Wah Sun Handbags International Holdings Limited, a Hong Kong-based handbag manufacturer with factories in Cambodia, reported a 3 percent revenue increase and wider gross profit margins last year due to Cambodia’s low labour costs and economies of scale.
Wah Sun, widely considered a leading original equipment manufacturer for non-leather handbags, is listed in the Main Board of Hong Kong’s stock exchange.
According to the company’s annual report for the last fiscal year, which ended March 31, revenue amounted to HK$697.5 million ($8.8 million), an increase of 3 percent, which the company attributes to an increase in demand for fast fashion brands, and the preferential tariff treatment Cambodia enjoys from various countries.
Contributing to that growth was an enhanced gross profit margin, which the company said it has widened by 1.2 percentage points to reach 21.8 percent in the last fiscal year. That increase is the result of relatively lower labour costs and economies of scale in Cambodia, the company said.
“As handbags exported from Cambodia enjoy preferential tariff treatment in Canada, member states of the European Union and Japan, there is high demand for production capacity in Cambodia. The group therefore enjoyed a relatively higher gross profit margin for products manufactured in Cambodia,” Wah Sun said.
“Further, with the increased production capacity in Cambodia, fewer orders were passed to subcontractors, which has further improved the group’s gross profit margin.”
Wah Sun plans to gradually expand production in the Kingdom to keep benefitting from Cambodia’s preferential tariff treatment, the company said.
The group manufactures and sells handbags, including top handle and shoulder bags. Its end customers are mainly well-known fashion brands headquartered in the US, Canada, Spain, Sweden and Japan.