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 senior international executive with extensive experience in global sourcing and market development worldwide to meet evolving business needs. Tom has proven ability in implementing and managing profitable global sourcing operations worldwide. Extensive experience in international market development operations to accommodate rapid growth. Skilled in building top-performing teams, benchmarking performance, and restricting organizations to improve efficiency, productivity, and profitability. Experienced transition leader and change agent. As principal of Nova Advisors, LLC I’ve assembled an exemplary team that brings with them the knowledge and experience gained from starting up a Global Sourcing program with multiple Fortune 500 companies as well as the largest supplier network throughout the Asia-Pacific region. We have experience and expertise in more than a thousand medical and pharmaceutical products in manufacturing and sourcing at the best value. The right product, the right price point and the right branding fueled these successes that resulted in double-digit growth for top line sales and bottom line net margins for our customers. What sets us apart: • Our reach includes a large network of suppliers & manufacturers spanning 13 countries in Asia-Pacific region • We understand the manufacturing process and the business of the supplier and the buyer • Our company culture is based on quality assurance and our process is based on local quality control Our commitment is to be your partner offering the best products and services at the lowest cost. Contact me to discuss how we can make the global marketplace work for you. thomas@novaadvisors.com In addition, I am open to discussing opportunities in global sourcing, international marketing & sales, logistics and medical/pharma in Thailand, Vietnam, Malaysia, Philippines & Japan. Aside from my work I enjoy piano, astronomy, physics, and assisting my daughters with their studies. SPECIALTIES: Global Sourcing, Supply Chain Management, Business Development, Marketing, Logistics, Global Networking, Market Development, Healthcare Solutions, Pharmaceuticals, Medical Devices, Technology, Asia, Southeast Asia, US and Canada
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