John Jonas breaks down why an iPhone SE costs nearly double in the Philippines compared to the US. Import duties, taxes, brokerage fees, and shipping costs stack up fast, and the risk of corruption during transit makes it cheaper to buy locally and build trust with Filipino workers.
Questions this episode answers
Episode 108
$429
28,990 PHP (~$555)
About 4,100 PHP (~$82)
About $250
Chapters
Welcome to the Secret Sauce of Outsourcing podcast that's dedicated to making you better at working with OFS online Filipino specialists. This is episode 108, why electronics in the Philippines are so Expensive. In yesterday's episode, I talked about shipping through balikbayan boxes. So here's why you might want to ship to the Philippines, even though you can't really do it this way. So buying electronics in the Philippines is more expensive than it is in the US which is one of the reasons why you might want to buy like a computer in the US and ship it to the Philippines, because it's just cheaper here. So let me. I'll just. I'll just give you a scenario right now. One of my ofs, Jam, he really likes Apple products, and he's been thinking about getting a new iPhone, and he has settled on the iPhone SE, which right now it's set to retail in the US for 429. That's like 22,000 Filipino pesos. So Jam then checks Apple Philippines how much it costs to buy an iPhone SE locally, and the price is 28,990 pesos, 29,000 pesos, which is about $555. That's a huge difference, like $125 difference. It's more expensive in the Philippines, which seems crazy to me, right? Where incomes are so much less than they are in the US and yet some things are so much more. And as a percentage of income, there's significantly more. Internet in the Philippines is similar where as a percentage of income, it's significantly more expensive than it is in the US and the price difference just doesn't make sense either. Like, it comes from China. It comes from China to either of us, they ship from China directly to the Philippines. The Philippines is way closer to China. I mean, if they were shipped from the US that, if they were shipped China to the US US Back to China, okay, I could see some price increase, but not that much. Not like 25% more expensive. And not only that, like, these things are shipped in massive, massive quantities like that. That should reduce the costs to the Philippines, right? And yet it doesn't. So here's what, When I asked about this, here's what they came up with. So they sent me a spreadsheet, which I'm sure they didn't make this up. They got this from. From some shipping people that explained why Philippines customs and import duties raise the price so much of things. So I'm not gonna go through this whole spreadsheet that I Have. Hopefully you can see this if you're watching the video in the podcast though. Like this spreadsheet is like 20 different line items of dutiable insurance, dutiable freight, foreign currency exchange rate, customs brokerage fees, customs documentary stamp, landed costs, excise tax, value added tax. I mean, so the total PHP that's going to the government is 4,000, 4,100 PHP, which is about $82 in US$82. So that alone is a pretty significant increase in cost. Now I'm sure there's import duties in the US too. I don't know what those are, but that's a pretty significant cost on this item. Right? However, the people in the Philippines still prefer to buy like that. So you know where the money's going. It's going to the government. You might look at this and think, oh, I'm going to ship. I'd just rather ship to the Philippines. Like I'll buy it in the US and I'll ship it over there. And you can, it's just dangerous. You can't really ship it in a Belloc Bayan box, which would be cheap. Shipping through FedEx or DHL isn't gonna be cheap. It's gonna be expensive. Customs in the Philippines is notoriously corrupt. They steal things all the time. When I asked my ofs like, oh, I wanna buy you a laptop, what's the best thing to do? They were like, I was like, can I just ship it to you? They were like, absolutely not. Please do not ship it. Okay. I mean, I just figured I could. They said you can, but you have to use, you have to use the post, you have to use ups. And so I go to UPS and Look, it's like $250 to ship a laptop. Well, like that doesn't work. They, so they ended up telling me, look, if you want to ship it, you can either use UPS or I have an aunt who lives in Maryland. You could ship it to her and she'll be coming home sometime next month and she could bring it with her. Like, okay, well this is now becoming really painful. So how about you just buy it there and I'll pay for it. Which in the end that's what they prefer. Because if they buy stuff from a store, yes, it's more expensive, but if it's damaged they can get it replaced. It has a warranty, they can get it taken care of. If it's shipped to them from here, man, they're just often out of luck. Anyway, it's more expensive to buy electronics in the Philippines, which is one more reason to take good care of the people that you hire there.
