Garment exports in Cambodia topped $1.56 Billion for the first half of 2013, boasting a growth rate of 32% from the first half of 2012. Here's why they're experiencing such rapid growth.
Both internal and external factors are currently contributing to Cambodia's rapid growth and rise to popularity for global apparel manufacturers.
For one, Cambodia has the lowest wage rate in Southeast Asia, averaging $14 per month in the garment manufacturing sector. With rising manufacturing and labor costs in China and Bangladesh, apparel brands are constantly looking for more cost-effective, high quality alternative sourcing options. Cambodia also has a very young workforce that is eager to work, despite the low wages.
Also contributing to Cambodia's massive gains are regional factors such as the recent factory collapses in Bangladesh that have been setting western apparel brands on edge as governments around the world are calling for drastic changes to occur.
Working conditions in many of the garment manufacturing hotspots of the world are questionable and Cambodia is not without it's share of problems. Cambodia however, has significant manufacturing infrastructure already in place to efficiently handle large international orders. Now that Bangladesh has lost free trade rights on the importation of many products, Cambodia has become a much more attractive location to produce garments.
“I think it must be the Bangladesh issue, and also China — where labor costs are very high now,” said Srey Chanthy, President of the Cambodian Economic Association.
This combination of internal and external factors is making Cambodia a very appealing place for brands to relocate manufacturing at this time. But what remains to be seen is whether or not this shift represents permanent or temporary changes to the apparel manufacturing industry.
Do you think this shift in production to Cambodia will be a permanent move?