Chinese companies are exploring Cambodia: skilled workers are hard to find and textile workers are paid NT$1.

Chinese Pioneers in Cambodia
At 9 a.m. on June 7, the surface temperature had exceeded 35 degrees Celsius, and guests in formal attire were sitting upright on chairs in the square.
Cambodian Prime Minister Hun Sen on the rostrum had a loud voice and talked endlessly about the special features of the park at his feet, his relationship with the park, and his expectations for its future.
This is the Sihanoukville Special Economic Zone in Cambodia. The Southeast Asian country is following the path China has taken before, establishing special zones in an effort to transform its agricultural economy into an industrial one.
Eight years ago, Hongdou Group, a Chinese enterprise in Jiangsu Province, took root here. It carved out a park from the grass and shrubs and became a veritable “big owner” of Sihanoukville Port. It also brought business opportunities to one of the poorest countries in the world.
Of course, this is not an easy job. In the park, it is sometimes difficult to find skilled workers. Female textile workers often start stepping on the sewing machine pedal before the mud on their feet is wiped off.
As a pioneer in Cambodia, Hongdou Group, together with the Chinese companies that have settled in the country, is witnessing a country’s economic transformation.
​Eight years of pioneering Cambodia
Surrounded by low hills on three sides and facing the US-aided Highway 4 on one side, the open land of nearly 12 square kilometers in the middle is the Sihanoukville Special Economic Zone (SSEZ).
The special zone operates in the form of a company. Its full name is Sihanoukville Special Economic Zone Co., Ltd. (hereinafter referred to as “Sihanoukville Special Economic Zone”). It is led by Hongdou Group and operated as a joint venture with Cambodia International Investment and Development Co., Ltd., with the former in a controlling position.
In 2007, Hongdou Group began to inspect Sihanoukville Port. After establishing a joint venture, it began negotiations to acquire land in 2008. Dai Yue’e, general manager of the Sihanoukville Special Economic Zone, told a reporter from China Business News that the Sihanoukville Special Economic Zone currently has full property rights over the land under its feet. The Cambodian government also delegated power to the Sihanoukville Special Economic Zone. After the latter completed the construction of a public office area with water, electricity and land leveling, it began to throw embroidery balls to Chinese companies to attract them to locate in the special zone.
In June 2016, the 100th enterprise was launched, and the Sihanoukville Special Economic Zone invited Hun Sen to attend the celebration. According to the managers of the Sihanoukville Special Economic Zone, what makes the special zone special compared to other areas in Cambodia is the exemption of import and export tariffs, and the “one-stop” service for import and export business required by enterprises is concentrated internally, providing investment applications and registration for enterprises entering the zone. Registration, customs declaration, commodity inspection, issuance of certificate of origin and other services.
However, in the early land purchase and actual construction of the park, the local government adopted a free-range policy: neither intervention nor restriction.
“When I first came here, there was no water, no electricity, no roads. It was almost 100% covered by weeds and shrubs with no economic value. The height difference of the terrain was as high as 70 meters.” Dai Yue’e recalled the scene when she set foot in the area eight years ago. Sad.
At that time, in order to survey the land, someone had to wield a machete to cut off the bushes before passing. These lands are owned by local farmers, and the company negotiates land purchase agreements with the farmers one by one. “This land is pieced together with more than 100 land title certificates.”
Even today, this 11.13 square kilometers of land is not fully available for the use of settled companies. Among them, the 5 square kilometers of land that have completed “five connections and one leveling” are distributed with more than 100 companies settled there.
​Labor is easy to buy, but skilled workers are hard to find
Among the more than 100 companies settled in the park, the majority are Chinese companies, reaching 87, mainly in light industry.
Companies that have lost their competitive advantages in China have rediscovered their profitability in Cambodia. The salary alone can save labor-intensive enterprises a lot of money. When the Sihanoukville Special Economic Zone was first built, that is, eight years ago, the local workers’ wages were only equivalent to 8 yuan per day, and the monthly salary was about 240 yuan.
