Cambodia is one of the countries with the fastest growing garment industry in the world. At present, investment in Cambodia’s textile and garment industry from countries around the world, including Thailand, is increasing year by year, mainly due to the lower local labor costs and the preferential treatment given to Cambodia by the Cambodian government to investors and its trading partners.
Kasikorn Research Center believes that with the increase in production costs in Thailand, Cambodia has increasingly become a new choice for trade and investment in the textile and garment industry, and the special economic zones and industrial parks located in various provinces of Cambodia are the most appropriate investment bases, including those around Phnom Penh. Region, Svay Rieng Province, Banteay Meanchey Province, Sihanoukville and Koh Kong Province’s industrial parks, especially the area around Phnom Penh City is the best, because it is close to the capital Phnom Penh, public facilities and transportation lines are relatively complete, and raw materials are available. and finished product transportation is more convenient.
However, Cambodia’s domestic production of upstream textile products such as yarns and fabrics used as raw materials for downstream production is insufficient to meet the needs of its domestic textile and apparel production lines, so large quantities of imports are required. Thai investors should make full use of the location advantages of neighboring Cambodia, low tariffs, and product quality recognized by trading partners to enter Cambodia’s upstream textile product market. Kasikorn Research Center predicts that the total export value of Thailand’s textile upstream products to Cambodia in 2013 is expected to reach US$120 million, a year-on-year increase of 25.0%.
Kasikorn Research Center believes that Cambodia’s clothing export potential is huge. At the same time, as Cambodia’s economy grows, its domestic clothing consumption demand also has the potential to grow. Therefore, Thai textile companies should seize the business opportunities to invest in Cambodia to expand the production of upstream and midstream textile products and supply raw materials to Cambodia’s garment industry nearby.
Although Cambodia has various favorable factors for attracting foreign investment, Thai investors must pay attention to the hidden costs that may increase operating costs and the limitations of low labor skills, which limits local production to cutting, sewing and Trimming (C.M.T) OEM production, most of the products are still cheap products, and the production of high value-added products is extremely limited. At the same time, major foreign investors such as China also occupy a larger market share due to their economies of scale. Therefore, Thai manufacturers who intend to expand the market in Cambodia should position their products in the mid-range to high-end categories and should not use low-price strategies to compete for market share, because Thai products can only be at a disadvantage when competing in the mid- to low-end market.
In addition, Cambodia’s imperfect infrastructure is still a major obstacle to the formation of a supply chain system. Therefore, Thai manufacturers must consider investing in more mature production lines and choose the most appropriate investment method. The most important thing is that investors should cooperate with local partners to make investment operations and connections with local governments more convenient and smooth.
