Part 4 of 4 in our research series

Coronavirus is taking a toll on everyone. Yet it has largely been high-income nations that have experienced spiking cases and high death tolls, with their healthcare systems unable to adequately handle the influx of patients.

Data indicates that low-income countries, whose curves are predicted to spike in the coming months, will be even less equipped for the coming scenario — and thus face the risk of an even more devastating death toll.

Among these nations is Cambodia. Straddling the Mekong River as it approaches its southern terminus, this tropical nation occupies a commercially strategic location between Thailand, Vietnam, and the Gulf of Thailand and is home to 16.7 million people. Cambodia’s relatively stable economy and governmental incentives have made it an attractive choice for popular brands and retailers looking to diversify their manufacturing from China. However, with an average monthly income of just $116 and a GDP per capita of $1,620, its population has few economic resources to get them through this crisis.

This article explains the circumstances that make Cambodia particularly vulnerable to COVID-19, including a delayed contagion curve, a weak healthcare system, an economic imperative to return to work regardless of exposure risk, a high rate of employment in factories, and a lack of likely aid from other countries.

It also answers the most important question of all: what can brands and retailers do to protect lives in their overseas supply chains?

Delayed contagion curves vs. economic realities

At the time of writing, global coronavirus cases have passed the 3.1-million mark and the death toll has reached 212,000. Countries have implemented lockdown measures, halted movement and travel, and ordered non-essential facilities to close.

Still, high-income countries have taken the brunt of cases thus far. The following four countries alone comprise 54.2% of all reported cases worldwide:

 

Country No. of cases No. of deaths
USA 644,348 28,554
Spain 182,816 19,130
Italy 165,155 21,645
France 147,863 17,167

 

With their high GDPs, such countries are the sites of both storefronts and headquarters for major brands and retailers. The spikes in cases have led to an abrupt drop in demand, however, and brands and retailers have had to close brick-and-mortar stores and strategize on how to manage their unsold inventory.

Behind each of these major organizations is a vast, interconnected global supply chain of vendors and factories in low-income countries, many of which are similarly halting operations as orders freeze. In Cambodia, where garment manufacturing employs 86% (over 850,000) of the country’s factory workers, workplace shutdowns have a violent economic impact. Lockdowns appear to have been effective in suppressing the rate of transmission in Cambodia so far:

 

Country No. of cases No. of deaths
Cambodia 122 0

 

The present situation, then, is that high-income (storefront) countries are largely experiencing their peaks while low-income (manufacturing) countries are still early in their contagion curves.

Let us now look at the near future. In high-income countries, peaks are expected to pass and commerce is expected to reopen sometime in the coming months. In Cambodia, whose economy is dependent on purchasing countries, the resulting surge in orders will incentivize factories to reopen. Cambodia’s COVID-19 burden will also have grown during this time period, and it is likely that this surge in demand will coincide with a peaking curve.

The question then is: will Cambodian factory workers stay home to avoid risk of exposure, or will they return to work?

Unfortunately, economic realities suggest they will not have a choice. While high-income countries can sustain their populations with assistance and stimulus programs, such resources are far less available in Cambodia. For many factory workers, their daily employment is what puts food on the table and staying home from work means going hungry. They must then make the choice between returning to work, where health and safety systems may not yet be in place, or foregoing income. They will choose the former.

A recent report by ACAPS presents three potential scenarios for COVID-19 containment worldwide, including outcomes for people living in poverty:

  1. Global containment (very low probability): This is the best-case scenario. Around the world, countries relax and then are forced to reimpose containment measures such as lockdowns and mandatory closings. While countries manage to maintain their healthcare systems, poverty worsens and humanitarian aid is downsized.
  2. Partial containment (moderate probability): High-income economies cautiously open back up mid-summer, though outbreaks continue to cause repeated shutdowns. Middle- and low-income countries see high death tolls and weak containment capabilities. Healthcare systems are largely preserved in high-income countries. Poverty worsens around the world and humanitarian aid is further reduced.
  3. Limited containment (moderate probability): Death rates soar worldwide, with the majority of governments upholding strict orders for no-movement. Authoritarian governments repress their populations, and disproportionate effects on impoverished populations leads to civil unrest. Humanitarian aid is almost completely unavailable.

