European firms moved production to Cambodia due to low wages

salary increase

A business publication in Cambodia has reported unexpected growth in the “machinery and transport equipment” sector and speculated it was as “probably bicycles”.

In 2011, 366,000 bikes were exported from Cambodia to the EU but in the first half of 2012 the country managed to almost triple its bike export to EU. Cambodia’s exports totaled close to 520,000 units in the first six months of 2012 compared to 140,000 units in the same period of 2011, according to Bikeeu.com.

The EBMA (European Bicycle Manufacturers’ Association) investigated and discovered that bicycle companies had moved their production to Cambodia from Thailand and China citing increased expenses.

Increasing expenses in China and Thailand have been attributed in part to rising wages. The minimum wage in Thailand was recently raised to 300 baht per day (US$10) and salaries in China in this business have risen to US$400 per month. By contrast, minimum wages in Cambodia are set at just US$61 per month.

Moreover, the move is estimated to save 14% on taxes. The EBA (Everything But Arms) agreement allowed country ranked among the 48 LDCs (Least Developed Countries) to export products duty-free to the EU, except arms and ammunition.

Introduced at the beginning of 2011, it ushered in a surge of 53% in export growth to European countries that year, making the EU Cambodia’s second-largest export partner after the US.

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About thomasdinnocenzi

Thomas D’Innocenzi is a highly accomplished, results-focused international consultant with extensive experience in global sourcing and business development worldwide to meet evolving business needs. Tom has proven ability in implementing and managing profitable global marketing and sourcing operations. He has extensive experience in international business development to accommodate rapid growth. Skilled in building top-performing teams, bench-marking performance, and developing organizations to improve efficiency, productivity, and profitability. Experienced transition leader and change agent. Tom founded Nova Advisors with the mission of providing expert Global Business Development consulting services for companies seeking to expand their market share as an independent consultant. Tom has a network of experts and advisors throughout the Asia-Pacific region and North America. His expertise includes business development, global sourcing, manufacturing, commodities, logistics, QA/QC, FDA, regulatory compliance, sustainability, and supply chain optimization. Tom is experienced in the medical device, apparel, consumer goods and technology services verticals helping companies advance their global sourcing capabilities and develop new markets through a local and sustained approach. Located in SE Asia and the United States, Tom expands market reach to drive sales. His global sourcing strategy includes directly negotiating with commodity suppliers, supply chain networks and distributors for optimal terms based on his expertise and first-hand knowledge of the players. Contact Tom to use his consulting service to increase your global market and make global sourcing profitable for you in the Asia Pacific Region and the United States. http://www.NovaAdvisors.com thomas@NovaAdvisors.com USA Direct: +1.904.479.3600 SINGAPORE: +65.6818.6396 THAILAND: +662.207.9269
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