Why Cambodia Is the Next Manufacturing Hub for US Retailers

In 2025, Cambodia Ministry of Labour and Vocational Training reported a major milestone: the number of active garment/textile/footwear & travel-goods factories in Cambodia reached 1,810, marking a 15.5 % increase from end-2024.

Simultaneously, export data shows Cambodia’s manufacturing exports—led by garments, footwear, and travel goods—are surging. As global supply chains continue to recalibrate from China, many US retailers and brands are turning to Cambodia as a fresh, cost-effective, and increasingly capable manufacturing base.

This article explains why Cambodia’s recent export boom is more than a temporary spike. It explores the structural, economic, and strategic forces transforming Cambodia into a rising manufacturing hub for US retail sourcing. For supply-chain managers, investors, and trade analysts, this signals a pivotal moment to pay attention.

We’ll cover: export and factory-growth data, Cambodia’s competitive advantages, real-world sourcing trends, comparative regional analysis, risks and concerns — and, finally, what this means for global supply networks heading into 2026 and beyond.

Cambodia’s Export Surge: The Numbers Behind the $11.5 Billion Momentum

Factories Are Booming

As of October 2025, there are 1,810 active factories in the garment/footwear/travel-goods sector — up 15.5 % from 1,566 at end-2024.
During the first half of 2025 alone, the government registered 116 new garment factories, raising the total to 1,682 by June.
Non-garment manufacturing also saw expansion: the total number of registered enterprises rose from 44,798 at the end of 2024 to 45,656 by mid-2025.

Export Performance — Impressive Growth Across GFT Products

In 2024, Cambodia exported US$13.92 billion in garments, footwear, and travel goods (GFT), marking a 23 % increase over 2023.
Footwear and travel-goods exports rose strongly: footwear exports grew 23 % (to ~US$1.68B), while travel goods jumped nearly 20 %.
In the first 10 months of 2025, GFT exports totalled US$13.6 billion, and footwear alone reached US$1.73B, while travel goods accounted for US$1.7B.
The export boom coincides with growing factory employment: the sector now employs over 1.11 million workers, with women comprising the majority.

Diversification of Export Goods

Though textiles remain the core, Cambodia’s export basket is expanding: exports of bicycles, car tyres, electrical goods, furniture, and processed items have increased.
Early signs of a shift from simple garment manufacturing to higher-value and more diversified manufacturing are visible.

Implication: These numbers reflect more than cyclical spikes — they indicate structural scaling and diversification. Cambodia isn’t just producing more garments; it is steadily building a broader manufacturing base.

Why Cambodia Is Emerging as a Strategic Manufacturing Hub for US Retail Sourcing

Competitive Labour Costs & Growing Workforce Capacity

Cambodia remains attractive for labor-intensive manufacturing — labour costs remain lower than many regional peers.
Its workforce is young, growing, and increasingly trained, creating flexibility and scalability that matter to exporters and large retail brands aiming for volume and reliability.

Favorable Investment Policies & Special Economic Zones (SEZs)

The Cambodian government has supported manufacturing investment through incentives, streamlined licensing, and stability — helping attract both foreign and regional investors.
SEZs located around Phnom Penh, Sihanoukville, Poipet, and Bavet give manufacturers easier access to logistics, duty-free imports for machinery and inputs, and better export facilitation.

Strategic Location & Logistics Infrastructure

Cambodia sits centrally in Southeast Asia, offering access to regional supply lines and export routes via land and sea. Its proximity to ASEAN neighbours helps integrate regional supply chains.
Recent improvements in logistics — expanding ports (e.g. Sihanoukville), road links, and trade facilitation — lower transport time and cost, making Cambodia more attractive for time-sensitive US retail sourcing.

Global Demand & Supply Chain Realignment (“China + 1” Strategy)

Though China remains dominant globally, rising wages, trade tensions, tariffs, and supply-chain disruptions have driven many US retailers to explore alternative sourcing. Cambodia — with cost, capacity, and proximity to inputs — fits the “+1” option.
The global appetite for diversified manufacturing origins, especially for garments, footwear, travel goods, and increasingly light manufacturing (bicycles, furniture, electronics components), favors Cambodia’s growing industry.

Upgrading Industry: From Low-Cost Garments to Higher-Value Goods

Cambodian manufacturers are increasingly pivoting toward higher-value garments (e.g., sportswear, branded apparel) and expanding into more complex goods, seeking to meet global standards for quality, sustainability, and compliance.
This evolution appeals to major US retailers who demand compliance with labor, environmental, and quality standards — beyond just low-cost production.

