European Union and United States quotas on Chinese garments have spurred a modest boom in Cambodia's garment exports but there is no stopping the march of China's textile colossus, given its vastly superior competitiveness.
The tale of the two exporters is captured in the events surrounding quota measures taken last year.
In the first three months of last year, after the abolition of global textile quotas - which gave Chinese exporters unrestricted access to world markets - Cambodia's garment exports fell 10 per cent as orders shifted to China.
In the second quarter, however, the US and EU imposed 'safeguard quotas' on Chinese textile exports, using a WTO mechanism to prevent Chinese textile exports from disrupting domestic markets.
That allowed a window of recovery for Cambodia's garment exports.
As a result, exports rose 10 per cent to US$2.12 billion for the year, the number of factories increased 10 per cent to 255 and its garment worker population also grew 10 per cent to 290,000 workers, said Ken Loo, secretary general of the Garment Manufacturers Association in Cambodia.
'I see more garment factories opening in Cambodia in the first half,' Mr Loo added.
Among the beneficiaries of this expansion is Tack Fat Group International. The Hong Kong-listed firm will spend $60 million to $80 million in the year to March to increase production capacity 20 per cent, with 70 per cent of the expansion in Cambodia and 30 per cent in China.
At present, 70 per cent of Tack Fat's garments are made in Cambodian factories, said executive director Norman Ho Yik-kin. The Hong Kong firm produces denim jeans and casual wear, all in Cambodia, as well as swimwear, in China and Cambodia.
'Cambodia looks hot, as it has no quota. You have to pay a quota fee of US$1.50 for a pair of Chinese jeans. Cambodia's labour costs are half of the big cities in China which are suffering from a lack of workers,' Mr Ho said.
Nonetheless, China's garment exports were booming this year, said Neeraj Sawhney, director of Topnet International, a Hong Kong trading firm.
Trade with China became more certain with the signing of the Sino-EU textile agreements in June and September last year and the Sino-US textile agreement in November.
Meanwhile, China's garment exports were back on the march and would grow more than 20 per cent in the first half, Mr Sawhney said.
'Buyers cannot ignore the huge production capacity that China has. Other countries like India and Bangladesh cannot match the huge orders Chinese factories can fulfil in a short lead time.'
Citing denim jeans as an example, Cambodia has about 10 factories for washing and finishing denim jeans while three Chinese provinces alone - Guangdong, Zhejiang and Jiangsu - have more then 1,000 such factories, noted Mr Sawhney.
'Cambodia doesn't have the infrastructure for all the kinds of denim finishes. China is far ahead in the range of products it can offer customers,' he said.
Mr Loo, who was visiting Guangdong, admitted as much.
'We wish we could see factories like these in Cambodia. Guangdong has the whole supply chain from buying raw cotton to weaving fabric to design to making a complete garment.
'Cambodia's garment industry is still young. We are still at the cut and sew stage, though some bigger factories are providing value-added services.
'In China, I see more engagement with customers. Chinese factories have garment designs they offer to buyers. In Cambodia, it's passive, waiting for buyers and designs to come,' he added.
In a move that does not bode well for Cambodia's garment industry, the US and EU quotas allotted to China by last year's agreements were far more generous than expected, Mr Loo said.
In October, a group of Chinese garment companies expressed keen interest in setting up factories and placing orders in Cambodia, to avoid US and EU quotas.
When the US quotas allotted by the Sino-US textile agreement were announced in November, 'their interest disappeared immediately. The quotas were so generous, there was no need for these Chinese firms to seek alternatives', Mr Loo said.
'We can't compete with China head on and we don't need to. We need to compete for the remaining portion that China does not supply. As long as we can compete with countries like Bangladesh, we can survive.'