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Smaller US Outsourcing Partners Buck Recessionary Trend

In a year defined by painful contraction for those countries producing garments for export to the United States, several smaller garment-producing nations have defied the recessionary trend.

Both Vietnam and Cambodia, bolstered by access to inexpensive labor forces, have posted year-on-year growth in their garment exports to the US. According to data released by the US Trade Department, Cambodia’s US-bound garment exports grew 0.25% in the first eight months of 2012, reaching a level of USD1.7 billion. Vietnam saw an even greater expansion, with its US-bound apparel exports reaching a level of USD5.1 billion in the first eight months of the year, a 7.17% improvement over the same period in 2011.

Compare this with the performance of such major garment exporters as China, whose apparel exports to the US shrunk 0.98% in the first eight months of 2012, or India whose US-bound apparel exports fell a whopping 10.63% in the year-to-date ending September 1. Indonesia, which accounts for 6.5% of the US’s apparel import market, suffered a 2.22% slide during the same time period.

Cambodia and Vietnam’s resilience owes to factors familiar to any dedicated observer of Southeast Asia’s garment manufacturing industry: inexpensive labor and the ability to affect quick turnarounds. Despite ongoing labor disputes, both countries have managed to employ their sizable excess labor forces to build robust garment export industries able to compete nimbly with China and India, whose labor and input costs continue to describe an upward trend.

Cambodia’s Least-Developed Country (LDC) status under the Generalized System of Preferences has also helped its garment manufacturing industry weather a rough 2012. This designation allows Cambodian exports duty and quota-free access to such markets as Canada, China and the European Union.

Both Cambodia and Vietnam have also benefited from the Source ASEAN Full Service Alliance (SAFSA), a Thailand-based organization that helps Southeast Asian garment manufacturers without access to complete supply chains obtain the raw materials they need to efficiently fill orders.