

Steps to Establishing An Office

A business enterprise must comply with the following requirements before it can start operations:

1. Apply for registration of the business name with the Bureau of Domestic Trade;
2. Register with the Securities and Exchange Commission if a partnership or a corporation;
3. Apply for a Barangay permit and Mayor's permit to operate in a chosen locality of business; secure municipal license (Export Processing Zone Authority enterprises excluded);
4. Register with the Bureau of Internal Revenue to obtain Tax Account No., Value-Added-Tax Registration No., and individual residence certificates for owners/incorporators;
5. Register employees with the Social Security System, Medicare, and Department of Labor and Employment. Other less common business forms include joint stock companies, joint accounts, business trusts, and cooperatives. Note: A foreign entity, depending upon the nature of its intended activity in the Philippines, may establish and register any of the following: a branch, a subsidiary, a licensing and franchising agreement, a joint-venture agreement, and a regional headquarters.

Selling Factors/Techniques

There are several invaluable sales tools which U.S. suppliers should employ in order to maintain market leadership:

1. Americans should exercise due diligence in the selection of their local distributors, agents, or representatives, since they are important market links;
2. After selection, U.S. suppliers must provide full support to their local representatives. U.S. suppliers should visit the Philippines at least once each year to keep abreast of developments in the industries they are serving, to show support for their local representatives, to discuss problems or to devise marketing techniques, and to visit customers;
3. There should be a strong emphasis on regular customer calls by local representatives in order for them to identify sales targets or opportunities; and
4. Training programs for customers and distributors, advertising and product promotion support, and participation in trade fairs, exhibitions and product seminars are also important for U.S. suppliers to maintain leadership in this highly competitive market.

Pricing Your Product

In most instances, price is the primary consideration in the purchase decision of Philippine buyers. However, in some cases the quality of the product as well as the after sales service/support, and availability of spare parts, supersede price as a primary criterion. End-users prefer American-made products if they can afford them because they are well known for high quality and durability. While the reliability of U.S. products works to the advantage of U.S. suppliers, they should nevertheless be concerned with cheaper prices of third-country competition. U.S. manufacturers and suppliers should be flexible in their prices and, where appropriate, should be prepared to provide end-users in different income brackets with alternative products.

After-Sales Service & Customer Support

Next to price, after-sales service and support are extremely important factors to marketing success in the Philippines. It is imperative for U.S. vendors to provide this support during and after the warranty period in order to satisfy their customers. The proximity of Taiwan, Japan and other Asian nations works against U.S. competitiveness.

Standards

Established by Republic Act No. 4109 and Executive Order 133, the Bureau of Product Standards (BPS) is a governmental body under the Department of Trade and Industry and is tasked to promote quality through product certification and quality management system certification. The Bureau offers the following services to importers and manufacturers:

• PS Quality Marking Scheme: A PS quality mark is affixed on products manufactured by companies that comply with national or internationally-accepted standards. The BPS undertakes rigid testing and assessment of the product based on standards set by the Bureau.
• Import Commodity Clearance to importers of commodities conforming to national and internationally accepted standards. In general, the Philippines' standards are based on accepted American standards, such that U.S. products/equipment generally do not encounter any problem with BPS clearance.
• ISO 9000 Certification: ISO 9000 Certification was launched in the Philippines on April 23, 1992 to spur business growth and provide greater assistance to Filipino manufacturers and exporters in meeting global market requirements. The requirements set by the International Standards Organization under the ISO 9000 Series have been adopted as the Philippine National Standards (PNS) 1000 Series. The standard can be applied in the services sector (including banking, insurance, tourism and medical services), as well as in manufacturing. The BPS concluded a Memorandum of Understanding with foreign certification bodies for joint quality system assessment work in specific fields. These organizations are TUV Product Service GmbH (Germany) and BVQI (U.K.). A certification from BPS shows that a company is structured for quality products and services. As of April 15, 1994, 34 local companies were certified by the BPS as complying with ISO 9000.
• ISO 1400 Series:
• Metric System: The BPS requires that only the modern metric system (SI units) can be used for measurement of any products, commodities, materials, services, utilities, and in commercial transactions, contracts and other legal instruments, official records and documents. Importation of non-metric measuring devices, instrumentation, and apparatus is prohibited without prior clearance with the BPS.

