Starting September 1, 2025, China will implement mandatory full employer contributions to employee social insurance (Five Insurances and Housing Fund). This policy is expected to raise labor costs significantly—by 15–25% on average—adding new pressure to already rising manufacturing expenses.
As a result, more companies are looking to Cambodia for production, especially for labor-intensive products like furniture covers (sofa covers, patio sets, etc.). Here's a detailed comparison between China and Cambodia in the context of the latest policy change.
1. China: Reliable Quality but Rising Costs
Strengths:
Complete Supply Chain: China still leads in materials, trims, and packaging—ensuring fast turnaround.
High Production Standards: Skilled labor and mature production processes result in high product consistency.
Advanced Automation: Many factories use semi-automated systems ideal for complex and custom orders.
Challenges:
Rising Labor Costs: From September 1, 2025, full social security payments will become mandatory nationwide. This policy will increase labor costs by 15–25%.
Increased Regulatory Pressure: Environmental and ESG compliance is driving up factory overheads.
Weaker Price Competitiveness: For cost-sensitive, bulk orders, China is losing some advantage.
2. Cambodia: Cost-Effective for Large-Scale Furniture Covers
Strengths:
Low Wages, No Mandatory Social Security: Average labor costs are around one-third of China's, with no enforced social insurance contributions—ideal for mass production.
Tariff Benefits: Cambodia enjoys favorable trade terms via GSP and RCEP, reducing or eliminating import duties in key markets.
Government Support: The Cambodian government actively promotes textile and light manufacturing industries.
Challenges:
Raw Material Imports: Most fabrics and accessories are sourced from China, slightly extending lead times.
Quality Management Still Developing: While production capacity is strong, experience with high-end or intricate products is still maturing.
Infrastructure Bottlenecks: Outside of Phnom Penh and Sihanoukville, logistics and utilities can be inconsistent.
3. Conclusion & Strategy
For standardized, high-volume furniture cover orders, Cambodia provides a compelling cost-saving alternative. For complex, high-spec, or urgent orders, China remains a reliable base.
We recommend a dual-base production strategy:
R&D, design, and sampling in China;
Mass production and bulk assembly in Cambodia.
This hybrid model maximizes cost efficiency without sacrificing quality or flexibility—and it is already being embraced by forward-thinking international brands.
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