Southeast Asia, adjacent to China, lies in the heart of the Eurasian continent and the Pacific Ocean. In recent years, driven by rapid economic and financial development driven by tourism, global manufacturers and brands have set their sights on Southeast Asia, sparking a wave of factory construction.
At the end of the last century, the economies of the “Four Asian Tigers” (Indonesia, Thailand, Malaysia, and the Philippines) experienced rapid growth. Today, many manufacturers prioritize these regions for factory construction due to their favorable business environment, infrastructure, and advanced technology. This has led to increased land and labor costs and fierce competition.
Driven by growing customer demand and embracing globalization, Sanyuan is committed to developing a blue ocean market in Southeast Asia. By 2024, Sanyuan will have established 16 factories in Cambodia, Laos, Myanmar, and Bangladesh, employing over 10,000 people, operating over 250 production lines, and producing 35 million units. Why did we choose to build factories in these countries? Let’s take Cambodia and Laos as examples.
Cambodia
Industrial Structure
According to statistics from 2022, among Cambodia’s three major economic pillars, industry (particularly the textile and garment industry) accounted for a whopping 33.7% of GDP. Thanks to preferential policies such as the Generalized System of Preferences (GSP) offered by developed countries, Cambodia has successfully attracted significant foreign investment into the garment and footwear industries.
Economic Development
Since becoming an ASEAN member and joining the WTO, Cambodia has experienced rapid economic development. In 2023, Cambodia’s total import and export trade reached US$46.83 billion.
Most-Favored-Nation Treatment
Market Access: After joining the WTO, Cambodia gained improved access to international markets under the most-favored-nation principle. Other WTO members are required to grant Cambodia the same tariff preferences as other members, which has boosted Cambodia’s exports, particularly into developed countries’ markets.
Tariff Preferences: Some Cambodian export products enjoy reduced or zero tariffs. For example, some textiles and clothing products enjoy zero tariffs in the EU market and tariff reductions and exemptions in the Japanese market under the RCEP.
Trade Facilitation: Most-Favored-Nation (MFN) treatment also includes trade facilitation measures. Cambodian exporters can enjoy simplified customs procedures and lower inspection and quarantine requirements, thereby reducing trade costs and improving export efficiency.
Labor Advantages
Labor Quality: Cambodia’s large and young labor force is highly adaptable and can meet rapidly growing market demand.
Labor Costs: Although the Cambodian Ministry of Labor and Vocational Training has announced wage adjustments in recent years, labor costs remain relatively low in labor-intensive industries.
Attracting Foreign Investment: Low labor costs have attracted a significant amount of foreign investment, particularly from China, Europe, and the United States, promoting local economic development and increasing employment opportunities.
Laos
Political Policy Factors
According to statistics, approximately 65% of the population in Laos adheres to Theravada Buddhism. Laos enjoys political stability and good public security. Currently, as a core country along the Belt and Road Initiative, the opening of the China-Laos Railway has further strengthened economic cooperation between China and Laos.
Labor Advantages
Laos currently has a population of approximately 7.38 million, of which 59% are aged 15-65, resulting in a relatively young labor market. The Laotian workforce is highly adaptable and easily trainable, meeting the needs of the light textile manufacturing sector.
Import and Export Policy
Laos is a member of the World Trade Organization (WTO) and the Association of Southeast Asian Nations (ASEAN), and actively participates in regional and international trade agreements such as the ASEAN Free Trade Area (AFTA) and the Regional Comprehensive Economic Partnership (RCEP). These agreements help reduce tariffs and non-tariff barriers, promoting the development of import and export trade. The Lao government is committed to improving the trade environment by streamlining customs procedures and improving regulatory efficiency, reducing trade costs for businesses and further attracting foreign investment.
Location Advantages
The Sanyuan factory is located in Savannakhet City’s Savannakhet Industrial Park. Savannakhet is Laos’ second-largest city and boasts a strategic location, making it a key economic hub along the East-West Economic Corridor in the Mekong Subregion. The industrial park, situated at the intersection of the Belt and Road Initiative, offers comprehensive transportation advantages by sea, land, and air. It is conveniently located near ports in Da Nang, Vietnam, and Laem Chabang, Thailand, and is only 8 kilometers from Savannakhet International Airport, facilitating convenient logistics. The park’s proximity to Savannakhet City, as well as Vientiane, the Laotian capital, and Mukdahan Province, Thailand, provides businesses with a broad market.
The park boasts comprehensive infrastructure, including stable power supply, water purification and wastewater treatment services, high-speed internet access, and supporting facilities such as employee dormitories, dedicated transportation, and catering. These facilities greatly facilitate daily operations.
Sanyuan is committed to expanding its factories in numerous Southeast Asian countries. This not only aligns with globalization trends but also effectively meets growing market demand, promotes sustainable development, and serves as a model for other companies in the industry. Sanyuan hopes to realize greater economic growth potential in this vast and diverse hinterland. Our goals are ahead!
