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Cambodia
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4*-,'"4)*0/"$$&4403*&4 4VQQMJFSDBQBCJMJUZJO$BNCPEJB &9&$65*7&46.."3: Cambodia’s silk fashion accessories industry is an emerging line that shows great potential for development as one of the country’s major exporting sectors. The industry is small and mainly composed of NGOs that provide employment opportunities to many disadvantaged people who have been affected by conflicts and disease. These efforts by social-civic enterprises have resulted in not just introducing local products to a worldwide buyer audience, but also in helping uplift the plight of the underprivileged. The industry’s strengths lie in its strong design capability and acceptance of small orders. Some suppliers do not even have minimum order requirements. Silk fashion accessories from the country include a variety of products such as fashion bags, wallets and purses, headwear and neckwear, fashion jewelry, and casual wear. Products usually feature traditional designs unique to Cambodia. Although the majority of manufacturers are NGOs, a number of enterprises are joint ventures or foreigninvested companies. Phnom Penh is the main production hub. The country’s capital is home to almost two-thirds of suppliers in this report. Other important sourcing centers are the provinces of Siem Reap, Battambang, Kandal, Pursat, Kampong Chhnang and Kampong Thom. Despite strong consumer interest, manufacturers of silk fashion accessories in Cambodia are facing certain issues that have made the business environment more challenging. The local supply of silk is short, forcing manufacturers to use imported materials from Vietnam and China. Due to low supply, costs have climbed by as much as 20 percent over the past 12 months. In response, the government is planning to revive the local sericulture industry to keep silk imports at a manageable level.
Another key hurdle is low production capability due to the continued employment of traditional processes done by hand. But since local items are characterized by their quality, which is achieved through painstaking detail, most suppliers are unwilling to shift to modern, machine-based production. The following are some of the key trends we see in Cambodia’s silk fashion accessories industry: • In an effort to generate more orders and stimulate buyer interest, the majority of suppliers are expected to keep prices at current levels. • Exports in the line are expected to see substantial growth, with close to half of manufacturers seeing exports to surge by at least 10 percent. An almost equal number of suppliers expect overseas shipment to increase by up to 10 percent. • Suppliers consider the EU as their top target market in coming months. North America and the Asia-Pacific region are expected to be strong secondary markets. • More products will feature environment-friendly components. These include natural and recyclable materials such as reed, sedge, jute and coconut shell. This report covers all major types of silk fashion accessories produced in Cambodia, including scarves, hand, shoulder, evening and shopping bags, men’s and women’s wallets, purses, and pouches. While all profiled suppliers focus on silk fashion accessories, a few also offer other types of products such as necklaces, rings, earrings, and bracelets. The Industry Overview section discusses key issues affecting export manufacturers and elaborates on the composition of the industry. The Products & Prices section details the features and price ranges of silk fashion accessories. It also lists the latest trends in style and materials.
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0#+&$5*7&.&5)0%0-0(: This Cambodia Sourcing Report is part of a series designed to provide buyers with information on new products from export manufacturers in supply markets that specialize in handmade merchandise. The Developing Country Sourcing Report series is part of Global Sources’ corporate social responsibility initiatives. It is offered in conjunction with The Kearny Alliance, whose mission is Aid through Trade. The objective is to help create jobs in developing Asia through export promotion. To produce this report, larger, midsized and emerging manufacturers—all with substantial export experience—were surveyed. The selection of suppliers is designed to reflect the composition of the industry in India in terms of geographic location, materials used and range of products offered. For in-depth profiles, our researchers visited the facilities of each company and interviewed senior executives who discussed their recent performance and provided forecasts for the next 12 months. All other companies in this report were either visited or contacted by phone. In each case, companies were required to answer specific questions designed to verify their manufacturing and export credentials, including a breakdown of exports by product type and market. Suppliers also participated in a survey designed to provide insight into the industry. XXX$IJOB4PVSDJOH3FQPSUTDPN
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*/%6453:07&37*&8 The production of silk fashion accessories in Cambodia is an emerging industry characterized and guided by traditional designs unique to the country. Products reflect innovation and creativity, which are the hallmarks of handmade items produced by skilled artisans and home-based craftsmen. Besides strong design capability, the line also boasts other key advantages. These include broad experience in supplying custom-made items and accepting low minimum order requirements. Although the sector is small, it is showing great potential for development as one of Cambodia’s major export industries. One important driver of growth is the existence of NGOs that provide employment opportunities for many disadvantaged citizens. Aggregate export data in 2008 indicates the country registered $3.28 billion in shipments, which is an increase of 3.6 percent over the previous year. There are no official export figures for the silk fashion accessories industry. The primary reason for this is that most products are shipped in small quantities via informal channels, mainly through expatriates and tourists. Another factor is that most items are made by NGOs, who are not required to acquire Country of Origin documentation. 4PDJBMDJWJDFOUFSQSJTFT The long history of conflicts in Cambodia has affected many people not just personally but also economically. Not only were numerous citizens left without a stable source of income, many also suffered physical, mental and emotional injury. Recognizing the need to uplift people from such circumstances, social and civic organizations have established developmental projects and outreach programs that offer educational and livelihood assistance, skills training, and microlending services. NGOs mainly target underprivileged
