Article — From the January 2010 issue
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Article — From the January 2010 issue
Taking this exhortation to heart, and hoping to get an inside glimpse at how clothes are made in Asia’s “sweatshop-free” nation, I decided to pose as the representative of an American firm looking to bring new business to Cambodia. Until now, “Dexter Designs,” which designed and sold high-end T-shirts to boutique stores, had been sourcing in China, but the company now hoped to get a better deal for itself somewhere else in the region. My intention was not to pull off some sort of sting but rather to see the inside of the apparel plants—where journalists and other interlopers are rarely granted access—and to meet with industry representatives in a business setting, where they might talk more openly about the Cambodian “model.”
My first stop was at the Garment Manufacturers Association in Cambodia (GMAC), which, as the trade group representing the country’s biggest employer and exporter, works closely with the government and wields huge political influence. Perhaps a dozen motorcycles were parked in front of its building downtown, and a corresponding number of helmets sat lined up neatly at the front counter. I passed the receptionist my simple black-and-white business card, which identified me as Dexter’s purchasing agent, and explained that I was in town for only a few days but hoped to have at least a brief meeting with the GMAC. After consulting with a colleague, the receptionist led me upstairs. We walked through the Fashion Observatory Centre—which featured a well-curated collection of books and magazines about the industry, as well as a fabric library and racks of clothing samples from local factories—and into the conference room. She turned on a wall-mounted air conditioner, which brought a bit of relief from the stifling heat, and ducked out for a minute, returning with a glass of water and some GMAC literature, which I flipped through while I waited.
GMAC’s most recent annual report describes its chief priority as seeking “to influence policy and legal environment, making sure it is conducive for the growth and development of the garment industry in Cambodia.” But it was equally concerned about “taking care of the Cambodian people,” which it pursued through its charitable activities. In one photo, a smiling GMAC official handed out Nike shoulder bags to a group of orphans. The report featured a section on two related GMAC projects—Precious Girl magazine, which offers apparel workers advice about “working life, hygiene, make-up, cooking, savings and relationship issues,” and the I Am Precious beauty pageant, which promotes the “self–esteem of garment workers.”
Before long, Kaing Monika, GMAC’s business-development manager, walked into the conference room. A thin man with neatly cropped dark hair, Kaing pumped my hand in vigorous greeting. “We work with international brands, so there is no question of quality,” he said. “We are very happy to help you.”
Prior to the bilateral trade agreement, Kaing told me, Cambodia exported almost nothing to the United States, to which it is now the ninth largest supplier of apparel. “The global economy has really hit Cambodia,” he replied when I asked about the current business climate. “We export a lot to the U.S., so when all these companies go bankrupt, in Chapter 11, we have a very hard time.”
Cambodia, I knew, was extremely generous to foreign investors. An article published by a website called Business in Asia identifies the country as “at the top of the chart among world’s [poor countries] in market-friendliness,” and touts the Cambodian government’s “positive policies in terms of the level of fiscal burden, labor market restriction, regulatory barriers and trade policy.” Could Dexter benefit from any incentives for foreign investors? I asked Kaing.
“Well, there are not [incentives] specifically to the buyer,” he said with an air of regret, but added that the government offered a number of subsidies to the factories; Dexter would benefit indirectly from these subsidies, which included a tax holiday of up to eight years, and, after that, a low corporate tax rate (9 percent) as well as the duty-free import of machinery and raw materials. Further concessions had been offered in the aftermath of the global meltdown, Kaing said: the government had suspended an “Advance Profits Tax” and was subsidizing company contributions to the national pension fund.
This was all good news, but what about the labor situation? I asked. The last thing Dexter wanted was to transfer business to Cambodia and then have production interrupted by strikes or other disruptions. He described labor unions as being numerous but mostly docile, and said there were few strikes. “Strikes can happen anywhere,” Kaing allowed, “but there’s a very good environment here.”
In order to attract factory interest, Dexter would have to place a minimum order of 5,000 T-shirts, Kaing told me. I asked if he could recommend any local factories, so on my way out he had the full list of the association’s 277 member companies printed for me. A GMAC employee used a yellow highlighter to indicate firms that could produce the boutique-quality T-shirts I was looking for. The list included the firms’ addresses and phone numbers, the number of employees, and the owners’ nationalities.Taiwan had the largest number of plants, with seventy, followed by China with fifty-six, Hong Kong with fifty, and South Korea with thirty-two.Kaing wished me luck as I left and said to be back in touch if I needed further assistance.
More from Ken Silverstein:
Perspective — October 23, 2013, 8:00 am
Postcard — October 16, 2013, 8:00 am