The combination of a delayed contagion curve in Cambodia, as well as a lack of economic choice in returning to work, put the country at risk for tremendous caseloads when demand for apparel returns. This alone makes it clear that brands and retailers need to enact preventative measures. Unfortunately, there are additional realities that further add to Cambodia’s risk.

Inadequate healthcare

As mentioned, even the world’s strongest healthcare systems are struggling. Below is a list of healthcare systems in high-income countries, ranked by the World Health Organization by Efficiency Index (a useful metric for gauging healthcare performance):

 

Health System Rank Nation Efficiency Index*
1 France 0.994
2 Italy 0.991
7 Spain 0.972
37 USA 0.838

 

All four of these countries have seen their healthcare systems saturated by COVID-19 cases. French and Spanish hospitals have been so overwhelmed that shortages have occurred in supplies, beds, and healthcare workers themselves. Italy’s death toll is currently over 13% due to their system’s inability to treat the needed number of patients. In the USA, whose healthcare system is also underprepared for the pandemic, workers have had to work without adequate personal protective equipment.

Compare these figures with those of Cambodia and other low-income places of production:

 

Health System Rank Nation Efficiency Index*
88 Bangladesh 0.675
92 Indonesia 0.660
112 India 0.617
174 Cambodia 0.322

 

Clearly, Cambodia’s healthcare system is not set up for success when infections begin to spike. This underscores the need for preventative measures.

Lack of foreign aid

Countries like Cambodia also cannot depend on help from high-income nations. As the ACAPS report stated, humanitarian aid will be scaled down even in the best-case scenario.

Similarly, little reassurance has resulted from the G20 summit. Though this council was created expressly to handle situations like the current pandemic, the recent meeting between nations produced only a dishearteningly vague public statement that promised no concrete shows of support.

Actual monetary investments in emerging markets like Cambodia have taken a sharp downward turn. After investing a net $79 billion into emerging markets in 2019, the past two months alone have seen $70 billion removed and relocated in relative safe havens like cash and US government bonds.

Others are not likely to step in and take action in Cambodia. As brands, retailers, and supply chain professionals, the duty is ours to take proactive measures to protect workers there from exposure when they return to factories. The same goes for our supply chains in other parts of the world — by preventing facilities from becoming breeding grounds for outbreaks, we can help protect densely populated communities from staggering death tolls.

A closer look at Cambodia’s garment and apparel industry

Cambodia’s capital city of Phnom Penh houses the lion’s share of its garment and apparel industry. The city’s population of 2 million has found significant employment with the garment sector, which is the most prominent employer in this export-centered economy. In 2016, there were 589 garment factories in Cambodia. The numbers today have grown thanks to large brands sourcing from the country, with the garment and footwear industry adding around $7 billion to the overall economy. Cambodia has fought hard for this growth, which is threatened by competition from neighboring countries and the possible loss of favorable trade agreements.

There are currently only 122 confirmed cases of coronavirus in Cambodia, and as of this writing, no deaths have been reported. However, the virus is taking a toll by impacting overseas brands’ ability to buy products. Cambodia’s labor ministry reported on April 1 that at least 91 garment factories employing 61,500 workers had suspended work. This represents nearly one in six garment and footwear factories. While the government has promised salary replacement of around $38 per month for these workers, it is unclear how long these measures will last or whether families will be able to survive on this amount.

COVID-19 threatens to harm Cambodians financially before inflicting serious wounds through spiking infections. Brands are currently responding to the Garment Manufacturers Association in Cambodia’s (GMAC) request to “join hands so that we can all survive together” — a request that undoubtedly must include implementing safety protocols in underprepared facilities to protect workers.