groups, who have limited or no access to reliable sources of employment. These include landmine and polio victims, people with disabilities, victims of human trafficking, widows, orphans, out-of-school youth, and the poor. Some social and civic organizations have commercial departments in charge of providing services. Individuals are accepted and trained for six to 12 months at no cost. To ensure quality and consistency, they are only allowed to make products upon completion of the training course. Sales from these items not only serve as income for workers but also support and promote NGOs’ programs. Networks of social-civic enterprises have been set up to further strengthen and galvanize each individual NGO’s efforts. One such example is Artisans’ Association of Cambodia (AAC), an organization of 48 NGOs that manufacture fashion accessories and handicrafts. Aside from offering training and employment, AAC assists its members by coursing orders and accepting payments from buyers, and sourcing and distributing qualified products from affiliate groups. Aside from the disadvantaged, NGOs also subcontract work to home-based artisans who reside in communities that specialize in handicrafts. Organizations also provide supplemental income opportunities to families that have farm-based livelihood. They are able to accept simple production processes such as weaving and sewing when intensive work in the fields is not needed. Two or more family members usually take part in this undertaking. Payment is based on the number of semifinished items made. Organizations that subcontract to farm-based families usually work with coordinators who live in the same village as the workers. Raw materials may be provided by the coordinators, depending on agreements with the NGOs.
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$IBMMFOHFT Due to its very nature, the industry is facing a number of challenges, some of which are crucial factors that may impede its development. The short supply of materials, particularly silk, is one such challenge. Although Cambodia has a long history of silk production, availability is less than demand. According to the 2007 Export Diversification and Value Addition for Human Development report released by the Economic Institute of Cambodia, domestic silk supply is estimated at 5 tons per year, while demand is 400 tons per year. Because of this discrepancy, 98 percent of silk requirements are imported from Vietnam and China. This equates to annual expenditure of $10 million for the material. Due to short supply, the price of raw silk has risen by as much as 20 percent over the past 12 months. This has, in turn, resulted in higher prices of finished products. To address this issue, the government is spearheading the industry’s growth by developing the local sericulture sector. It also provides assistance for product development and business management. Another key concern facing the line is low production capacity. Compared with Vietnam and China suppliers that mostly use machines and other modern equipment, Cambodia makers generally continue to employ traditional handprocesses. These include weaving, reeling, dyeing, knitting, sewing, embroidering and beading. As such, more time and manpower are required, limiting efficiency. XXX$IJOB4PVSDJOH3FQPSUTDPN
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"SUJTBOTµ"TTPDJBUJPOPG$BNCPEJB The Artisans’ Association of Cambodia is an umbrella organization of NGOs that provide povertyalleviation and employment opportunities. Aiming to rehabilitate the lives of disadvantaged artisans in Cambodia, AAC focuses on the handicrafts sector by providing training, employment and sales support to local suppliers. The association also supports local and international trade in the country by serving as a buyer agent that sources qualified products among its members. It acts as a distributor of its members’ products by receiving direct orders from overseas buyers. Customers can course orders and payment through AAC. Aggregate sales in 2008 reached $2.7 million. Member organizations work closely with people with disabilities, humantrafficking victims, minority tribes, vulnerable women and the poor. Most suppliers featured in this report are members of AAC. Besides providing training, the
association also offers networking opportunities as it connects all members with one another to enable information exchange. AAC also develops enterprises by imparting expertise on management structure, staffing policies and financial supervision. The association aids marketing and promotional efforts by helping members in finding the right clients. It also supports design and product development efforts to help members capitalize on emerging local and international market trends. The association was established in 2001 and initially consisted of five members. It has since grown to include 48 affiliates that make various product lines, including fashion accessories, garments, textiles, toys, home decor and gift items. AAC is supported by the World Rehabilitation Fund, International Labor Organization and the United Nations Development Program. It is a member of the World Fair Trade Organization.
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