Information on Philippine standards, including acceptable international standards, is available from the BPS at Tel.: (632) 890-4965/890-4924; Fax: (632) 890-4926/890-5131.

Business Etiquette

Office hours for business firms and the Philippine Government normally are from 8:00 a.m. to 5:00 p.m. Appointments can be scheduled up to one month prior to your arrival in the Philippines. Foreigners are expected to be on time for all business appointments. Filipinos tend to be reasonably punctual for business meetings. It is best to attempt to accomplish business objectives in mid-morning or late afternoon. Many business deals are completed informally during meals, entertainment, or over a round of golf. Offices are generally closed on Saturdays and Sundays.

When introducing yourself to a new customer, letters of introduction from persons known to the customer--either friends or business associates--can be useful. Without introductions, it is very difficult to meet with decision-makers, who are always at the top of organizations. A hired go-between is often used in order to reduce the number of persons one must go through before reaching decision-makers in the Philippines.

The exchange of business cards in the Philippines is more casual than in other parts of Asia; a Filipino businessperson to whom you've given a card may, or may not, give you one in return. However, the visiting businessperson should be the first to offer a card. Business cards may be printed in English; it is not necessary to translate them into Filipino.

Summer-weight clothing normally worn in temperate zones is suitable for the Philippines. It is acceptable for businessmen to conduct calls in short or long-sleeved shirt and ties without a coat. The native "barong tagalog" (a light-weight, long-sleeved shirt worn without a tie) is ordinary business attire for businessmen. Light suits and dresses are appropriate for women. Tailors abound, and laundry and dry-cleaning facilities are available.

The successful businessperson would be wise to adhere to the following basic rules of etiquette while conducting business in the Philippines:

• Business in the Philippines evolves out of social interaction; never decline an invitation to a social event;
• Speak in quiet, gentle tones. Filipinos revere harmony. The only time you are likely to hear loud Filipinos is when they are boisterously happy;
• The pace of business negotiations in the Philippines is much slower than that of the U.S. Expect to take several trips over a period of months to complete a complicated business deal;
• When it comes to making a decision, a "yes" usually comes quicker than a "no." This is because a way must be found to deliver a "no" politely, without loss of face. Do not be surprised if a "no" is delivered through a third party;
• Celebrate the conclusion of a business deal by inviting your Filipino partners to a restaurant. The person who issued the invitation always pays...unless it was a woman. Invite the wives of your business partners to dinner, but not to a luncheon;
• Expect to be invited to dinners and parties at the home of your Filipino partner (unless he or she is Chinese). Most households have servants, including a cook. Compliment the hostess on the decor, but be aware she probably did not prepare the food;
• Desserts are very popular in the Philippines. If you are hosting a luncheon, provide a dessert;
• Never appear too eager to begin eating at a party; allow the hostess to ask you several times to sit down. A person who jumps at food is considered greedy and uncouth.

Information clips have been excerpted from Getting Through Customs' Passport System, the on-line cultural and business database; Tel: (610) 353-9894; Fax: (610) 353-6994.

Asian Culture but Western Society

Philippine society has always been kind of an anomaly: it is Asian but at the same Western. The constant challenge to scholars is deciding--which of the two sides of the Philippines is eroding the other? In a business setting, the safe thing to assume is that you are in an Asian setting where people are expected to be gracious and amiable, not as rigidly and outwardly ceremonial, as say, the Japanese, but expecting eager to please and receive courtesies in return.

Foreigners doing business in the Philippines should take note of the following:

1. Westerners have a built-in advantage; they are, for some reason, almost automatically welcome. A Westerner, particularly, has to so something unforgivably wrong, not to merit a warm welcome, as a friend and as someone to do business with.

