China and Vietnam on the road to the market

Adopting an analytical approach grounded in the literature on the impact of industrial relations (IR) systems on foreign direct investment (FDI) decisions, this article assesses the workplace practices in Hong Kong-invested garment factories in the regulated IR system in Cambodia. Cambodia opened up FDI in 1993. The country has attracted FDI in light manufacturing, mainly in the export-orientated garment and footwear sectors. The USA is the largest trade partner of Cambodia in garment exports because of a unique agreement, US-Cambodia Trade Agreement on Textile and Apparel. The Agreement granted a quota for Cambodian garment export in return for better compliance with international labour standards. The trade agreement and private sector initiatives have combined to bring about a “labour advantage” in Cambodia. This labour advantage will continue to be its competitive edge in a post-Multifibre Agreement world, and other developing countries may well follow Cambodia's model.