(Yicai) March 13 -- With US tariffs on Chinese imports rising, Luckyway Home Appliances is now exploring Cambodia as an alternative to Vietnam and Thailand for a new factory, as the Southeast Asian nation offers lower labor and land costs and benefits from zero levies on exports to the United States.

Luckyway, which mainly exports electric fans, had planned to build factories in Vietnam or Thailand, but as more and more Chinese companies moved into these countries, local labor and land prices skyrocketed, General Manager Li Mingyang told Yicai.

Coupled with the uncertainty created by the new US government’s trade policy for these two countries, Luckyway has instead turned its attention to neighboring Cambodia, he said.

Li recently visited an industrial zone in Phnom Penh where he learned that local workers get paid USD208 a month, half of what those in Vietnam earn. In addition, the monthly lease for plants in the city is USD2 per square meter, while it reaches USD5 per sqm in Vietnam, he noted.

US President Donald Trump has imposed tariffs on trading partners worldwide, including raising levies on all imports from China by 20 percent. Luckyway's overseas clients have asked the Zhongshan-based firm to set up factories outside of China in response to these tariffs, Li said. 

Cambodia's trade surplus with the US is quite small, so the North American country does not tax imports from Cambodia, and the risk of potential tariffs is relatively low, Li pointed out.

But Luckyway still has reservations about building a plant in Cambodia because the local supply chain is not yet mature and there is a shortage of skilled workers, he said. As a result, raw materials would need to be shipped in from China and managers sent over, which would jack up production costs, he noted.

Luckyway could invest in a Cambodian factory if its overseas clients accepted a price increase of about 12 percent, according to Li. In addition, he has also floated the idea that Luckyway’s supply chain partners in China also head overseas, thereby reducing local production costs.

Editors: Dou Shicong, Martin Kadiev