Analysis of the competitiveness of the garment industry in Cambodia

Abstract

The Cambodian textile and clothing industry is a potential engine to boost economic growth and employment creation for the poor from rural areas. It is also the most important source of industries in Cambodia, being more competitive and having comparative advantage to other countries. This industry has the potential to continuously benefit from trading growth in globalization change. Cambodia’s garment industry faced increasingly fierce competition in the globalization era, specifically as Vietnam became a WTO member in 2007, and as safeguard measures on China were lifted by the US and the EU at the end of 2008. This paper provides a statistical analysis based on firm–level data from 150 sampled companies collected in 2007. The purpose of this thesis is to examine extensively the key factors of the Porter’s Diamond Model and the GEM model’s influence on the competitiveness of the garment industry in Cambodia. The collected data from the surveys were analyzed through the SPSS software program.

The results are reported in frequency tables, bar charts, pie charts, means, standard deviations and the Logit Model relative to explain the research questions. Combining all of the results in this thesis will reveal possibilities to strengthen the capacity of the garment sector to deal effectively with rapid change and growing competition in order to capture the trade opportunities that are being created through improved market access. The contributing factors that enhance international competitiveness of the garment sector are found to be electricity supply cost, labor forces availability, availability of cheap and abundant workers, local financial resource availability, stimulating collaborative innovation processes in the fields of dissemination and technological transfers for research and development (R&D), negotiating and lobbying improved market access for preferences under Most Favored Nation (MFN) or the Generalized System of Preferences (GSP) given by advanced countries, and collaboration between the government and private sector. In addition, the related government institutions have authorized the issuance of licenses or certificates of origin to the companies. They should take actions to eliminate corruption and other trade barriers. This paper also highlights these issues to be solved and suggests some strategies for enhancing competitiveness in the face of global environment challenges.