Weaving Cambodia's Future: Growth, Resilience, and Reinvention of the Textile Sector in the Kingdom
- Eco News
- Jul 8
- 5 min read
Cambodia has quietly carved out a place for itself in the global garment, footwear, and travel goods (GFT) industry. Once a modest player, the kingdom is now the world's 15th largest exporter of GFT and the third largest in ASEAN, with a remarkable turnover of US$13.6 billion in 2024.
However, as the global industry faces major disruptions, ranging from geopolitical tensions to changing consumer demands, Cambodia's GFT sector finds itself at a critical juncture, where opportunities and uncertainties are balanced.
The global GFT industry landscape: trends and transformations
The global GFT industry is on a steady growth trajectory. Between 2025 and 2029, annual growth is expected to reach 2.6%, with apparel revenues expected to reach US$1.8 trillion and footwear revenues expected to reach US$505.7 billion by 2025. Women's clothing dominates the market and is expected to reach US$963 billion in 2025. However, these optimistic prospects are tempered by persistent challenges: inflation, geopolitical fragmentation, and a consumer base that is more price-sensitive than ever.
In 2023, global GFT exports totaled US$720 billion. China remains the undisputed leader, accounting for 38% (US$274.4 billion) of exports, followed by Italy with 8%. Cambodia, although smaller in size, has carved out an important place for itself, accounting for 2% of the global market.
A pillar of economic growth
The FTI sector is the driving force behind Cambodia's industrial economy. The number of FTI companies grew from 1,192 in 2020 to 1,555 in 2024, reflecting strong investor confidence and the sector's dynamism. In 2024, the industry directly employed more than 918,000 workers, 75.6% of whom were women, and indirectly supported up to 3 million people. This gender dimension is crucial: the sector has become a powerful driver of women's economic empowerment and social mobility.
Export performance and market diversification
Cambodia's fair trade exports jumped 24% in 2024 compared to the previous year.
The United States remains the leading market, with $5.2 billion (38.5% of exports), followed by the European Union ($3.8 billion, 28%). Japan, Canada, the United Kingdom, China, and ASEAN complete the ranking of the main destinations, highlighting the global reach of the sector.
The clothing sector leads the way, accounting for 38.2% of total exports, followed by travel goods (7.5%) and footwear (6.4%). It should be noted that travel goods (luggage, backpacks, handbags) have experienced solid growth, particularly in the US market.
The GFT sector is the driving force behind Cambodia's industrial economy. The number of GFT companies has increased from 1,192 in 2020 to 1,555 in 2024
Trade wars and tariffs
The trade war between the US and China and the ensuing tariff hikes have catalyzed a “China + 1” strategy among global brands, which have shifted orders to other manufacturing hubs such as Cambodia. Major brands such as H&M, Nike, and Adidas are increasingly reducing their exposure in China, seeking to avoid the legal and reputational pitfalls associated with allegations of forced labor.
Regional instability and supply chain reorganization
Political crises in Myanmar and Bangladesh have further altered global supply patterns. As international brands pull out of Myanmar due to human rights concerns, Cambodia has become a preferred alternative, attracting orders and investment. Similarly, Ethiopia's once-booming garment sector has suffered setbacks due to internal conflicts, further strengthening Cambodia's competitive position.
The challenge of graduating from LDC status: navigating a new era
Cambodia's expected graduation from the Least Developed Country (LDC) category is a source of both pride and peril. While it reflects economic progress, it also threatens to undermine preferential access to trade, particularly to the EU and US markets, which have been the foundation of the sector's success.
Implications for market access
The loss of LDC privileges could result in higher tariffs and increased competition. For Cambodian exporters of EFT products, maintaining competitiveness will require strategic adaptation: investing in productivity, compliance, and value addition.
Wages and standard of living
Between 2018 and 2024, wages in Cambodia's GFT sector rose steadily, reflecting both economic growth and improved living standards. Minimum wages are now more aligned with per capita GDP, but the sector needs to strike a balance between wage growth and productivity gains to remain competitive.
Investment and innovation
Investment in the sector has been strong, with new factories and technological upgrades multiplying. However, to move up the value chain, Cambodia needs to accelerate productivity growth. This means embracing digitalization, automation, and sustainable practices, areas in which regional competitors are also investing heavily.
The human face of Cambodia's garment sector
Behind the export figures and growth rates lie the stories of nearly one million workers, mostly women, whose lives have been transformed by this sector.
For many, a job in a garment factory is a way out of poverty, a means of supporting their families, educating their children, and gaining financial independence.
However, challenges remain: job security, safety at work, and access to social protection remain major concerns. The future success of the sector depends not only on economic indicators, but also on its ability to provide decent jobs and respect labor rights.
Sustainability and corporate responsibility: the next frontier
Environmental and social compliance
As global brands strengthen their due diligence requirements, sustainability has become a must. The AGF sector in Cambodia must adapt to stricter environmental and social standards, whether it be reducing its carbon footprint or ensuring fair labor practices. Factories that invest in green technologies and supply chain transparency will be better positioned to retain their international customers.
The role of stakeholders
Collaboration between the government, industry associations, trade unions, and international partners is essential. Initiatives such as the Responsible Business Hub and Cambodia's Handicraft Sector Development Strategy for 2022-2027 are steps in the right direction, promoting dialogue and encouraging continuous improvement.
Outlook: risks, resilience, and reinvention
Economic challenges
The sector faces challenges: inflation, currency fluctuations, and potential slowdowns in key markets could dampen demand. The loss of trade preferences after the end of LDC status adds an extra layer of complexity.
Opportunities for reinvention
However, Cambodia's textile and handicraft industry has shown remarkable resilience, rebounding from the shock of COVID-19 and taking advantage of changes in the global supply chain. The way forward lies in reinvention: moving from low-cost manufacturing to sustainable, higher value-added production.
Recommendations for the future
Invest in skills and technology: Improve worker skills and adopt advanced manufacturing technologies to boost productivity.
Enhance sustainability: Prioritize environmental compliance and social responsibility to meet global standards.
Diversify markets and products: Tap into new markets and develop higher value-added products to reduce dependence on a few large buyers.
Strengthen social protection: Improve working conditions and social safety nets to ensure inclusive and sustainable growth.
Building a sustainable future
The textile industry in Cambodia is at a turning point. The transition from a low-cost manufacturing hub to a sustainable, high-value-added industry will not be easy.
However, with strategic vision, investment in human resources and technology, and an unwavering commitment to responsible business, Cambodia can continue to shape a future that is prosperous, inclusive, and resilient in the face of global change.
As global fashion capitals seek new partners in a rapidly changing landscape, Cambodia's history is a testament to the adaptability, ambition, and perseverance of its people.
The next chapter is being written in factories, boardrooms, and global markets, stitch by stitch, seam by seam.
This article is based on information and data from the Cambodia Garment, Footwear and Travel Goods (GFT) Sectoral Brief, Issue 4, commissioned by TAFTAC and EUROCHAM Cambodia, and written by International Economics Consulting Ltd.
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