By Nathan Green
GARMENT sector representatives identified a key shortcoming of the domestic industry on Wednesday at the launch of a dress-design competition for workers.
Though the second biannual "I Am Precious" competition was primarily aimed at promoting the "self-value" of garment workers by giving them an outlet for their creativity and skills, most speakers identified the lack of domestic design capabilities as a key constraint on the sector.
In Cambodia, the vast majority of garment firms are involved only in the simplest, lowest-value part of the production chain in which they cut, make and trim (CMT) products for clients further up the chain. In many cases, these clients are not even the retailers and brand-name merchandisers that control the retail business but other factories occupying an intermediate step in the process.
Kaing Monika, external affairs manager at the Garment Manufacturers Association of Cambodia (GMAC), said the competition, in which workers have been asked to submit designs for a dress or T-shirt, was a part of a much bigger push to grow the Cambodian part of the value chain beyond CMT.
"If Cambodia is able to design things our own way, we can go out and find buyers rather than wait for them to come to us," he said.
Hin Wisal, assistant country director for the UN Development Programme, said the increasingly competitive market that has evolved amid of the global economic crisis has also raised the pressure on Cambodia to expand its share of the value chain.
Cambodia is at the very bottom of a buyer-driven commodity chain
Figures from the Ministry of Commerce's Trade Preferences Systems show garment exports fell 26.41 percent year-on-year across the first quarter of the year to $534.6 million.
"For Cambodia, this means developing design capacity so that the country can export garments based on its own designs," Wisal said. "We have to see this campaign as a mechanism to promote the industry and bring the attention of international buyers and the government."
Though identifying the absence of Cambodian design and intellectual property in the garment sector is one thing, capturing this lucrative part of the value chain and finding a market for Cambodian made products will be far from easy.
Cambodia is at the very bottom of a buyer-driven commodity chain in which the retailers and brand-name merchandisers at the retail end exert almost total control over how, when and where manufacturing takes place. These retailers and fashion companies, or "manufacturers without factories" as they have come to be known, also control how much profit accrues at each stage of the chain.
Given intense price competition among the usually Third-World contractors that make finished goods for these buyers, it is relatively easy for them to ensure the bulk of these profits are captured at the high-value research, design, sales and marketing part of the process.
Breaking into this exclusive club to become original brand manufacturers is therefore difficult. Not only do domestic design skills need to be developed, but a market for the locally designed goods also needs to be created. The international retailers and brand companies that currently dominate this club will have little incentive to help Cambodian manufacturers eat into their market share.
But it can be done, as other Asian neighbours such as Hong Kong, Malaysia and Singapore have demonstrated. Manufacturers in these countries copied the business models of their clients by upgrading their production abilities from simple assembly to marketing and design and in turn outsourced parts of the production to low-wage countries, such as China, Indonesia and, more recently, Vietnam and Cambodia.
In a research paper published in International Business Research in January, value-chain expert Zhenming Sun argues that the firms that have been most successful in upgrading their garment sectors first developed design and marketing experience in their local market.
But as GMAC President Van Sou Ieng told the Post in June, there is practically no domestic market for garments in Cambodia, meaning the country may need to break the mould to bring to life its design aspirations.
Regardless of the obstacles, if Cambodia has any hope of developing its original brand manufacturers, it needs to start by building a workforce with the appropriate design and marketing skills as a first step towards expanding its value chain. With this in mind, the "I Am Precious" competition may not be the answer, but it is certainly a good start.