Sourcing Options: Cambodia

In recent blogs we have discussed how the landscape for sourcing in Asia has been changing. This is a natural process: as China’s free market economy matures, China manufacturing prices have gone up in some areas. For instance, for low-skilled, low tech work such as the cut-and-sew garment industry, some regions of China have been becoming uncompetitive. New Asia sourcing options are becoming more attractive for our clients’ consideration, however.

For instance, I recently returned from a trip to Cambodia and saw situations much like I remember when I began sourcing manufacturing in China back in 2002: new, modern factories being built and a workforce eager for opportunities.

Back in the 1990s, Cambodia began moving from a planned economy to free-market capitalism with the predictable result of “a rising tide lifts all boats.” Cambodia is a member of the World Trade Organization and the regional Association of Southeast Asian Nations—an intergovernmental organization promoting dialogue, cooperation and integration for mutual economic advancement.

As important as new manufacturing facilities in Cambodia, infrastructure improvements are necessary to ensure the reliability of utilities, such as electricity and water, and transportation with modern roads, bridges and ports. For this Cambodia seems to be relying heavily on the China Belt and Road Initiative (BRI, formerly called the One Belt, One Road Initiative). This is a strategy where the Chinese government invests heavily to fund development in countries throughout the region. While such investment is sorely needed and benefits economies such as Cambodia, some see this as China solidifying its dominance in the area. Cambodia’s challenge will be finding a path to maintain its sovereign individuality while leveraging infrastructure improvements to fuel its economy.

From what I have witnessed of the energy and enthusiasm of the Cambodian workforce, there seems to be a strong desire to seize this opportunity. This in turn creates opportunity for our clients. While we continue to source manufacturing in China, there are going to be situations where China may not offer the best fit or value.

Restrictive tariffs and the simple realities of free market economies may make other countries the more competitive fit. No matter what, Avela Corporation is ready to serve as your feet on the ground for manufacturing sourcing in the Asia region.

We will maintain our offices in Houston and Shanghai, but we are organically expanding our operations into other Asian countries as the situation and economics demand. In the end, finding the best fit for our clients remains our mission. This involves staying abreast of tariff and customs issues and balancing them with factors such as infrastructure support and transportation costs. These, and other concerns are all part of the mix our staff considers when serving our clients. This, and our personal approach to business relationships have led to the success we have experienced since 2002.

Changing times will always create new opportunities for profitable manufacturing, and in the end the rising tide will continue to lift all boats.

Contact Avela to see what we can do to float your boat!