What the Industry Is Sourcing from Cambodia — A Breakdown for US Retailers

Product Category	Why It Matters / What’s Happening
Apparel & Footwear	Core backbone — large-scale orders from global brands; high export volume, rapid growth in factories and output.
Travel Goods & Accessories (bags, luggage, backpacks, etc.)	Diversification beyond garments; travel-goods factories rising; stable demand from brands expanding lifestyle lines.
Bicycles & Light Industrial Assembly	Non-garment manufacturing rising in importance — bicycles, basic assembly, offering entry into different supply-chain segments.
Furniture, Home Goods, Consumer Items	Early signs of diversification; attractive for retailers wanting to consolidate multiple product lines from one country.
Electronics / Components (e.g. wiring harnesses, basic assemblies)	With incoming investments and light manufacturing growth, Cambodia may soon become relevant for parts sourcing — offering a future beyond textiles.

This diversified sourcing base increasingly appeals to large US retail buyers, making Cambodia more valuable than a single-product sourcing location.

Regional Comparison: Cambodia vs Vietnam vs Bangladesh (and Other Competitors)

To understand Cambodia’s rise, it helps to compare with regional peers — each with strengths and limitations.

Labour Cost & Workforce

Cambodia remains competitive on wages compared to Vietnam, Thailand, and China. That cost advantage continues to draw labour-intensive manufacturing.
Its young workforce and rapidly increasing factory count offer scalable manpower, without the saturation and rising costs some more mature hubs face.

Infrastructure & Flexibility

While Vietnam and Bangladesh have more mature infrastructure, Cambodia is rapidly catching up — and its newer factories within SEZs benefit from planned layouts, logistics integration, and expansion headroom.
Infrastructure improvements and investments in SEZs give Cambodia an advantage in agility and potential for future growth.

Diversification vs. Specialization

Vietnam: already diversified, but often saturated in garment and textile sectors; rising labour costs.
Bangladesh: strong in garments, but faces political risk, rising costs, and limited diversification outside textiles.
Cambodia: emerging as a more diversified manufacturing hub — garments and growing non-garment sectors (bicycles, consumer goods, light manufacturing), offering fewer single-market risks.

Investment Policies & Risk Profile

Cambodia’s relatively stable investment incentives, political stability, and growing SEZs present an attractive long-term case for supply chain planners and investors.
While no country offers zero risk, Cambodia’s model — combining low cost, developing infrastructure, export-oriented policy, and diversification push — makes it a compelling alternative to more established but saturated hubs.

Case Studies — Real Moves That Signal Cambodia’s Growing Role

Case Study 1: Rapid Factory Expansion in 2025

In the first half of 2025 alone, 116 new garment factories opened. This reflects not just rising orders but growing investor confidence in Cambodia’s regulatory environment, labor force, and export potential.

Case Study 2: Export Diversification — Bicycles, Home Goods, and More

Alongside traditional garments and footwear, Cambodia’s export basket is widening — with bicycles, car tyres, electronics components, and furniture gradually contributing to export totals.
This shift means US retailers can source a broader range of SKUs from Cambodia, simplifying supplier base and logistics.

Case Study 3: Movement Toward Higher-Value Garments & Ethical/Sustainable Production

Responding to global buyer demand for higher quality, brand-level apparel, Cambodian factories are upgrading — moving into sportswear and eco-fabric garments, aligning more closely with compliance, sustainability, and brand-sensitive manufacturing.

These case studies show that Cambodia’s export boom is not just about volume — it’s about the quality, diversity, and sustainability of manufacturing, which matter increasingly to modern US retailers.

Risks & Challenges: What Supply-Chain Managers and Investors Should Watch

While Cambodia’s rise is promising, decision-makers need to be aware of critical vulnerabilities and manage them carefully.

Dependence on Imported Raw Materials & Inputs

Much of Cambodia’s textile, footwear, and accessory production depends on imported fabrics, materials, and components — often from China or Vietnam.
Any disruption or cost fluctuation in input supply (tariffs, shipping delays, currency changes) could impact manufacturing cost and viability.

Skills Gap in High-Value Manufacturing

While Cambodia is maturing, moving into high-value garments, electronics, or components demands consistent upskilling of workers, quality control, and compliance infrastructure. The transition will take time and investment.

