Establishment of Electronics Manufacturing Services Site in Cambodia

Sumitomo Corporation (Head Office: Chuo-ku, Tokyo; President: Kuniharu Nakamura) will establish the headquarters of Sumitronics Manufacturing (Cambodia) Co., Ltd., (hereinafter: SMC) a company which aims to provide electronics manufacturing services (EMS) on a contract basis, in Poipet, Banteay Meanchey Province, Cambodia in collaboration with affiliate Alpine Technology Manufacturing (Thailand) Co., Ltd. (Head Office: Prachinburi Province; Managing Director: Tomoyuki Sato; hereinafter AOTH) and Sumitronics (Thailand) Co., Ltd. (Head Office: Bangkok; President: Keiya Endo).

Southeast Asia saw the establishment of the ASEAN Economic Community at the end of 2015, with results such as the removal of customs duties. Further economic integration is planned between now and 2025, especially in the area of liberalization. The Greater Mekong Subregion*1 is also expecting to experience an ongoing ripple effect from economic development centered on manufacturing in Thailand. In this context, Cambodia enjoys a geographical advantage, possessing logistical infrastructure and a plentiful supply of young, low-cost labor. It benefits from companies seeking to safeguard their Thai operations through a “Thailand-Plus-One” strategy*2, with the result that many foreign-owned companies have already entered the market, creating a cross-border economic zone*3. Poipet, the city where SMC will be established, is located in the Southern Economic Corridor close to the Thai border and is mainly expected to develop as a manufacturing site targeting Thailand.

SMC has been launched in Cambodia ahead of other Japanese EMS businesses in an effort to provide low-cost, reliable EMS to Japanese automotive and consumer electronics makers engaged in manufacturing in Thailand. Company registration will be completed in April 2016, with manufacturing scheduled to begin in October. The project will cost a total of 2 billion yen, with the aim of producing revenue worth 4 billion yen in five years.

AOTH is one of the leading EMS businesses in Thailand, boasting high-level manufacturing technology and meticulous quality control. By combining AOTH’s strength in manufacturing technology with the business management and marketing expertise of Sumitomo Corporation, SMC will be able to quickly establish its business foundation in Cambodia.

Sumitomo Corporation entered the field of EMS operations in the 1990s and has expanded its business to nine bases in seven countries overseas through its subsidiary Sumitronics Group. Moving forward, the company aims to further expand its business, in order to capture growing demand in electronics-related business, including industrial, medical, automotive and environmental infrastructure.

*1 Greater Mekong Subregion: The name for the zone encompassing five countries along the Mekong River: Thailand, Vietnam, Cambodia, Laos, and Myanmar; and two regions in China, the Yunnan Province and Guangxi Zhuang Autonomous Region.
*2 Thailand-Plus-One: A business model whereby Japanese businesses concentrated in Thailand’s industrial cluster transfer the labor-intensive aspect of their work to special economic zones close to the border in neighboring countries.
*3 Cross-border Economic Zone: Localized economic zone limited to the border region of a country.