Will Cambodia Rise as a Contract Manufacturing Hub in Southeast Asia?

As global businesses explore contract manufacturing options outside of China, one previously overlooked country had been gaining interest and momentum: Cambodia. The tiny, mostly agrarian nation shifted to a market economy in the 1980s and has built up its manufacturing sector in recent decades. Lying between Thailand and Vietnam, with access to the Gulf of Thailand, Cambodia was taking advantage of “spillover” business from those two growing economies. Cambodia is coupled with its natural resources and existing infrastructure in labor-intensive manufacturing and is poised to become a hub for manufacturers leaving China.  One of Cambodia’s top manufacturing footprint is in garments and textiles, which accounts for 63 percent of the country’s total exports, mostly to Europe, United States and Canada.

Genimex has launched several initiatives in Cambodia and is ready to help our clients take advantage of the benefits, assisting clients who have contracted to have a range of products manufactured, including gear bags, backpacks, plastic items, such as hairbrushes, and metal items, including tool chests.

Cambodia is very price competitive and has the second lowest minimum wage in Southeast Asia. There has been large foreign direct investment due to various incentives and establishments of special economic zones. Investors can benefit from full foreign ownership of businesses, corporate tax holidays, duty-free import of select goods and minimal restrictions on capital repatriation.

According to the World Health Organization, the impact of COVID-19 “In Cambodia, from Jan 27 to … 14 August 2020, there have been 273 confirmed cases of COVID-19 with 0 deaths.” If those numbers can be trusted, the disease itself has done nothing to ravage the nation. But the global economic contraction has dealt a serious blow. As euractive.com reports, the “Cambodian government has taken various emergency measures to curb the impact.” In addition to a $66.7 million EU grant to help Cambodia’s economy, the Cambodian government has eased taxes and disbursed more than $550 million for various relief programs to stabilize businesses and support laborers. COVID-19 will eventually pass, and we can anticipate Cambodia taking long-term measures to compete with Thailand and Vietnam for manufacturing business relocating from China.

Given the uneven terrain, companies looking to outsource to Cambodia require knowledgeable assistance to protect their interests and maximize the advantages. Since many of Cambodia’s factories are foreign owned, we already have relationships of mutual trust with the parent companies. We have chosen suppliers who meet our high-quality standards, operate honestly, and maintain favorable labor relations. Our product managers are frequently onsite overseeing progress and advocating for our clients.

If you are interested in outsourcing to Cambodia or any other Southeast Asian country, you can trust Genimex to guide your project from conception to successful completion.