More Than $250M Lost During Cambodia Strikes

The Cambodian apparel industry suffered losses of more than $250 million in sales and investment.

with contributions from Cheng Sokhorng

PHNOM PENH, Cambodia — The Cambodian apparel industry suffered estimated losses of more than $250 million in sales and investment during the nearly two-week nationwide strikes staged by its workforce to protest for higher wages.

This story first appeared in the January 7, 2014 issue of WWD.  Subscribe Today.

The mostly peaceful demonstrations for an increased monthly salary of $160 erupted into violence on Friday when security forces opened fire on rioting workers at an industrial park here. At least four workers were killed and more than 30 injured.

Following the crackdown, the government said demonstrations would no longer be tolerated, while manufacturers resumed factory production as the capital settled into an uneasy calm.

According to Van Sou Ieng, chairman of the Garment Manufacturers Association in Cambodia — which represents the country’s more than 400 exporting factories — the industry lost about $200 million in clothing sales, while about $70 million of potential investment was deferred from the country when the strikes began on Dec. 24, after the government said that the minimum wage would increase by $15 to $95 a month.

“In the last 15 days, five to seven factories have canceled their trips to Cambodia to invest here because of [the strikes],” Sou Ieng said, speaking during a conference Monday on the garment sector’s wage issues.

He added that the immediate reaction from buyers is either legal action against the manufacturers in order to receive insurance claims to refund their losses, or to cancel any coming orders.

“The second consequence is that buyers will not place as many orders in the next year. We expect them to reduce their orders by 20 to 30 percent,” Sou Ieng said. “Experience in Bangladesh has given us that data, and [the buyers] will tell us ourselves that they are not making any orders for April and May.”

Sou Ieng declined to comment on whether the manufacturers would be open to continuing wage negotiations, saying only that the talks cannot happen “under threat.”

Cambodia’s garment sector generated more than $5 billion in exports during 2013 and is a manufacturing base for some of the biggest global brands, including H&M and Gap Inc. Both retail giants condemned Friday’s violence perpetrated by the security forces, as did local and international rights groups.

But Sou Ieng on Monday continued to defend the government’s use of force to suppress the protesters.

“If there was no such violence [by the protesters], there would be no such police action,” Sou Ieng said. “The intention of the police to secure law and order is appropriate.”

According to Heng Sour, spokesman for the Ministry of Labor, the manufacturers filed a legal complaint against union leaders who had mobilized their members during the nationwide strikes, and all wage negotiations have been postponed until that is resolved.

“The manufacturers have filed a complaint against all the union leaders, so now we will let the court take action first,” Sour said. “After everything has been finished with this process, maybe we will have a meeting again [to discuss the wage].”

At least one union leader, Rong Chhun of the Cambodian Confederation of Unions, has been summoned to court for questioning on Jan. 14.

Unions have largely instructed workers to return to the factories, but Ken Chheng Lang, deputy director of the National Independent Federation Textile Union in Cambodia — which was one of the unions participating in the strike — said they are still trying to fight for a higher amount.