Kingdom factory goes for the gold

The Phnom Penh Post

Wednesday, 19 October 2011 12:01

Don Weinland

Photo by: Will Baxter

A garment worker lays out cloth to be cut at the ShenZhou (Cambodia) Co, Ltd factory on the outskirts of Phnom Penh yesterday. The factory, which employees more than 4,300 workers, is now making Adidas apparel for the 2012 Olympics, which are to be held in London. 

Cambodian garment makers are filling orders for the 2012 London Olympics in what insiders say is the first time the country has supplied the Games.

ShenZhou International Group Holdings Ltd, one of China’s largest apparel exporters, makes shirts and other sportswear for Adidas that will supply the 2012 games.

Although Adidas would not disclose details concerning the Olympic contract, ShenZhou’s Cambodian factory produces more than 300,000 garments per month for Adidas, or about 25 per cent of the factory’s 1.3 million garment-per-month capacity.

Hidden at the back of the sprawling Vattanac Industrial Park in Phnom Penh’s Chom Chao district, and employing 4,324 Cambodians, ShenZhou is by many accounts a model producer among the Kingdom’s burgeoning garment sector. Still, worker contracts and production costs show signs of a market in the throes of development.

As an official sponsor of the 2012 Olympics in London, Adidas required suppliers of the Games to rank among the top 60 per cent of its supplying factories worldwide in terms of human and environmental safety and management effectiveness, William Anderson, head of Adidas’s social and environmental affairs in the Asia-Pacific region, said yesterday at the factory.

ShenZhou ranks low on the list. Management issues put the factory between the 40th and 50th percentile, Anderson said. The factory is free, however, of the safety hazards that would disqualify the company.

“We can tell you there are no zero-tolerance issues here. There are no major threshold issues here,” he said, referring to standards the company uses to identify problems. The lower rating is “focused on management systems.”

The decision to source Cambodian garments for the Games was simple, Anderson said. ShenZhou’s vertical operations and access to fabrics, as well as Cambodia’s trade preferences with the United States and Europe, made ShenZhou a candidate for the job, he said.

It’s the first time Cambodia has produced apparel for an Olympic Games, Von Sou Ieng, president of the Garment Manufacturers Association of Cambodia, said yesterday. Anderson confirmed that this was the first time a Cambodian company had produced garments for the Olympic Games committee.

The news is also good for the sector’s reputation after a recent spate of fainting incidents attracted unwanted attention, Von Sou Ieng said.

“It’s good for Cambodia’s recognition in being able to produce quality products,” he said. “Despite a few bad elements, we should focus on the great competitiveness of this country’s manufacturing.”

ShenZhou was free of the mass-fainting incidents that shocked the industry starting last April, but the trend was disheartening nonetheless, factory general manager Yan Delin said yesterday.

“We were very concerned about that,” he said, adding that he followed the incidents, some of which occurred in neighbouring factories, in the Cambodian media.

Adidas has investigated similar fainting cases throughout the region, but in the past 10 years Anderson said he had seen about four.

The phenomenon in Cambodia, in which more than 200 workers would be admitted to hospitals at a time, was extraordinary, he said.

“Faintings have occurred in other countries, it’s just the frequency of the ones that have occurred here. It’s exceptional to see them in large clusters,” he said.

Photo by: Will Baxter

A garment worker sews Adidas apparel yesterday at the ShenZhou (Cambodia) Co Ltd factory, located on the outskirts of Phnom Penh.

The faintings were highly emotional, Anderson said. The initial collapse of a worker because of fatigue or exposure to toxins could trigger a string of faintings in workers – primarily female – who might not have physical symptoms, he said.

Anderson listed a number of obstacles to doing business in the Kingdom, among them the high costs of production and energy, the need to import all materials and inconvenient transportation.

Although rights groups have criticised manufacturers for the use of short-term contracts for employees, both Anderson and Yan Delin claimed their staff preferred them.

Labour rights groups say compan-ies use short-term contracts to deny workers benefits. Yan Delin, however, claimed that workers preferred short-term contracts to the more stable long-term contracts because it gave them more freedom and an additional severance bonus at the end of every six-month period.  Workers, regardless of the terms of their contract, received the same benefits, he added.

Despite the severance-pay incentive, garment workers in Cambodia largely sought long-term contracts, Better Factories Cambodia manager Tuomo Poutiainen said yesterday.

“It has already been established that workers prefer long-term contracts for job security,” he said, adding that companies should promote the use of long-term contracts to stabilise the labour force.

The ShenZhou factory is also void of unions, which experts say is a rarity in Cambodia’s highly unionised garment industry.

Unions had never been barred from formation in the factory, Yan Delin claimed. Three or more workers could easily unionise with provided paperwork, he said.

Unions simply had not formed because of relatively high wages, he said. Workers at the factory earned an average of US$130 a month and the employee turnover rate stood at 2.5 per cent a month, company representatives said.

According to Anderson, preventing the formation of a union was an offence that could lead Adidas to dropping a supplier.

Yet more than 80 per cent of Cambodian factories had a union presence, David Welsh, country director for the American Centre for International Labour Solidarity, said yesterday.

“It’s an anomaly. It’s highly unus-ual,” he said, adding that factories without unions were usually of a much lower line of production.