2. The Filipino business person wants to be treated nicely and with respect. Avoid manifesting any signs of impatience, let alone arrogance. The Filipino is sensitive, perhaps, much too sensitive. In return, he could be irrevocably loyal to business associates of partners from overseas.

   Kindly bear in mind: a very high percentage of Filipino business people that foreigners are likely to do business with are women, many of them under the age of 40. They are gracious, charming people, but thoroughly pragmatic, bright, hard-working, and knowledgeable.

3. Put all proposals, ideas, plans, tentative and final agreements, etc. in writing. To a first meeting, bring along a simple inexpensive gift (called "pasalubong" in Tagalog literally, a gift or token given by a friend who has just arrived from shopping; in this case, from a trip).

4. The Filipino business person is a creature of his family. For a first social meeting, (e.g. dinner or reception) indicate that you would like to meet your associate's spouse.

5. From the academe, among the activists, NGOs, labor union federations, etc. one may hear, from time to time, fulminations against foreign investors, whom they accuse of transfer-pricing, taking undue advantage of cheap Filipino labor, bringing in industries that wreak havoc among the environment, typifying the evil of globalization, etc. They may be remote from your direct experience, unless you are Shell, or the IMF, but they are there. This type of behavior is a matter of politics, not culture. Nevertheless, keep in mind that Filipino culture welcomes and dictates hospitality towards foreigners, plain visitors and those who come to do business alike.

Sales agent and distributor arrangements are common in the Philippines. Given Filipino affinity for American products, companies generally are eager to pursue discussions once they have examined a U.S. firm's product literature and have determined that there is a market for the product.

There is no typical profile of a Filipino agent or distributor. Firms can range in size from small (fewer that 25 employees handling only a few specialized products on behalf of a limited number of manufacturers) to large trading companies handling a wide range of products and suppliers. Some Filipino firms focus only on the Metro Manila area, whereas others also service provincial commercial centers such as Cebu, Davao, Iloilo, and Baguio. All Filipino agents and distributors should be registered with the Philippine Securities and Exchange Commission. U.S. firms seeking agents or distributors in the Philippines are encouraged to use the services of the U.S. & Foreign Commercial Service, Manila, such as the "Agent/Distributor Service (ADS)" or the "Gold Key Service."

(NEED ADDITIONAL INFO FOR LOCATING SALES REPS)

What the Philippines offers to its potential global partners is a large population, 74 million, with an annual growth rate of 2.3 percent, a literacy rate of more than 94 percent, (99 percent in Metro Manila) and a Gross Annual Product (GAP) growth rate of five percent. By the year 2002, the country hopes to register a GAP growth rate of 10-12 percent, a per capita Gross National Product (GNP) of US$2200, inflation of less than four percent and an unemployment rate of lower than four percent. There is a large manpower pool of over 26 million Filipinos 15 years of age and older. Filipinos are among the most productive, creative, and versatile people in Asia. Percentage of the population subsisting below the poverty line is expected to be under 20. Almost 60 percent of the population are below the age of 25.

National Center. The country's national center and capital is Metropolitan Manila. Manila is the country's nerve center of industrial and financial activity, transportation and communications, trade, and educational services. Approximately 85 percent of Philippine foreign trade passes through the Port of Manila; 90 percent of imports enter this port to be distributed to the other principal cities. Most of the Philippine's national importers and distributors are located in Manila.

Interregional Centers. In addition to Manila, the other major interregional centers are Cebu City, Iloilo, Davao, and Zamboanga. Cebu City, the third largest city in the Philippines, is the prime trading center in the southern part of the archipelago.

Major and Secondary Centers. Furnishing the archipelago with basic economic, political, and social services are about 40 major and 35 secondary centers situated throughout the Philippines. Although comparatively small, with populations of up to 60,000, their importance lies in the fact that they render essential urban services to their respective territories.