Additionally, the government is taking additional measures to prevent disease transmission; any workers taking an unpaid leave of absence during the Khmer New Year celebrations, which the government officially canceled, were forced to complete a 14-day, unpaid self-quarantine. The GMAC has also issued the following plea to factories: “WORKERS SAFETY FIRST! Please continue to stay vigilant and maintain high levels of hygiene as a preventive measure at the workplace to protect our workers and help prevent the spread of the virus.”

Cambodia has a significantly lower health system efficiency than many other countries where products are manufactured. This means preventative actions will be especially valuable, and factories will need assistance to implement the needed health standards to combat COVID-19 outbreaks. A 2018 report by Better Factories Cambodia showed that, while overall compliance on 21 critical issues had improved from 2014, only 41% of factories were in total compliance. Areas related to hygiene and health either improved marginally or worsened. These statistics highlight the need for a solution that allows brands and retailers to ensure compliance across all of their partner facilities abroad.

With a weak healthcare system, as well as Phnom Penh’s high population density of 5,700 people per square kilometer, Cambodia stands as another vulnerable target for loss. Organizations must take the lead on reinforcing existing safety measures and implementing new ones to deal with COVID-19 here, particularly since financially insecure factories may be less able to do so themselves.

The industry must collaborate to protect workers in the global supply chain

The scale of devastation that could result in Cambodia and other low-income countries is concerning. Brands and retailers, while struggling to survive, also have the chance to build their reputations on how they handle themselves during this pandemic. When this period is over, consumers will carry a heightened awareness of brands’ health and safety measures — and they will hold those responsible whose supply chains are the sites of outbreaks.

The tools to implement COVID-19 safety measures in our supply chains are available to us now. We can protect workers, their families, and the communities they live in by ensuring that returning to work is not a sentence for infection. But we must act now, and we must act together.

Inspectorio offers Rise platform for free to help in the fight against COVID-19

So how can brands and retailers reactivate supply chains without restarting the coronavirus pandemic?

Using the information we have and can continuously gather around the situation, we must implement important health and safety initiatives at these places of production, ensure compliance, provide corrective action and preventive action (CAPA), and facilitate continuous improvement through education. However, most organizations have limited resources or insufficient tools to execute these measures as quickly and successfully as the crisis requires.

This is where we can help. The Inspectorio Rise platform is uniquely positioned to help protect factory workers on a global scale, and we are offering these tools free, for a whole year:

  • We have been collaborating with leading brands, retailers, and international NGOs to assemble a library of COVID-19 workplace readiness guidelines.
  • Our real-time monitoring and reporting lets brands and retailers keep track of how overseas partner facilities comply with vital health and safety initiatives.
  • It is now becoming critical to be able to view up-to-date COVID-19 data trends and compliance information side by side. Our Rise platform features a COVID-19 Sourcing Dashboard that puts real-time COVID-19 and compliance data in one place, letting brand and retailer teams make better-informed sourcing decisions.
  • As facilities submit assessments, the Rise platform automatically generates reports that include automated recommendations for corrective actions, as well as didactic e-learning courses to facilitate continuous improvement.
  • Our comprehensive Analytics dashboard helps brands and retailers understand which facilities need improvement, as well as what type they need.

We can support our partner facilities, protect workers, their communities, and economies. We at Inspectorio are committed to this mission, but we need your help.

We can protect lives, together, as an industry, and we must act now to #KeepWorkersSafe.

For more information on the Inspectorio COVID-19 Workplace Readiness guidelines and the Rise platform.

