In recent years, with the disappearance of China's demographic dividend and the rising production cost, many China enterprises have moved their factories to Southeast Asia with lower labor costs, such as Cambodia. However, the business environment in Southeast Asia is not as beautiful as expected. Now many enterprises have moved their factories to Southeast Asia and returned to China. This shows that the current business environment in Southeast Asia is not as optimistic as expected, especially for Cambodia. In the past few years, many factories have closed down, among which the closure of garment factories is a typical example.
The main reason for the closure of a large number of garment factories in Cambodia is the rising labor cost, which makes Cambodia's labor force no longer have an advantage. A few years ago, many international enterprises set up factories in Cambodia, mainly because of Cambodia's low labor costs. Now, however, the workers have petitioned the Ministry of Labor and collectively demanded higher wages. Therefore, compared with the labor wages in Cambodia, the labor costs in some countries in Southeast Asia and South Asia are relatively low. At present, Cambodia's labor cost is almost twice that of other South and Southeast Asian countries. In this case, it is understandable that some enterprises fled Cambodia and went to countries with lower costs.
The imperfect supply chain and weak logistics increase the production cost of enterprises. At present, Cambodia's industrial manufacturing industry is relatively weak, and most of the fabrics and other raw materials needed for the garment industry cannot be supplied. Therefore, many garment factories set up in Cambodia import raw materials from China, and from China to Cambodia, the cost of this raw material is even much higher than that of China, including freight and customs duties.