The next designer handbag you purchase will probably have a “Made in Cambodia” label.
Fashion corporations seeking to diversify their supply chains have already began opening manufacturing facilities in Southeast Asia as an alternative choice to China.
“Change is already happening,” said Steve Lamar, executive vice chairman of the American Apparel & Footwear Association.
Steven Madden CEO Edward Rosenfeld said during a recent earnings conference call that handbag production had been moved from China to Cambodia.
The footwear and accessories maker predicts that 15 percent of its handbags will come from Cambodia this 12 months, and that percentage will double in 2019.
“Our head of handbag sourcing is right there working on a plan to increase that activity.”
Tapestry, the luxurious handbag company that makes Coach and Kate Spade handbags, has adopted the same strategy, increasing production in Vietnam and reducing supplies from China to lower than 5 percent.
Investment incentives
“Cambodia offers some pretty good investment incentives, like tax holidays,” said Matt van Roosmalen, Cambodia country director at Emerging Markets Consulting, an investment advisory firm focused on Southeast Asia.
“As long as tariff exemptions are in place, companies will be more motivated to invest in production capacity in Cambodia.”
Cambodia’s footwear exports rose 25 percent in 2017, while apparel exports rose 8 percent over the identical period, in line with data from annual report by the National Bank of Cambodia, which attributed the rise partially to increased demand from the U.S.
Beyond the tariff threat, wages in China have risen steadily, while Cambodia stays one among the lowest-cost countries on the planet. According to estimates by Oxford Economics, Cambodia’s labor costs are 1 / 4 of those in China.
Source : Bloomberg | Cambodia Journal
