ChineseInvestmentinCambodia: GarmentsandBeyond

Sophal

Ear,PhD

AssistantProfessorUSNavalPostgraduateSchool

17June2011CityUniversityofHongKong

Disclaimer:MaterialcontainedhereinismadeavailablefortheDisclaimer:MaterialcontainedhereinismadeavailableforthepurposeofpeerreviewanddiscussionandpurposeofpeerreviewanddiscussionanddoesnotnecessarilyreflecttheviewsoftheDepartmentofthedoesnotnecessarilyreflecttheviewsoftheDepartmentoftheNavyortheDepartmentofDefense.NavyortheDepartmentofDefense.

1.

BirthoftheGarment Sector

2.

Maturationofthe GarmentSector

3.

CaptureAvoidance ThankstoGreater

China?4.

HandinHand

Governance5.

DimensionsofChinese

Influence6.

ChinasGeopolitical

InterestsOWNED BY GREATER CHINA

WhereSweatshopsAreaDream

NickKristoff

NewYorkTimes,1/14/09

Fromnothingin1994,garments became14%oftheeconomy,

provides~320,000jobs(asmany indirectjobs),&helps1million

Howdidthishappen?

In1999,theUSandCambodia agreedtolinklabortotrade

Betterlabor=moreexports

3rd

partylaborstandardsmonitoringof garmentsmoreexportquotas.

THISWORKED.

TheUnitedNations InternationalLabour Organizationwas

that3rdparty monitor.

480pointchecklist; oneofwhichis97% compliancewith

Cambodias minimum

wage.

Butchallengesremain

MillionUS$AnnualGarmentExport 19952009

27.7183.3

227.14359.36

600.1906.37

1,156.841,343.67

1,609.691,982.79

2,190.312,651.51

2,866.32 2,970.00

2,160.35

GreaterChinasInvolvement

Inmid1996,mostofthegarmentinvestors, comingfromsuchadiversebackgroundasChina,

HongKong,Macau,Malaysia&Singapore,decided toformanadhocunittorepresentthemasagroup insteadofbeingsingledoutindividuallywhen

dealingwithofficialsfromtheMoC,whichhas beenchargedbytheRGC tooverseetheexport

ofgarmentsandtheissuanceofCertificatesof Origin.

GarmentManufacturersAssociationofCambodia

CaptureAvoidance ThankstoGreater China?

GMACGarmentFactoriesin CambodiabyNationalityofOwner

1 1 1 1 1 1 1 39 10

13 14

3139

44

66

GMACExecutiveCommitteeby Nationality

Cambodia10%

Malaysia10%

China10%

Taiwan28%

HongKong14%

Singapore7%

Korea14%

USA4%

UK3%

HandinHandGovernance

HandinHandGovernance

Wenegotiatewitheachgovernment departmentyoutake$10forinspection

insteadof$35weagree.Wetellallmembers thecostnegotiatedat$10.Ifnotaccepting,I

refertoGMAC,andGMACrefertoyourboss. Someinprivatesectordontwanttheirbossto

knowandcheattheboss.GarmentFactoryOwner

DimensionsofChineseInfluence

Telecommunications,fiberoptics, pharmaceuticals,goldmining,oil,agro

industry Younameit. Butwhy?

ChinasGeopolitical Interests

DamningtheMekong

PerennialDroughts:ClimateChangeorPerennialDroughts:ClimateChangeor ChineseDams?CambodianPMsaysnotChineseDams?CambodianPMsaysnot China!China!

1999:SpeakingofChineseLargess1999:SpeakingofChineseLargess CambodianSenateComplexCambodianSenateComplex

(whichhasitsowngolfrange)(whichhasitsowngolfrange)

2009:Tomb2009:TomblikeCouncilofMinistersBuildinglikeCouncilofMinistersBuilding

NotJustArchitecturalMonstrosities 20052007Chinadelivered

15patrolboatstoCambodia tobolsteritsageingfleet.

AFP:The[latest]handover camelessthanamonth

beforetheexpectedvisitof theAmericanwarshipUSS

Essex,thelatestinaseries ofhighprofileUSNavy

stopsinCambodia.

MoneytooMoneytoo

ChinasurpassedtheUSChinasurpassedtheUS asadonortoCambodiaasadonortoCambodia in2006,whentheUSin2006,whentheUS

disbursed$51milliondisbursed$51million $600millionin$600millioninaidaid

oftencitedoftencited $1.2billionin$1.2billionin

investmentinvestment

signedinsignedin December2009duringDecember2009during visitofChina'sVicevisitofChina'sVice

PresidentXiPresidentXiJinpingJinping

Uyghurs

vs.Trucksvs.$1.2bn.

"IftheUSgivesus theequipment,we arehappy.Andif

theywon'tgiveitto us,itisalsogood.

Khieu

Kanharith, Cambodiangovt spokesman

December2009:Daybefore$1.2bnfromChina,20 ethnicUyghurs

sentbacktoChina

April2010consequences:200UStrucksandtrailers forCambodiacancelled

EngagedButNotMarriedEngagedButNotMarried

Itistherights[Itistherights[sicsic]ofU.S.]ofU.S.

toeitherdonateortoeitherdonateor suspendsuchassistance.Cambodiaisimplementingitssuspendsuchassistance.Cambodiaisimplementingits

ownpolicyandlawswithintheframeworks[ownpolicyandlawswithintheframeworks[sicsic]offull]offull sovereigntysovereignty

ThatmeansU.S.canimplementtheirThatmeansU.S.canimplementtheir

policyandwecanimplementours.policyandwecanimplementours.KoyKoy

Kong,spokesmanforMinistryofForeignAffairsKong,spokesmanforMinistryofForeignAffairs

andInternationalCooperationtoldXinhuaandInternationalCooperationtoldXinhua May2010:257militarytrucksand50,000militaryMay2010:257militarytrucksand50,000military

uniformsdonatedbyChinauniformsdonatedbyChina TheyareallbrandTheyareallbrandnewtrucks...fromthefactory.newtrucks...fromthefactory.

CambodianPMCambodianPM

Chinese Investment in Cambodia: Garments and BeyondSlide Number 2Where Sweatshops Are a DreamSlide Number 4Slide Number 5Slide Number 6Slide Number 7Slide Number 8Slide Number 9But challenges remainMillion US$ Annual Garment Export 1995-2009Greater Chinas InvolvementCapture Avoidance Thanks to Greater China?GMAC Garment Factories in Cambodia by Nationality of OwnerGMAC Executive Committee by NationalityHand-in-Hand GovernanceSlide Number 17Hand-in-Hand GovernanceDimensions of Chinese InfluenceChinas Geopolitical InterestsSlide Number 21Damning the MekongPerennial Droughts: Climate Change or Chinese Dams? Cambodian PM says not China!1999: Speaking of Chinese Largess Cambodian Senate Complex(which has its own golf range)2009: Tomb-like Council of Ministers BuildingNot Just Architectural MonstrositiesMoney tooSlide Number 28Uyghurs vs. Trucks vs. $1.2bn.Engaged But Not MarriedSlide Number 31