The Swedish multinational clothing retail company Hennes & Mauritz AB (H&M) has announced that it will open its first store in Cambodia next year, according to the companies half-yearly report released this month.
Cambodia Investment Review contacted H&M who confirmed the planned launch in 2022 but did not disclose where the first store would open.
H&M already has a large presence in the region with 11 stores in Vietnam and 43 in Thailand. The company has been producing its products in Cambodia since the 1990s however announced it would reevaluate its production hereafter the EU decision to partly withdraw Cambodia’s duty-free access to EU markets in February of last year.
European Chamber of Commerce in Cambodia (EuroCham) President Tassilo Brinzer told Cambodia Investment Review that H&M committing to opening a franchise here in 2022 means that Cambodia continues to have great potential as a consumer market. Adding, in turn, this means that a large European group expects overall business in the Kingdom to expand.
“We know that H&M is already one of the largest garment producers in the country, and I would hope that this opening is an addition to a growing footprint here. If for example, H&M were to reduce its production base here at the same time, there could be a net loss to the Kingdom’s economy,” Brinzer said.
“I think while we continue to attract more and more brands to all of Cambodia’s economic sectors, and as diversified as possible, the country also needs to make investments attractive by providing a healthy and green infrastructure that is future proof. The upcoming investment law is a good example for a positive, forward-thinking, and modernized approach to attracting quality investment,” he added.
However, Brinzer believes that this is not a sign Cambodia is becoming a mainstream investment destination however does reflect a sign of confidence in the market and the expansion of the consumer base.
“I would not call this a sign for Cambodia becoming a mainstream investment destination. Opening a retail store has been on the agenda of many leading global brands in the past, think of Adidas, Puma, Decathlon and so many others who have opened outlets here. It is however a sign of confidence in the market and the expansion of the consumer base,” he said.
Earlier this year major American franchisors earmarked Cambodia as ‘a next market’ destination attracted by the nation’s rising incomes and its middle-class connection to international brand culture.
Chief Strategy Officer at Phnom Penh-based advertising firm Mango Tango Nancy Jaffe told Cambodia Investment Review that Mango Tango has interviewed many women here about their interest in fashion.
“Fashion trends in Cambodia are increasingly driven by international trends, as more shopping options have become available in recent years, and as Cambodians look to fashion-forward countries such as Thailand and Japan for inspiration,” Jaffe said.
Jaffe said that affluent Khmer women shop at fast-fashion brands such as H&M when they travel to Bangkok. “They have told us that they wished those brands were available here. Given H&M’s success in Thailand, it is likely that they will have a good understanding of what will be popular with the market here,” she added.
The Royal Cambodia Government is aspiring to attain upper-middle-income status by 2030 and a high-income economy by 2050. According to the ASEAN Cities – Stirring the Melting Pot report published by the Economist Intelligence Unit, “Rapid growth is set to change the face of cities across the Association of South-East Asian Nations region, opening up new economic opportunities as the urban middle-class swells.”
“Households earning over $10,000 per year are forecast to quadruple in number from 38 million in 2015 to 161 million by 2030, driving economic growth across the region and creating increasing demand for discretionary goods and services,” the report added.