Jie Wei overcomes challenges with unexpected demand for pyjamas

Content image - Phnom Penh Post
HKBAC director Raymond Tam (right) and vice chairman So Man Kit during an interview with The Post.

When Jie Wei Cambodia Garment Factory Ltd commenced operations in 2011, it was in response to the government’s call for foreign investors to help drive the Kingdom’s garment sector.

The company’s executive director, Raymond Tam, told The Post: “Fifteen years ago when we chose Cambodia as our manufacturing base, costs in the production of garments, such as wages, renting factory premises and logistics, were relatively low.

“And to make it more attractive for us to invest here, the government was also offering attractive tax incentives, while the country enjoyed export concessions to many established markets around the world.”

Having been involved in garment manufacturing in Cambodia for more than a decade, Tam – who is also the director of the Hong Kong Business Association of Cambodia (HKBAC) and an executive member of the Garment Manufacturing Association in Cambodia – has truly seen the industry evolve, particularly in recent times.

“When we started manufacturing in 2011 in Cambodia, we were operating from a small factory and had a small workforce. Today, we have a main factory on Veng Sreng Road in Phnom Penh and a smaller subsidiary located nearby, and close to 1,200 employees including management staff,” he said.

Jie Wei had for many years been producing and exporting an estimated 10 million garment items to the EU.

Content image - Phnom Penh Post

However, with the Covid-19 outbreak at the beginning of this year and the partial withdrawal of the preferential treatment enjoyed by Cambodia under “Everything But Arms” (EBA) in August, the company may look at alternative markets and new approaches to doing business.

Fortunately for Jie Wei, its diversification approach into the US and Canadian markets has paid handsome dividends – thanks in part, surprisingly, to the Covid-19 pandemic.

“Who would have thought that the Covid-19 pandemic would present our company with a much needed boost in business, especially in these times of economic uncertainty?

“Believe it or not, producing pyjamas extended a lifeline to our business. During the lockdowns due to the Covid-19 outbreak, people were staying at home and the demand for pyjamas increased.

“And as a result, two of our direct buyers – Target and Walmart –requested us to produce and export significant quantities of pyjamas for the US, and to a lesser degree the Canadian market,” Tam said.

As for the challenges posed by the EU’s partial withdrawal of EBA for Cambodia, Tam is confident that with ongoing efforts and plans to diversify business into other markets, it is likely that Jie Wei’s dependency on garment orders from the EU market may decrease in time.

“The major concern for us with the EU market is that effective from August this year, import tax will be applied to 40 garment categories – 25 for garments, nine for shoes and six for bags.

“With taxes placed on our export orders, we will be less competitive.

“Reducing the cost of operations may be one alternative to consider if we plan to refocus on the EU market. But for the time being, we will also look for other solutions and opportunities that are able to mitigate any potential loss of the EU market,” he said.

Nevertheless, for Jie Wei, the accidental foray into the pyjama-making garment category is sure to be a hit in light of the uncertainty engulfing the garment manufacturing industry globally.