Overview of Chinese Textile Industry's Investment in Cambodia

by:JIYALI     2021-08-10
The textile industry is one of the important traditional industries in mainland China. Its gross output value and total export value account for a high proportion of the national economy. It plays an important role in earning foreign exchange through exports, solving and maintaining employment. However, under the quota control in the past, the development of the textile industry was severely restricted, and it has always been under pressure to reduce production. After joining the WTO, the United States and the European Union immediately launched defensive measures on the grounds of disrupting the market, and then imposed restrictions on some textile exports from mainland China. The industry has once again been in trouble. Due to the long-term adverse export environment, China's textile enterprises have gradually moved abroad. Investment overseas has become an important strategic means for the sustainable development of enterprises. In the past ten years, Cambodia has gradually become an investment location for textile and garment enterprises in mainland China. The investment profile is as follows:    From August 1994 to the end of 2004, a total of 189 Chinese enterprises invested in Cambodia with a total investment of US$410 million, the second only It is Cambodia's fourth largest source of foreign investment in Malaysia, the United States, and Taiwan, and has become the largest FDI (foreign direct investment) country for three consecutive years. Cambodia Bluebird International Garment Co., Ltd. was the first Chinese company registered in Cambodia in 1994, and the Chinese mainland invested in Cambodia in the textile and garment industry, including 107 sole proprietorships and joint ventures, including 104 garment enterprises. , 3 textile companies, accounting for 56.6% of the total number of investment cases in the same period.   The total investment in the textile and garment industry over the years was 136.5 million US dollars, accounting for 33.3% of the total investment from mainland China in Cambodia during the same period, with an average investment of 1.28 million US dollars per case. (Note: Shandong Demian Group (Cambodia) was established in 2002 with a registered company of US$14 million, and the total registered investment of the remaining 4 garment industries in the same year was US$2.9 million.)    Based on the analysis of the investment data of the Chinese mainland garment industry in Cambodia over the years, when the mainland appeared When overcapacity and export competition pressure increase, the number of garment companies investing in Cambodia will increase significantly. Especially after the United States and the European Union continue to impose restrictions on textiles in mainland China, garment companies investing in Cambodia have seen substantial growth. Cambodia's investment advantages Cambodia implements an open free market economic policy, and its economic activities are highly liberalized. According to the economic freedom ranking of 170 countries and regions by international organizations in 2003, Cambodia and Japan rank 35th, much higher than other neighboring countries. . Cambodia is listed as one of the low-developed countries of the WTO and enjoys a number of preferential treatments granted by developed countries. The main reason for businesses to invest in Cambodia is that 28 developed countries such as the United States and the European Union grant General Preferential Tariff (GSP) treatment. Some countries Provide quota-free and tariff reduction and exemption preferential treatment for textile and garment products imported from Cambodia.   In 2005, the investment of Chinese textile and garment enterprises in Cambodia is expected to grow substantially. According to statistics, in the first half of 2005, 19 garment enterprises were registered with a total investment of 30.5 million US dollars, which has exceeded the level of 2004. Cambodia’s investment barriers Cambodia is one of the low-developed countries. Due to years of war and political turmoil, infrastructure has been severely damaged. Although repaired in recent years, it is still imperfect in terms of electricity, water supply, and road traffic. To meet the production needs of enterprises, water and power outages often occur, and because of the high cost of water and electricity supply and inconvenient transportation, the operating costs of enterprises increase. In addition, Cambodia’s wage level is higher than that of its neighboring textile and garment competitors such as Vietnam and Bangladesh, while labor quality and efficiency are lower. At present, the legal minimum wage of Cambodian garment workers is 45 US dollars per month, and the actual average monthly wage is about 80 US dollars.  The legal system is not sound, and the rights and interests of investors cannot be effectively protected. Cambodia has not promulgated the 'Company Law' and other basic laws on commercial operations, nor has it established a specialized agency to resolve commercial disputes. The interests of foreign-funded enterprises cannot be protected through normal channels. In addition, there is a widespread misconception that foreign investment is making money for the Cambodian people. The people do not favor foreign investment. In addition, labor union organizations are complicated and strikes and demonstrations are frequent, threatening normal business operations and even personal and property safety.   Government agencies are severely corrupt and inefficient. Due to factors such as low salaries of civil servants and rising prices, red envelopes are required to handle any government procedures. In addition, the government review procedures are complicated and the application time is lengthy, which adds to the burden on enterprises.
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