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Reference ID: 09PHNOMPENH525
Created: 2009-07-28 09:58
Released: 2011-08-30 01:44
Classification: UNCLASSIFIED
Origin: Embassy Phnom Penh
VZCZCXRO8027
PP RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHPF #0525/01 2090958
ZNR UUUUU ZZH
P 280958Z JUL 09
FM AMEMBASSY PHNOM PENH
TO RUEHC/SECSTATE WASHINGTON DC PRIORITY
INFO RUCNASE/ASEAN MEMBER COLLECTIVE PRIORITY
RUEHC/DEPT OF LABOR WASHINGTON DC PRIORITY
UNCLAS SECTION 01 OF 03 PHNOM PENH 000525
SIPDIS
STATE FOR EAP/MLS, DRL/IL - DOL FOR ILAB
E.O. 12958: N/A
TAGS: ELAB ECON PGOV PHUM CB
SUBJECT: CAMBODIA'S ANTI-SWEATSHOP BRAND INTICES BUYERS BUT
LACKS COHESIVE MARKETING STRATEGY
REF: PHNOM PENH 409
1. SUMMARY. Cambodia's garment industry is known for its
innovative programs such as Better Factories Cambodia and is
recognized as a global leader in responsible competitiveness.
Companies concerned with image and social responsibility
continue to source from Cambodia during the global economic
crisis and have pointed to the responsible labor policies of
the government as being key criteria for sourcing decisions.
However, industry leaders have long predicted that high labor
standards would not be enough for Cambodia to retain its edge
in the competitive garment sector. As buyers continue to
press for lower costs, Cambodia's garment sector struggles to
keep up, and is quickly realizing the need to better
publicize and promote its anti-sweatshop brand. END SUMMARY.
BACKGROUND
-----------
2. In 1999, Cambodia and the United States entered into a
bilateral textile agreement which set a quota on textile and
apparel exports to the U.S. and reduced tariffs on imports
from the U.S. The agreement also included additional quota
if factory working conditions complied with Cambodian labor
law and international labor practices. In response to the
need to ensure Cambodia's factories lived up to the
agreement, the International Labor Organization (ILO), in
cooperation with the Garment Manufacturer's Association of
Cambodia (GMAC), created Better Factories Cambodia (BFC),
which was financed by both the U.S. and Cambodian
governments. BFC began to inspect factory working conditions
and provided the government, factories, and buyers with
detailed reports. In fact, the Ministry of Commerce to this
day requires registration with BFC and acceptance of
unannounced, independent monitoring in order to export
garments.
3. This initiative, coupled with U.S.-funded training to
promote workers' rights through the American Center for
International Labor Solidarity (ACILS) and the ILO, helped to
fuel the rise of the union movement in Cambodia and created a
worldwide reputation for good working conditions. In
addition to the individual factory reports, BFC produces
semi-annual synthesis reports which summarize information
about working conditions and labor standards in Cambodian
garment factories that are registered with BFC. Initial
reports found high instances of involuntary overtime work,
anti-union discrimination, and incorrect payment of wages.
However, subsequent editions (the latest, still in draft
form, is the 22nd synthesis report produced by BFC), show
continued improvements in every category. Most importantly,
the reports confirmed to international buyers that Cambodian
garment factories allow freedom of association, pay at least
minimum wage, contain no child labor, forced labor, and have
few documented instances of sexual harassment. The
monitoring of work conditions by BFC helped lure brands such
as Adidas, Nike, and Gap, eager to avoid bad publicity from
sweatshops. BFC is close to being 100% self-sustainable, and
the Cambodian experiment has now become a model for others,
spurring the creation of the joint ILO-International Finance
Corporation (IFC) Better Works initiative, which will
implement the Cambodian concept in countries throughout the
world.
BENEFITS
---------
4. According to Technical Advisor Tuomo Poutiainen, BFC
benefits workers, employers and their organizations as well
as unions. It also benefits socially responsible consumers
in Western countries who desire sweatshop-free products, and
has helped to reduce poverty in Cambodia through the creation
of more jobs with better working conditions. Even with the
global financial downturn and subsequent local effects, the
garment industry continues to fuel Cambodia's economy. The
ILO estimates that the garment industry contributes to the
livelihoods of over 1.7 million people through remittances to
the country side and through direct economic activity such as
transport. It directly employs approximately 290,000 people
in garment and 33,000 in footwear factories. The majority of
the workers are employed in production, however approximately
10% hold managerial jobs. According to the Garment Industry
Productivity Project (GIPC) program manager, the number of
Cambodians in management positions is slowly starting to
increase as employers begin to recognize the cost benefit of
hiring locally, and as employees become better trained
through government and NGO programs.
