Official Export Data - EU Imports per HS-4 Digit Categories - US Imports per Quota Category

Cambodia Apparel Exports in Jan-Sep 2016 Country Report

Cambodia's apparel exports have continued surging in January-September 2016, whatever the fall of the US market, thanks to the duty-free access to the European Union. Competition is however surging from Vietnam and Myanmar whereas a surge of minimum wages is directly threatening the competitiveness of Cambodian apparel plants, fully owned by a volatile foreign capital. Our statistical tables offer a comprehensive view of EU and US import data per category of products. Percentage changes and indexes are provided for volume and value exports, and unit prices.

Cambodia's apparel exports have continued sharply rising in the first half this year and remained very strong in the third quarter, although experiencing a double-digit decline on the US market.

Double-digit increase

After gaining 7.8% in dollar terms in the first half of 2015, apparel exports have jumped by 10.5% in the same period of last year.

This is entirely due to a surge in sales to the European Union, as Cambodia benefited from the recovery of EU imports in the last year.

Cambodian clothing exports enjoy a duty-free access to the European Union, under specific rules of origin granted to the LCDs, the poorest countries in the world, as listed by the United Nations.

Surging exports to Japan

If apparel exports to the US have apparently fallen 14.7% in the third quarter 2016 from a year earlier, shipments to Japan have surged 24.9%, as a clear sign that Cambodia is less dependent on its traditional markets.

Exports to Spain have gained 28% in third quarter, whereas surging 34% to France. Shipments to the U.K. have however dropped 7.9%.

Exports to the US market have plunged by 13.9% in volume terms in the first ten months of the year, reflecting the fall of the American apparel imports and surging competition from neighbouring Vietnam.

Competing with Vietnam

If Cambodia has a clear advantage on EU's market thanks to its duty-free access, tariffs are similar for Vietnam and Cambodia for accessing the US market.

The election of Donald Trump has however offered some relief to Cambodia-based exporters, with the TPP (Trans Pacific Partnership) and its consecutive duty-free access for Vietnam on the US market being now indefinitely delayed.

With its specific rules of origin imposing that yarns should be locally produced, the TPP would also have further boosted textile production in Vietnam, a major threat for Cambodia where apparel plants are forced to import most of their raw materials in absence of a strong textile industry.

Highly vulnerable

Whatever its current success on the European and Japanese markets, Cambodia's apparel industry however remains highly vulnerable.

First, Vietnam has signed a duty-free agreement with the European Union which will progressively eliminate tariffs up to 12% over a six-year period.

Second, minimum wages have dramatically risen in the last years in the Cambodian apparel industry, from 80$ in 2013 up to 140$ in 2016.

If effective wages are not lower in Vietnam, the minimum wage is still at $68 in Bangladesh.

Chinese investors could shift to Myanmar

Third, most companies are owned by foreign investors with Chinese accounting for 90%. A move to cheaper countries could therefore rapidly depress Cambodia's exports, with competition now emerging from Myanmar benefiting from lower labor costs and a similar duty-free access to the European Union.

In order to stay competitive, Cambodian plants are however climbing the value chain and have been apparently able to sell more sophisticated products in the past year, following the example of Sri Lanka.

Monitoring of social standards at apparel companies is also another advantage under I.L.O.'s "Better Factories" program which has been implemented for the first time in Cambodia more than 15 years ago.



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