New data from the US Department of Commerce this week revealed that in January, US imports of cotton denim trousers from China jumped 737 percent over January 2004, while imports of the same product from Cambodia fell 11 percent.
On Jan 1, quota fees and limits on garments exported from China to the US were lifted and the average cost of a dozen pairs of jeans from China dropped by $26 to $104 overnight.
Similar to the impact on Cambodia, imports of jeans from Hong Kong fell 13 percent in January and imports from the Philippines fell 20 percent. In contrast, jean imports from Central American countries increased—Guatemala was up 146 percent—reflecting duty-free access to the US market, the report noted.
“This is not surprising,” John Lu, general manager of the Garment Manufacturers Association of Cambodia, said Tuesday. “There is no way that we can compete with China in terms of price. If buyers are not interested in taking our reputation for good labor standards into consideration then we cannot compete.”
GMAC has been lobbying for duty-free access to the US, which imported 71 percent of Cambodian garment factory output last year. Despite the decrease in exports to the US, Lu said some factories in Cambodia are expanding.
“Big factories are expanding operations here because US buyers are consolidating their purchases to fewer factories,” he said, adding that the public can expect smaller garment factories to close.
He named Taiwan Enterprises and June Garments as two large enterprises that are expanding.
“Many will expand by opening other factory locations under a different name in order to get a new tax holiday from the [Council for the Development of Cambodia],” he said, adding that June has opened the Violet factory and a third factory is in the works.
Last week Prime Minister Hun Sen announced a two year extension of corporate tax holidays for garment manufacturers.
