Garment makers urge retailers to keep buying

Photo by: Sovan Philong

Workers manufacture garments at Modern Dress Sewing Factory.

CAAI news Media

Wednesday, 23 September 2009 15:01 Chun Sophal and Steve Finch

Outlets such as H&M and Gap say they would like to purchase Cambodian garments but cannot guarantee purchase quotas.

ABUYERS forum for Cambodian garments ended in Phnom Penh on Tuesday with manufacturers and unions urging the likes of H&M and Gap to maintain orders amid a decline that has seen overseas sales of the Kingdom’s leading export industry fall about 25 percent this year.

Ken Loo, director general

of the Garment Manufacturers Association of Cambodia (GMAC), said he told buyers Monday evening that they should maintain orders in support of the International Labour Organisation (ILO)-led initiative Better Factories Cambodia that attempts to guarantee labour standards.

He conceded, however, that “some buyers do not want to order garment products from Cambodia because they think that Cambodian [garments] … are too expensive”. Official figures show that exports to Cambodia’s leading buyer the United States fell 31 percent in the first seven months year-on-year, while those to Europe were down 10 percent over the same period. Lou acknowledged that Vietnam and Bangladesh in particular had faired better during the economic downturn, but added they were less reliant on the US market.

Gap, estimated by Lou to be the No 1 purchaser of Cambodian garments, acknowledged it had decreased its orders as demand has dropped in the US, said sourcing manager Agnes Bulahan-Lagrosa.

“[However,] we are determined to place more orders in Cambodia,” she said.

Still, no buyers committed to increasing purchases of Cambodian-made garments, Lou said, citing the nature of the seasonal fashion industry and increasing uncertainty following the global economic crisis.

“It’s become even more difficult [to purchase against future demand,” he told the Post.

Kanwarpreet Singh, a Puls Trading Far East Ltd buyer on behalf of H&M, estimated to be the second-largest purchaser of Cambodian garments, said his company had made no commitments to future orders from the Kingdom.

“We have already bought at the same level [this year] as last year,” he said.

H&M is one of the few buyers that has kept orders steady in 2009, Lou said.

Ath Thun, president of the Coalition of Cambodian Apparel Workers Democratic Union (CCAWDU), urged buyers to increase purchases from Cambodia even if they are sometimes more expensive than the likes of Vietnam, citing the attractions of the Better Factories Cambodia (BFC) standard.

“If orders do not increase, factories cannot produce more products, and as a result, workers will lose their jobs,” he said.

Cambodia first started the BFC initiative on the basis of increased quotas from the US Department of Labour in 2001, becoming the first country to do so. The project was extended from 2005 to 2008 despite the Kingdom's loss of preferential treatment from the world’s largest economy, and was further extended from 2008 through next year.

Better Factories revisited

In May, Commerce Minister Cham Prasidh publicly raised the possibility of reassessing the scheme “if as a result of supporting the ILO labour practices [there are] fewer purchase orders and less business for Cambodian exporters”.

Lou said Tuesday that the ILO was looking at how the scheme could be refined for the benefit of Cambodia in the future.

“It is time to look at the driving forces behind BFC.” he said.

The second half is traditionally better for garment orders, Lou added, due to the Christmas season in the West.

“I think its going to get better,” he said. “[But] I think the buyers are very concerned about sales at Christmas.”