Made in Cambodia: Foreign Industry Calls on Cambodia as the Next “Low-Cost” Alternative in All Things Manufacturing
About a decade ago, global manufacturing firms staged a mass exodus to Asia in search of low-cost alternatives to increasing domestic wage demands and operational costs. The consensus was the continued development of a regional supply chain that had formed in countries like Vietnam and Indonesia, while taking advantage of low wages offered by the world’s largest exporter in China. It was an idea that bolstered many a bottom line, but now things are changing. Since then, China has become increasingly prosperous with a rapidly growing middle class. The demands of this new wealth have had Chinese manufacturers rightfully turning their attention to their growing customer base, leaving some exporters in cold. What’s more, growing wage demands in China as well as in Southeast Asia’s light-manufacturing countries is forcing foreign manufacturers to consider other options as they search for the next low-cost destination. The result has been a speedy realignment of the jigsaw puzzle that is Asia’s manufacturing supply chain. China has become bullish on foreign markets, investing billions of dollars at a time in new factories and infrastructure development projects abroad. Vietnam, meanwhile, has earned the title of Asia’s new tech hub as its workforce moves away from sewing t-shirts to assembling microchips for consumer electronic goods. Cambodia – a country where the low-value garments last year made up nearly 90 percent of all its exports – too is overdue for an upgrade as investors have begun to flood market with value-added manufacturing plants, producing things like automotive parts, sporting equipment and small motors for various consumer products. … Such is the case with Japanese auto parts maker Yazaki Corp., who christened their new $24 million wire harness factory in Koh Kong province. … Most recently, global automotive components manufacturer Denso announced in January that it would invest a modest of $400,000 for the development of its new subsidiary Denso Cambodia Co. Ltd., which will produce sensor components at their new facilities in the Phnom Penh Special Economic Zone (PPSEZ). But Denso is not PPSEZ’s only new customer: Yamaha Motor, Laurelton Diamond, a subsidiary of the popular U.S.-based jeweler Tiffany & Col, and Japanese firms Marusan Plastic and Nikko-Kinzoku Cambodia – a firm that makes wax casting – are all in the process of building factories there, according to recent PPSEZ data. …
