The Implications for Labor of China’s Direct Investment in Cambodia

For over a decade most research linking foreign direct investment (FDI) to labor practices has centered on large and prominent companies—such as Nike and Reebok—headquartered in the United States and Europe. As a result; scholars have overlooked the influence of FDI by small and medium-sized enterprises (SMEs), and also failed to notice the growth of direct investment from non-traditionaì sources. China’s FDI outflows are well established; but little attention has been paid to its current position as one of the most important sources of investment in Cambodia, particularly in the garment sector. In the absence of any research exploring the impact of Chinese FDI on labor, this article draws from empirical research conducted by the Cambodian Labor Organization on factory conditions in the garment sector during 1999-2000. The article argues that over and above conventional analysis of FDI—such as firm motivation and inter-and intra-firm networks—assessments of the Chinese government’s foreign and aid policies, the U.S.-Cambodia Textile Agreement; the Multi-Fiber Arrangement, aspects of cultural and linguistic affinity, and Cambodia’s economic situation are prerequisites to understanding the relationship between Chinese FDI and Cambodian workers.