Energy, Utilities, and Infrastructure Limitations

Although logistics infrastructure is improving, not all regions have uniformly high standards. Some factories may still face power reliability, transport delays, or logistic bottlenecks.

Trade & Tariff Policy Risks

Cambodia’s export competitiveness could be affected by shifting trade policies, tariffs, quotas, or international trade tensions. Heavy reliance on certain markets (e.g., U.S., EU) amplifies risk.

Overdependence on Few Sectors

Historically, garments, footwear, and travel goods dominate Cambodia’s exports. Overreliance on these sectors leaves Cambodia vulnerable should demand shift. Diversification is progressing — but remains incomplete.

For supply-chain managers, these risks suggest the need for due diligence, diversified sourcing strategies, and contingency planning; for investors, it implies evaluating whether factories and infrastructure are built for long-term resilience.

What This Means for Supply-Chain Managers, Investors, and Trade Analysts

For Supply-Chain Managers & Retail Buyers

Cambodia presents a compelling alternative to China and saturated hubs like Vietnam/Bangladesh — especially for high-volume, cost-sensitive categories.
Its expanding export base and growing manufacturing infrastructure make it ideal for diversified sourcing (apparel, footwear, accessories, light manufacturing) from a single country.
To leverage this, buyers should:
1. vet suppliers thoroughly (input sourcing, quality control, compliance)
2. factor in potential logistics or input-material risk
3. consider long-term partnerships, not one-off orders, to benefit from scale and stability

For Investors & Private Equity / Infrastructure Funds

Opportunities lie in supporting Cambodia’s growth trajectory: investment in SEZs, logistics, input-manufacturing, worker training, and compliance infrastructure.
As Cambodia moves into higher-value and more diversified manufacturing, early investments may yield significant returns in emerging sectors like light manufacturing, components, consumer goods.

For Trade Analysts & Strategic Advisors

Cambodia is at a turning point — the convergence of favourable labour economics, global supply-chain realignment, policy incentives, and diversification make this more than a temporary trend.
Tracking Cambodia’s forward-looking developments (SEZ expansion, input-integration, export diversification, trade agreements) will provide early signals of a shifting global manufacturing map.

Conclusion — Cambodia at the Crossroads: A Rising Hub with Real Potential

Cambodia’s manufacturing sector in 2025 is no longer just about producing cheap garments. The explosive growth in factories, steadily rising export volumes, and visible diversification across product categories suggest a deeper transformation.

For US retailers exploring supply-chain alternatives, Cambodia presents a powerful value proposition: competitiveness, scalability, evolving manufacturing sophistication, and strategic geography. For investors and analysts, it represents a long-term play — a country moving up the value chain, opening opportunities beyond apparel, into diversified manufacturing and global supplier networks.

That said, the path forward must be managed carefully. Raw material dependence, input supply chains, trade policy uncertainties, and compliance demands require thoughtful risk management and strategic planning.

But for those who take a data-driven, long-view approach — Cambodia offers a chance to be part of the next big shift in global manufacturing. The time to watch and consider is now.

Call to Action — What You Should Do Next

If you’re a supply-chain manager: Evaluate your sourcing network. Consider running trial orders with Cambodia-based suppliers. Begin supplier audits focusing on capacity, compliance, and input supply lines.
If you’re an investor or infrastructure fund: Explore opportunities in Cambodia’s SEZs, logistics corridors, and manufacturing support industries. Growth potential in diversified manufacturing is rising rapidly.
If you’re a trade analyst or advisor: Monitor Cambodia’s export data, factory licensing, input sourcing — and reposition your models to include Cambodia as a core node in global supply-chain projections.

Don’t wait. Cambodia is no longer a peripheral supplier — it’s emerging as one of the most promising manufacturing hubs for US retail sourcing in Southeast Asia.

Asked Questions (FAQs)

1. Why are US retailers increasing their sourcing from Cambodia?

US retailers are turning to Cambodia primarily due to its competitive labor costs, stable political environment, improving logistics infrastructure, and diversification away from China. With tariff pressures and rising costs in traditional hubs, Cambodia provides a reliable low-cost alternative for apparel, footwear, electronics assembly, and light manufacturing.

