Cambodia may become a more important supplier to US fashion companies

With more and more US fashion firms aiming to diversify and increase their garment sourcing base following the supply chain disruption caused by the Covid-19 epidemic, Cambodia is expected to benefit.

According to the Fashion Industry Benchmarking Study done by the US Fashion Industry Association, around 40% of US fashion businesses expected to “source from more nations and collaborate with more suppliers” during the next two years.

Apart from the current supply problems, American corporations note that “Asian suppliers, such as Vietnam, Bangladesh, and Cambodia, as well as members of the African Growth and Opportunity Act, offered the most competitive pricing. In comparison, sourcing from the United States and Europe is the most costly due to substantially higher labor expenses.”

At the moment, Asia accounts for more than 70% of US garment imports, with Cambodia ranking fifth on the rankings, which is led by China.

The US garment industry is an important destination for Cambodian exporters. Cambodian garment exports to the United States have been steadily increasing and are expected to hit a new peak in 2022. Cambodian garment exports to the US reached $3.513 billion in the nine months (January-September) of last year, virtually matching the 2021 level of $3.522 billion.

The Cambodian garment sector may receive larger and more diverse orders as a result of the changing orientation of US garment importers. Jerseys, shirts and trousers, and shorts accounted for more than half of the export value to the US in the nine months, according to Fibre2Fashion’s market analysis tool TexPro. According to TexPro statistics, shipments of shirts and trousers were worth $1.091 billion (31%), while jerseys were valued $759.570 million (21.62%).

According to a recent study from the General Department of Customs and Excise, the garment export is Cambodia’s greatest foreign exchange earner, accounting for about 60% of the country’s total export value.

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According to the research, eight of the top ten most-used sourcing destinations for US fashion businesses are in Asia, topped by China (91 percent), Vietnam (88 percent), Bangladesh (84 percent), India (72 percent), and Cambodia (69 percent).

More over half (53%) of the US garment importing businesses polled reported sourcing clothes from more than 10 countries in 2022, compared to only 37% the previous year.

Reducing “China exposure” is a critical driver of US fashion businesses’ sourcing diversification strategy, with around 33% of companies stating that they sourced fewer than 10% of their garment items from China.

China in 2022, according to the analysis. In addition, in 2022, about half of enterprises claimed they would source more clothing and associated items from Vietnam than from China.

According to the research, Beijing’s lockdown measures also had a detrimental impact on US clothing purchasing from other Asian nations that rely on China’s textile raw material supply, such as Vietnam.

The fashion business in the United States continues to rely on worldwide sources. In 2022, it sourced clothing from as many as 48 nations, up from 43 in 2021.

“Some Asian suppliers, particularly China, lost the competitive advantage of ‘sourcing flexibility and agility’ in 2022. Respondents, for example, used to praise China’s unparalleled production capacity, which allowed US fashion companies to enjoy greater flexibility and agility (including quickly adjusting the delivery, volume, and product of the sourcing order based on customer requests) when sourcing from the country,” according to the Fashion Industry Association report.

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