SUCCESS STORIES
PHNOM PENH 00000525 002 OF 003
---------------
5. Socially responsible companies, such as the Gap and Walt
Disney, have been solid supporters of the BFC project and
Cambodia, stating they will continue to source from Cambodia
due to its commitment to high labor standards. The Walt
Disney Company's International Labor Standards program
prohibits the manufacture of Disney-branded products in
countries with poor labor standards. Cambodia was initially
on this blacklist; however in 2005 Disney launched a pilot
program in Cambodia to reevaluate the situation based on the
emergence of the BFC project's independent monitoring
reports. The pilot was successful and now licensees and
vendors sourcing in Cambodia utilize the monitoring and
remediation resources offered by the ILO as a condition of
sourcing Disney-branded products in Cambodia. Cambodia's
commitment to responsible labor practices has even made it
into a book and the blogosphere. After visiting factories in
Cambodia, Kelsey Timmerman, author of, "Where Am I Wearing? A
Global Tour to the Countries, Factories and People that Make
Our Clothes," stated he would not hesitate to buy a pair of
Levi's made in Cambodia. He recognized BFC's role in
fostering improved labor standards and favorably compared the
quantity and quality of unions and workers' knowledge of
their rights to that in Bangladesh, where wages are poor,
knowledge is low, and unions are few.
THE BOTTOM LINE
---------------
6. While many companies originally came to Cambodia and are
committed to staying due to its reputation as being a labor
friendly country, some buyers continue to emphasize the point
that good working conditions alone are not enough to ensure
Cambodia's share of the garment manufacturing industry. As
Better Factories expands into more countries under the new
name of Better Work, garment buyers will have more options
for socially responsible sourcing. GMAC, the Ministry of
Labor, and slowly even unions are beginning to understand and
respond to the need for improved productivity, price, and
quality in order to remain competitive. In response,
training centers have been initiated to enhance the basic
knowledge of garment workers with the intention that they
will be able to enter into higher quality markets in the
future. The ILO and ACILS have been working with the unions
to explain the global financial crisis and the economics of
the garment sector, and encouraging them to work with
management and settle disputes legally rather than resulting
to disruptive wildcat strikes. Additionally, the ILO and IFC
are working to launch a pilot project focusing on energy
efficiency and cost savings.
BRANDING
--------
7. Once a year an International Buyers Forum is organized by
BFC and IFC which provides an opportunity for mainly regional
representatives from international companies to meet together
with government, suppliers, and unions. Last year, 28
representatives from leading garment brands across the U.S.
and Europe, including Adidas, Gap, H&M, Wal-Mart, Levi
Strauss & Co., and the Walt Disney Company attended. In
addition to providing a medium for discussion, the Forum
allows Cambodia to promote itself to new buyers. This is an
area which GMAC and the RGC seemingly overlooked when the
sector was thriving. However, both now realize the need for
a positive branding and marketing campaign to attract more
image-conscious multinational companies to Cambodia.
According to BFC, GMAC is in the process of developing a real
marketing strategy which will emphasize the niche labor
reputation and will include short video clips for
professional trade marketing efforts later in the year.
Earlier this month BFC, RGC and GMAC jointly launched the
second edition of the "I am precious" competition, which is a
campaign to promote Cambodian garment workers, to recognize
the value of the work they do, and to enable them to
demonstrate their talents through a dress and T-shirt design
competition. Industry stakeholders see the competition as
part of a bigger push to grow the Cambodian part of the value
chain, and as a mechanism to promote the industry and attract
international buyers.
8. COMMENT: While there is increased advocacy and awareness
about the potential benefits of promoting Cambodia's positive
labor practices, the RGC, GMAC, and other stakeholders
currently lack a cohesive marketing strategy. Some question
the importance of such a strategy, stating that companies'
key priority will be the bottom line, which is why Cambodia
is losing ground to countries such as Bangladesh (Ref A).
PHNOM PENH 00000525 003 OF 003
Author Kelsey Timmerman and others have been quoted as saying
they would like to have the option of paying an extra $5 or
$10 for a shirt labeled "Good Working Conditions." A planned
conference in DC hosted by IFC in November is intended to
support the Cambodian stakeholders and the Cambodian approach
to improving labor standards, and will generate positive
publicity for the sector. Leveraging the activism of
university students, such as those involved in United
Students Against Sweatshops, could be another avenue for
stakeholders to explore. The Embassy plans to meet with
interested parties during this year's Buyers Forum, and will
continue to work with our counterparts in the tripartite
system to develop future ideas and initiatives. END COMMENT.
RODLEY
WWeek 2015