Blog: Michelle RussellCambodia garment industry approaching crossroads

Michelle Russell | 27 August 2014

If Cambodia's US$5.5bn garment industry is not yet at a crossroads, it is approaching one, according to participants at an industry trade show held in Phnom Penh. Many industry suppliers believe that while Cambodia remains a growing market for their textile and garment products, there are challenges ahead, from rising labour costs to increased competition from neighbouring countries.

Another such challenge is wages, with many trade unions and garment factory owners remaining at odds over plans to increase the current monthly minimum wage of $100. As a result, a fresh wave of trade union action has hit Cambodia's garment industry over the last month, with as many as "25 separate strike actions having taken place within matter of 22 days in August alone", a union told just-style last week.

Wage issues of a different kind are also causing problems in China, where the recent spate of minimum wage rises in the country's cities are expected to put pressure on an industry already struggling to maintain profits amidst rising costs.

Elsewhere, new research suggests that while the inclusion of Vietnam in the Trans-Pacific Partnership (TPP) is a major thorn in the side of the US textile industry, there may be more to fear from Japan. The study found that, as one of the world's leading textile exporters, Japan's entry into the TPP "substantially reduces the opportunity for the US textile industry to expand exports in the Asia-Pacific region, such as Vietnam".

The issue of toxic chemicals in waste water discharges from textile processing facilities continues to be a major challenge for the industry, with environmental pressure group Greenpeace calling on apparel firms to clean up their supply chains. just-style has taken a closer look at the problem and the need for industry collaboration.

One company currently scrutinising its supply chain is US apparel giant Gap Inc. The company has been working on building a more responsive supply chain, seamless inventory, international expansion, and omni-channel capabilities. Last week, the retailer revealed plans to enter India, and highlighted the progress made to date on its supply chain fabric platforming as it shifts its relationships from vendor-based to mill-based.

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