Chinese textile industry
The major strength of the Chinese textile and clothing industry lies in its complete industrial chain, which makes China the world’s largest exporter of clothing. However, this situation is gradually changing. In recent years, due to low labor costs in Southeast Asia, Chinese clothing manufacturing has begun to show a trend towards offshoring to Southeast Asia, and some industries Related to clothing manufacturing are also considering transfers to this region. In response to this trend, some analysts have stressed the urgency for the Chinese clothing and textile industry to carry out industrial restructuring and modernization, increase the number of value-added products and create their own clothing brands.
According to some press reports, new Chinese companies arrive almost every day in Cambodia, all factories in the industrial park of Phnom Penh have been rented, and only in remote areas outside Urban areas that part of the land and factories are still available for rental.
Outsourcing clothing production in Cambodia
The main reasons why Cambodia is so popular with Chinese textile and clothing companies are that the minimum monthly wage is only US $ 120, and that the cost of hiring factories in this country is only 1 / 5th of what it costs in China, and finally that clothing products manufactured in Cambodia benefit from a preferential duty-free policy for exports to the EU.
Yuttana Silpsarnvitch, Executive Director of the Thai Apparel Manufacturers’ Association, said in an interview with the press that China’s clothing exports account for nearly 35 percent of the world’s clothing exports. On the other hand, the countries of South-East Asia account for only about 10% to 12%.
The Director of the Chinese Textile Import and Export Chamber of Commerce, Jiang Hui, told reporters that, with regard to transfer decisions to Southeast Asia, a portion is due to transfers Direct from China to this region from apparel manufacturers of European and American brands, while the other part comes from Chinese companies having received orders from European and American clothing brands who have leased premises in South east Asia or bought shares in local garment companies for their production.
Nowaday, the most qualified place to produce your clothing line might be Vietnam if you want to produce cheap T shirts and Hoodies. If you would like to produce high quality garments in Asia, you should focus on finding a clothing manufacturer in Thailand.
Plant construction in Southeast Asia faces many challenges
In South-East Asia, rising labor costs, inadequate production capacity, shortage of infrastructure and imperfect legal and land tenure systems will all become a problem that will limit the Development. According to press reports, in Malaysia, Singapore and other countries, wage costs have gone from 30 to 40 US Dollars per month to 60 US Dollars in 15 years. However, due to competition from foreign firms to attract employees in a sort of artificial auction, labor costs in Cambodia have gone from US $ 60 per month to US $ 120 in just two years. Since 2011, there has been a rapid increase in labor costs that can be described as “incredible”.
For high-end textile companies, the environment in Cambodia is difficult. European high-end clothing brands have ordered a limited number of high-level products in each lot with larger batches, resulting in higher customs clearance costs for fabrics imported from China. But the production efficiency of Cambodian workers is low, and if the garments produced do not meet the required quality standards, the fabrics must be re-imported and remanufactured; “Only companies that have made higher orders may have more margin”.
Difficult to produce clothes in Cambodia
According to the President of the National Federation of Textile Industry of Thailand, Cambodia has insufficiently developed the sector of the necessary textile raw materials. Many Chinese companies have thus to content themselves, after having ensured in China the production of fabric, printing and dyeing, to bring buttons and thread to Cambodia for a final finish by local employees.
China’s clothing industry should accelerate the development of advanced technologies “Within 3-4 years after the Asian garment industry will be segmented the market: China, Thailand and Vietnam will provide most of the Production of high-end clothing, while Bangladesh, Myanmar and Cambodia will mainly produce low-end clothing “