2. Which sectors in Cambodia are most attractive for manufacturing and sourcing?

The most active manufacturing sectors attracting US buyers include:

Apparel and footwear
Travel goods and garment accessories
Electronics assembly
Automotive wiring harnesses
Furniture and home goods

These sectors benefit from established supply chains, skilled labor, and strong export incentives.

3. How does Cambodia compare to Vietnam or Bangladesh in terms of manufacturing competitiveness?

Cambodia has lower labor costs than Vietnam and more flexible labor regulations than Bangladesh. While Vietnam offers stronger infrastructure, Cambodia is catching up with new logistics projects, Special Economic Zones (SEZs), and pro-investment reforms. Many US brands now use Cambodia as part of a “China + 1 + Cambodia” diversification strategy.

4. What government policies support Cambodia’s rapid manufacturing growth?

Key policies strengthening Cambodia’s manufacturing competitiveness include:

Investment incentives under the Law on Investment 2021
Tax holidays and duty exemptions for export manufacturers
Improved labor standards monitored by Better Factories Cambodia
SEZ development offering streamlined customs and faster logistics
These create a business-friendly environment for foreign investors and multinational supply chains.

5. Is Cambodia’s manufacturing sector sustainable long-term?

Yes—Cambodia is positioning itself for long-term sustainability through:

Ongoing infrastructure upgrades (ports, dry ports, expressways)
Expanding skilled labor in electronics and tech manufacturing
Diversification beyond apparel into higher-value industries
Strong trade relationships with the US and EU
Rising investor confidence due to stable governance

While challenges remain (energy costs, logistics bottlenecks), the trajectory indicates sustained growth over the next decade.

📚 References

“Garment Factories Increase to Over 1,800” — AKP (Agence Kampuchea Presse), November 2025 — reports 1,810 active garment/textile/footwear/travel goods factories as of October 2025, and data on GFT exports in first ten months of 2025.
URL: https://akp.gov.kh/post/detail/354143

“Number of Factories and Enterprises Continues to Increase in H1 2025” — AKP, August 2025 — provides mid-2025 data on enterprise registrations, growth in garment and non-garment sectors.
URL: https://akp.gov.kh/post/detail/344072

“Cambodia Exports Over US$6 Billion in GFT Goods in First Five Months 2025” — AKP, June 2025 — early-year export statistics, showing growth in garment, footwear, and travel goods exports.
URL: https://akp.gov.kh/post/detail/339665

“Cambodia’s GFT Exports See Strong Growth in 2024” — AKP, January 2025 — annual export value statistics for 2024 including garment, footwear, and travel goods.
URL: https://akp.gov.kh/post/detail/327191

“Cambodian Garment Factories Increase to Over 1,800” — B2B Cambodia summary of AKP report, November 2025 — industry & trade-analysis commentary on growth and investment climate.
URL: https://b2b-cambodia.com/news/cambodian-garment-factories-increase-to-over-1800/

“Cambodia Global Textile Summit 2025: Highlighting the Kingdom’s Role in Global Supply Chains” — B2B Cambodia, 2025 — discusses labour, wage trends, industrial capacity, and export orientation of Cambodia’s GFT sector.
URL: https://b2b-cambodia.com/news/cambodia-global-textile-summit-2025-highlighting-the-kingdoms-role-in-global-supply-chains/

“Cambodia GFT Sectoral Brief (2024)” — Asia Garment Hub / Cambodia GFT Sector Development Strategy 2022–2027 — historical data on the growth of the Garment, Footwear & Travel Goods sector, its contribution to exports, employment, diversification path (e.g. bicycles, electronics parts).
URL: https://asiagarmenthub.net/resources/2024/cambodia-gft-sectoral-brief-issue-3.pdf

“Cambodia sees opening of 116 new garment units in H1 2025; total 1,682” — AlchemPro, 2025 — data on factory expansions during first half of 2025, export growth, import of raw materials for manufacturing.
URL: https://www.alchempro.com/news/manufacturing-news/cambodia-sees-opening-of-116-new-garment-units-in-h1-2025-total-1-682-304316-newsdetails.htm

“Global Supply Chain Reallocation and Shift under Triple Crises: A U.S.-China Perspective” — Research paper (2025) — academic analysis of global supply–chain shifts post-COVID, trade tensions and “China+1” dynamics relevant to Southeast Asia manufacturing hubs.
URL: https://arxiv.org/abs/2508.06828

Behind the $11.5 Billion Jump: Why Cambodia Is the Next Manufacturing Hub for US Retailers