Sources

  1. World City Populations 2020,” World Population Review. Accessed 16 April 2020.
  2. Average Income around the World.” Worlddata.info. Accessed 16 April 2020.
  3. Report for Selected Countries and Subjects.” International Monetary Fund. Accessed 16 April 2020.
  4. Countries Where COVID-19 Has Spread.” Worldometer. Accessed 16 April, 2020.
  5. Bain, Marc. “More than a Million Garment Workers Are out of Work Because of Coronavirus.” Quartz, 3 April 2020. Accessed 16 April 2020.
  6. Johnson, Kay. “Cambodia Says 91 Garment Factories Suspend Work Due to Coronavirus, 61,500 Workers Affected.” Reuters, 1 April 2020. Accessed 16 April 2020.
  7. Chheng, Niem. “[Cambodia] PM Imposes Lockdown.” The Nation Thailand, 10 April 2020. Accessed 16 April 2020.
  8. New COVID-19 Forecasts for Europe: Italy & Spain Have Passed the Peak of Their Epidemics; UK, Early in Its Epidemic, Faces a Fast-Mounting Death Toll.” Institute for Health Metrics and Evaluation, 6 Apr. 2020. Accessed 16 April 2020.
  9. ACAPS Scenarios report: COVID-19.” ACAPS, 10 April 2020,. Accessed 16 April 2020.
  10. Tandon, Ajay, et al. “Measuring Overall Health System Performance for 191 Countries.” World Health Organization, 2000. (GPE Discussion Paper No. 30). Accessed 16 April 2020.
  11. Nossiter, Adam. “For France, Coronavirus Tests a Vaunted Health Care System.” The New York Times, 27 March 2020. Accessed 16 April 2020.
  12. Marx, Willem. “Doctors Hit by ‘Huge Avalanche’ of Coronavirus Patients in Spain.” NBC News, 2 April 2020. Accessed 16 April 2020.
  13. Chow, Denise, and Emmanuelle Saliba. “Italy Has a World-Class Health System. The Coronavirus Has Pushed It to the Breaking Point.” NBC News, 19 March 2020,. Accessed 16 April 2020.
  14. COVID-19 Puts Unprecedented Strain on US Health System.” Healthcare Dive, 17 March 2020. Accessed 16 April 2020.
  15. Jain, Ash. “Trump Just Missed a Perfect Opportunity to Reassert American Leadership.” Foreign Policy, 2 April 2020,. Accessed 16 April 2020.
  16. G20 Leaders’ Summit – Statement on COVID-19: 26 March 2020.” GOV.UK,. Accessed 16 April 2020.
  17. Kempe, Frederick. “COVID-19’s next Target: Fragile States and Emerging Markets.” Atlantic Council, 29 Mar. 2020,. Accessed 16 April 2020.
  18. Spiess, Robin. “A Sector Too Big to Fail?” Phnom Penh Post, 5 April 2018,. Accessed 16 April 2020.
  19. Rastogi, Vasundhara. “Cambodia’s Garment Manufacturing Industry.” ASEAN Business News, 11 Nov. 2018,. Accessed 16 April 2020.
  20. Nika, C. “GMAC Appeals to Stakeholders to Join Hands to Tackle Manufacturing Woes Caused by Coronavirus.” Khmer Times, 25 March 2020,. Accessed 16 April 2020.
  21. Chan, Sok. “Absent Workers during KNY Must Go on 14 Days Unpaid Leave and Mandatory Self-Quarantine.” Khmer Times, 9 April 2020,. Accessed 16 April 2020.
  22. Better Factories Cambodia’s Annual Report 2018 Highlights Notable Improvements in Working Conditions.” Better Work, 1 April 2020,. Accessed 16 April 2020.
  23. Annual Report 2018: An Industry and Compliance Review.” BetterFactories Cambodia, 2018,. Accessed 16 April 2020.
  24. Hertzman, Edward. “Fashion Brands Risk Destroying Factory ‘Partners’ – and Their Own Goodwill.” Sourcing Journal, 26 March 2020,. Accessed 16 April 2020.
  25. De Mey, Nick, and Philippe De Ridder. “Shifts in the Low Touch Economy.” Board of Innovation, 2020,. Accessed 16 April 2020.

For more information on the Inspectorio COVID-19 Workplace Readiness guidelines and the Rise platform.

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