Cambodian Garment Industry Case Study

By restricting the amount that major producers such as China could export to ‘quota markets’, the Multi-fibre Arrangement gave new exporting countries an opportunity to enter the industry on the basis of their underutilized MFA export quotas (Natsuda et al. 2017).

When the MFA ended, it was expected that China and India would increase their market share considerably and that most other countries would lose their share. In this case, China has increased its market share, even though India has done so. Some of the most direct forecasts have been confirmed for sub-Saharan Africa, but Asian producers, notably Vietnam and Cambodia (including Bangladesh), have increased their share of world exports of textiles and clothing. However, the Cambodian

Cambodian garment industry does not focus on designing. Designing or styles are on the buyer’s hand, which meant buyers tell the industries the styles they want to buy from each producer. Moreover, all the inputs or accessories for producing garment products are imported from other sources outside the home country, mostly from Vietnam and China. According to Yamagata’s survey of 164 garment firms in Cambodia, 139 firms (or 87.4 percent) were engaged in only serving fabric and making final products (Natsuda, et al., adopted from Yamagata 2006, pp.9-10)

FDI in garment industry gives more experience to Cambodia especially in technological acknowledgement. Nevertheless, Cambodia is still lack of technological knowledge in garment industry compared with Thailand and Vietnam, the closest member countries in the region. Many papers wrote about Cambodian garment firms, especially foreign firms, which hired foreign managers rather than local managers due to local managers lacked of experiences and knowledge in garment

Most of foreign aids are from US, China, Japan and EU. At the same time, Cambodia attracts FDI from around the world over the past decade and has been very successful. Chinese FDI accounted for US$554 million or 32 percent of the total US$1.7 billion in 2014 (ASEAN Statistical Year Book 2015). Chinese FDI increased since 2000 except during the world economic recession in 2008-2009. However, FDI from Republic of Korea increased by US$203 million in 2008 and dropped by US$98 million in 2009 (ASEAN Statistical Year Book 2013).

FDI inflow is divided into four (4) main sectors: agriculture, industries, infrastructure and tourism. FDI in the agricultural sector amounted to US $ 794.5 million in 2011, US $ 556.6 million in 2012 and a sharp increase of US $ 1,128.8 million in 2013. However, it started to decline of US $ 264.7 million in 2014 and US $ 482.6 million FDI flows in the infrastructure sector, which amounted for US $ 3,129.8 million in 2015 compared to the industrial sector, amounted for US $ 919.3 million and the tourism sector represents only US $ 111.9 million in