Logo of Phnom Penh Post newspaper Phnom Penh Post - Garment makers look east for sales amid US downturn

Garment makers look east for sales amid US downturn

Garment makers look east for sales amid US downturn


Textile sector leaders seek markets in Japan, other nations to bolster flagging exports as global financial crisis begins to hit industry profits, GMAC says

Photo by: Chun Sophal

GMAC President Van Sou Ieng arrives from Japan at Phnom Penh International Airport on Saturday night.

THE Garment Manufacturers Association of Cambodia (GMAC) announced Sunday that new purchase orders have been inked with Japan, amid growing concerns that one of the Kingdom's key industries is too reliant on the US market.

The deal represents an important step forward in trade relations between Cambodia and Japan, GMAC President Van Sou Ieng told reporters after his return from Japan.

"We will export 10,000 jackets and 100,000 pairs of shoes in early 2009 to mark the beginning of trade exchanges with Japan," he said.

"We hope that Japan will make more purchase orders for Cambodian garments because Japan is the third-largest garment market in the world after the US and European Union," he added.

Van Sou Ieng, along with officials from the Council for the Development of Cambodia (CDC), union representatives and a delegation from the Commerce Ministry, made the trip to Japan at the government's urging in a move aimed at shoring up the garment sector, which last year was worth some US$2.9 billion.

I think Japan is a good market ... but

we have to seize

opportunities in russia.

US exposure

The garment  sector has been hit hard by the economic slowdown in the US, which buys about 70 percent of Cambodia's total textile output.

Japan, on the other hand,  buys about 90 percent of its garments from China, Van Sou Ieng said.

Chea Vuthy, deputy secretary general at the CDC, emphasised on Sunday the importance of developing closer trade relations with Japan and other nations in the wake of declining US and European sales.

One of those new markets, he said, is Russia.

"I think Japan is a good market for Cambodia's garments, but we have to seize opportunities in Russia as well to preserve the sustainability of this sector," Chea Vuthy told the Post.

"Our garment exports to the US are showing signs of decline, so our best option is to find new markets," he added.

Tan Eng Teo, managing director of Thaipore Garment Manufacturers, said, however, that factories would have to increase quality control standards to appeal to Japanese buyers.

Better quality

"The Japanese market demands high-quality products, so we have to face this challenge and try to meet their standards," he said.

"The Japanese market has no confidence in Cambodia, so we have to overcome this barrier and change their minds if we want to have an opportunity to expand there," Tan Eng Teo added.

Cambodia's garment sector employs more than 380,000 workers in 319 factories, and exports are expected to reach US$3 billion this year, according to government estimates.

But independent analysts suggest export revenue will be lower than expected as the global financial crisis takes a larger bite out of revenues and spending, particularly in the US.