Even though the wages of Cambodian workers have increased year after year, they are still lower than the wages in China. According to Fan Yun, general manager of Xindashun Textile Co., Ltd. based in the Sihanoukville Special Economic Zone, the average monthly packaging expenditure for local workers plus corresponding benefits is about US$200. Based on the recent exchange rate of RMB against the US dollar, the monthly salary of an ordinary textile worker in Cambodia is around RMB 1,300.
The overall per capita income in Cambodia is lower. According to World Bank data, Cambodia’s per capita income in 2014 was US$1,084, with an average monthly income of approximately US$90.
Although labor costs are low, a drawback for Chinese companies is that Cambodian workers do not have the same industrial training as local Chinese workers.
On the 10th of every month, the Sihanoukville Special Economic Zone recruits employees regularly, and most of the applicants are surrounding farmers. A manager of a company stationed in the park laughed and said that Cambodian workers work “very slowly”. Often the work efficiency of two Cambodian workers is only equivalent to the level of one worker in China.
This may be related to the local climate. The temperature in Cambodia is above 30 degrees Celsius all year round, and it is difficult for people to withstand high-intensity work at this temperature for a long time. On the other hand, because local workers are directly transformed from farmers, they wash off the dirt on their feet and step on the sewing machine pedal, which is very important to the local people.Said it was a test. They have been able to cope with basic light industry with ease, but once it involves slightly more complicated work, they are unable to do anything.
​China 30 years ago
Hun Sen has a deep connection with the Sihanoukville Special Administrative Region. In 2008, Hun Sen also attended the foundation laying ceremony of the Sihanoukville Special Administrative Region as Prime Minister. In recent years, Cambodia has been vigorously promoting the construction of special economic zones, and so far 11 special economic zones are actually in operation. Reduction and exemption of import and export taxes is a “standard feature” of special economic zones, which has attracted the transfer of China’s low-end manufacturing industry.
In China 30 years ago, the textile industry was the focus of industry, but now it is a “sunset industry.” Entrepreneurs are like predators on the grassland, migrating with the seasons in search of suitable hunting grounds.
When Xindashun Textile settled in Cambodia, it bought the 50-year right to use a piece of land from the Sihanoukville Special Economic Zone and established its own factory. For Chinese companies that choose Cambodia and settle in the Sihanoukville Special Economic Zone, in addition to the low-cost local labor force, the preferential policies provided to Cambodia by developed countries are even more important. Because it is classified as a poor country, developed countries and regions such as the European Union, Japan and the United States have granted Cambodia many tax incentives, which has added weight to the attraction of the special economic zone.
For example, the tax rate for hydraulic forklift products exported from China to the EU is as high as 78%, but exports from Cambodia are exempt from import duties. The factory of Zhu Youqun, a hydraulic forklift supplier in the Sihanoukville Special Economic Zone, followed the Chinese hydraulic forklift manufacturers to move from Thailand to Cambodia.
Hongdou International Garments, a subsidiary of Hongdou Group, was also one of the first companies to settle in the Sihanoukville Special Economic Zone. The factory currently has four production lines for two sets of trousers and two sets of suits, with an estimated monthly production of 40,000 pieces and 30,000 pieces respectively. Chinese management capabilities are combined with local workers: the factory has 20 Chinese managers and 620 local employees.
In fact, the Sihanoukville Special Economic Zone has benefited from the overlapping effects of the policies of China and Cambodia.
Cambodia is like China 30 years ago, a country transitioning from an agricultural economy to an industrial economy. Its young and strong labor force is slowly adapting to work from farmland to industrial assembly lines. The Cambodian government, like China 30 years ago, hopes that foreign investors will bring capital and management capabilities, and at the same time transplant and implement industries.
China is vigorously promoting the “One Belt, One Road” strategy, and Cambodia is at the forefront. At the same time, domestic supply-side reforms that are conducive to eliminating excess production capacity mean that a large number of Chinese companies are expected to transfer abroad.
After the celebration on June 7, the sea breeze brought dark clouds, and a heavy rain followed the wind. Close to the coast, the Sihanoukville Special Administrative Region is a place of turmoil. Chinese people who have been through reform and opening up must be familiar with this.