In the post-U.S. military bases era, U.S.-Philippine relations have improved and broadened, focusing more prominently on economic and commercial ties while maintaining the importance of their security dimension. Philippine domestic political stability has resulted in increased U.S. investment in the country, and the U.S. remains the Philippines' largest trading partner.

Combined, the geographical location of the Philippines, its abundant, English-speaking work force, and an improved image have successfully attracted investors not only from the United States, but also from the neighboring nations of Japan, Taiwan and Korea. Widespread evidence of restored political and economic stability, including economic reforms since 1992, continues to renew confidence domestically and stimulate growing interest from potential foreign investors.

General Statistics Religions: Roman Catholic (83%), Protestant (5%), Islam (5%), Aglipay (3%), Iglesia ni Kristo (2%) Government System: Presidential form, headed by a president; Government affairs undertaken by three branches: the legislative, executive and judicial. Languages: Various Philipino dialects, dominated by Tagalog (28%), Cebuano (24%), Ilocano (10%) and Ilongo (9%); English is normal business language. Work week: 48-hour work week Source: Philippine Yearbook (National Statistics Office)

DOMESTIC ECONOMY (US Dollars in Millions, except where noted) 1995 (Actual) 1996 ( Proj.) 1997 (Proj.) GDP (current prices) 74,151 83,518 93,655 Real GDP growth rate (%) 4.8 5.7 6.2 GDP per capita (USD/person) 1,055 1,162 1,274 National government spending as % of GDP1 18.4 18.82 8.82 Inflation (%) 8.1 9.0 7.0 Unemployment (%) 9.5 9.0 8.5 Forex reserves3 7,776 10,200 12,000 Ave. forex rate (pesos/USD) 25.71 26.30 26.65 Foreign debt7 37,7786 40,000 44,000 Debt service ratio (in %; ratio of principal and interest payments to export income)3 14.6 14.5 13.5 U.S. economic assistance (bilateral aid, fiscal year) 62.1 63.14 61.45 MERCHANDISE TRADE (Philippine data, fob, million USD) 1995 1996 1997 (revised) (projections)1 Total country exports 17,447 21,730 7,070 Total country imports 26,3917 33,250 40,900 Imports from U.S. 4,8687 6,220 7,770 Exports to U.S. 6,160 7,600 9,470 U.S. share of host country imports (%) 18 9 19 National Government's cash disbursements as % of GDP Based on programmed levels Government projections as of April 1996; export income refers to total receipts from goods and services Approved level Requested level Preliminary Concept revised to exclude "net due to" accounts of foreign commercial banks

Environmental Infrastructure

Sanitary conditions in the Philippines are not on par with those in the U.S., and uncooked food and unboiled water should be avoided. The air in Metro Manila is heavily polluted, although other areas outside the city enjoy better environmental quality. The following summarizes the environmental infrastructure of the Philippines:

Water Supply

Only 62 percent of households in Metro Manila have access to potable water. Sixty-seven to 70 percent of the rest of the population has access to potable water. Lack of sewage service for 90 percent of Metro Manila is a major contributor to the region's water pollution problem. Cebu, the Philippines' second largest city, has the worst water supply problem.

Wastewater

Less than 10 percent of the population of the six cities and thirty-one municipalities in Metro Manila have sewage connections, whereas not a single municipality discharging to Laguna Lake has a sewage system.

Solid Waste

Most solid waste generated in the Philippines is openly dumped, some is disposed of in landfills, and only a small amount is incinerated because of the high cost. Metro Manila currently generates 11,135 tons of solid waste per day (industrial, domestic, commercial, and other sources). Of an estimated 5,500 tons of domestic solid waste per day, about 15 percent or 817 tons end up on river banks and in bays, vacant lots, storm drains, and streets. Of an estimated 4.6 tons per day of hospital waste, 92 percent is being disposed of together with residential waste.

Hazardous Waste

The lack of any central hazardous waste treatment, storage and disposal facilities has been a critical obstacle to implementing DENR's hazardous waste regulations under Republic Act 6969.

Source: 1996 US-AEP Country Assessment: PHILIPPINES