Of the roughly US$10 billion in total investment approved by the Council for the Development of Cambodia in 2025, Chinese investors committed US$5.42 billion and domestic investors US$3.12 billion.

The incorporation address is Cambodian, but operational control typically flows from China. Suppliers, raw materials, management and technical expertise are sourced from Chinese networks. The value added locally is often limited to labour and the regulatory address.

Cambodia’s manufacturing Purchasing Managers’ Index (PMI), a monthly measure of business conditions compiled by S&P Global as part of its ASEAN Manufacturing PMI survey, stood at 50.9 in April 2026, the second-highest reading in ASEAN after Malaysia. A reading above 50 indicates expansion. The result reflects active production but does not speak to the origin of capital, components, or management.

The sector is dominated by garments and textiles, which account for the substantial majority of Cambodia’s export earnings. Major international fashion brands, including H&M, Gap and Inditex, publish annual supplier transparency reports that list Cambodian manufacturers as active sourcing partners. The presence of these buyers provides market legitimacy but does not alter the underlying FDI composition.

Under US trade rules, substantial transformation requires more than geographic relocation. The origin of capital, management and supply inputs determines tariff treatment. A Chinese-owned factory in Cambodia assembling Chinese components does not typically meet the substantial transformation threshold for a change in country of origin.

For brands subject to Section 301 tariffs on Chinese goods, sourcing from Chinese-controlled Cambodian facilities offers limited protection. US Customs and Border Protection examines the entire supply chain, not just the final assembly location.

Cambodia’s manufacturing boom introduces risk dimensions that supply chain planners need to price into their China-plus-n calculations, a strategy of diversifying manufacturing across multiple countries to reduce dependency on any single source. In Cambodia’s case, the additional country in the equation may not represent genuine diversification if the underlying ownership and supply network remains Chinese.

Transfer pricing between Chinese parent companies and their Cambodian subsidiaries, meaning the pricing of transactions between related entities within a corporate group in ways that can shift taxable profit between jurisdictions, creates a second layer of complexity. Intercompany transactions can be structured to minimise taxable profit in Cambodia while maintaining operational control from China.

Cambodia’s manufacturing growth will continue, driven by low labour costs and ongoing infrastructure development. The Chinese FDI concentration is documented in the Council for the Development of Cambodia’s own approval records and verifiable at the factory level through published supplier disclosures. Until that concentration falls or its composition changes materially, brands targeting Section 301 exposure reductions through Cambodian sourcing are managing optics rather than risk.

Correction, 24 September 2026: An earlier version of this article misstated Cambodia’s 2025 approved investment figures and gave China’s share as more than 70%. According to the Council for the Development of Cambodia, China accounted for 54% of US$10 billion in approved capital. This has been corrected.

Correction, 24 September 2026: An earlier version of this article described 50% growth in manufacturing investment as growth in manufacturing output. It has been removed.