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Teddy bear production shifts from China to Cambodia

AS China’s economy continues to grow and wages for Chinese workers continue to increase, one American company is shifting some production into Cambodia.

First & Main (Cambodia) Ltd. is the only stuffed animal manufacturing company in Cambodia, according to owner Brad Holes.

“Cambodia serves as a hedge for importers and retailers who are single sourced in China where conditions are becoming increasingly volatile and unfavourable,” Holes said.

Holes was in Shanghai in 2006 when he received a phone call from his friend Craig Muller.  Muller leads an organization that helps to fund orphan care programs around the world: www.warmblankets.org.  

One of the organizations that it helps support is Four Square Children of Promise in Phnom Penh.

Holes joined Muller for a visit to Phnom Penh and took a tour of the slum areas.

“I did not want a first class tour; I wanted an uncensored and real view of things – and Craig did not disappoint me.   One of my first stops was a slum in Phnom Penh where I saw young girls selling themselves in the middle of the day and people living in shanties.”

The experience resonated with Holes to determined to do something.  Muller suggested that Holes employ about 20 women in a small toy workshop and arranged for production space to do so.

“We would pay wages to these women to support them through the time of their training and before they were sent off to work in orphan care facilities throughout Cambodia,” Holes said.

Muller and Holes also thought it was possible to sell the Cambodian-made products in the United States.

After several months Holes’ workforce was up to 130 workers in a factory moved to the Russey Keo District.  Today, First & Main employs 350 people in Khan Sen Sok.

“Except for one Chinese and American manager, all others are Cambodian,” Holes said.

“The factory has had a positive impact on the Cambodian economy and provided well for its workers and for orphan organizations.  It is now a profitable venture and can make greater contributions in the future.”

Holes’ factory has manufactured and given more than 10,000 blankets to orphans around Cambodia.

First & Main and one of its customers also provide free shipping to the USA for an organization called Jumpah Orphan care that supports work with HIV positive orphans and families.

Holes agreed to answer a few questions for The Phnom Penh Post on the occasion of Independence Day.

What does First and Main Do?
First & Main (Cambodia) Ltd. is the first and only stuffed animal manufacturer in Cambodia.  Its products are mostly purchased by wholesale distributors in North America and sold by better gift stores there.

What projects do you currently have underway?
We recently completed a private equity funding deal with Emerging Markets Investments Pte. Ltd. in Phnom Penh.  Proceeds from their investment are being used to move the factory to a larger building where the company’s workforce can be expanded to 2,000.

What partners do you have?
First & Main (Cambodia) Ltd. is owned by myself, Brad Holes.  The Cambodian-Lao Development Fund (CLDF), advised by Emerging Markets Investments Pte. Ltd., is a new partner and financier.  They have an impressive and prestigious list of  investors, including a large multi-lateral bank and various European governments. They and their investment will be very helpful in building FMC into a much larger organization.

Why did you choose Cambodia?
One of the reasons that I chose to expand the factory in 2008 was in response to rising prices in China.  I believed then and continue to believe that the factory serves as a hedge to foreign importers who are single sourced there, and, in a short time, should also provide price advantages.

What other aspects of business are you involved in outside Cambodia?
I also own First & Main, Inc. in Chicago.  First & Main, Inc. is an importer and wholesale distributor of stuffed toys and related products.  Most of its products are imported from China; however, an increasing number are now supplied by First & Main (Cambodia) Ltd.  FMI was founded in 1993.  Both companies share an office in Qingdao, China where two dimensional designs are turned into three-dimensional prototypes.  Eight sample makers are employed there.

What do you want people to know about what you do?
We are working hard to create a model stuffed toy factory in Cambodia.  Some of our interests are to treat employees well and according to ILO standards.  This is important to our customers around the world and to ourselves.  Additionally, we wish to use “best practices” of manufacturing to produce a factory that is productive and profitable.  Additionally, we aspire to be the best at what we do, which means that we will have to make products that are innovative and meet high standards of quality, condition and correctness.

Are you involved in any charity work?
FMC is involved in supporting orphan care organizations in Cambodia.  This is what brought us to Cambodia; it was not a profit motive (though that is now important).  

Do you have any plans for expansion in the future here?
In fact, we are expanding as quickly as possible.  We are currently investigating building options that will facilitate a factory with 2,000+ employees.  We believe that we can grow to a 2,000 person factory in about 18 months following the time that the factory is moved.

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