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Cambodia: Adidas, H&M, & others review their business & investment strategies and implications of EC's partial EBA withdrawal decision

Author: Shaun Turton, Nikkei Asian Review, Published on: 15 February 2020

"Fashion brands weigh Cambodia strategy after EU curbs trade", 14 February 2020

Stripped of some of its European trade privileges, Cambodia is bracing for an economic hit as major brands such as H&M review their production in the country. The European Commission… announced it would suspend duty-free access for 40 products from Cambodia, equal to about 20% of the country's exports to the bloc, or some 1.1 billion euros ($1.19 billion)…

Barring this, economists expect higher export costs will see some textile production shifted away from the country's vital apparel industry... H&M has indicated it will reconsider sourcing from Cambodia after the country lost some of its EU trade privileges…

Already, Swedish giant H&M -- which sources from factories in Cambodia employing about 77,000 workers -- has signaled changes to its supply chain. In a statement, the company said the partial EBA withdrawal would constrain the competitiveness of Cambodia's textile sector. "It will negatively affect future investments, as well as predictability and trust, two crucially important elements of a well-functioning industry," the company wrote…

Stefan Pursche, a spokesperson for Germany's Adidas, which sources 22% of its textiles from Cambodia … said the company was reviewing the implications of the EU's decision…

Discussing the EU's decision, the association's senior vice president of policy Nate Herman said, on top of increased production costs, it would also "hit the country's reputation." "We are strongly concerned with the labor rights situation in the country, and the potential adverse impact the loss of these preferences could have on Cambodia's workers and economy," Herman said…

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Related companies: adidas European Chamber of Commerce in Cambodia H&M