One Japanese company is creating a precision manufacturing industry in Cambodia.

Minebea may be a company powered by tiny motors, but it is also one that is happy to be propelled into the future. The Japanese giant is taking pioneering steps in Cambodia’s production industry by introducing the manufacture of intricate electronic parts to the Kingdom’s workforce. 

Minebea Cambodia’s COO, Kengo Katsuki, is the man tasked with overseeing Phnom Penh’s most technical production line. Workers at the company’s facility in the Phnom Penh Special Economic Zone (PPSEZ) build a wide range of components and miniature motors used in phones, cars, computers and the like. The group’s client base includes Samsung, Apple, Nokia, Canon and Bosch.

A few days ago, Minebea Cambodia's 1,200 employees moved to a brand new plant . Like its facilities in China, many operators at Minebea Cambodia come from the countryside and sleep in the PPSEZ’s dormitories. The company plans to more than quadruple its workforce and employ 5,000 workers within the next two years.

“It’s the first time I have worked on this kind of project. It is a real challenge but I like it,” Katsuki says, before adding a note of caution. “Frankly speaking, recruiting such a large workforce in so little time is not easy.”

The challenge of enlisting this workforce from rural areas is also apparent. “The turnover ratio in the first two weeks is very high. Some resign because they are not familiar with standing jobs, others because they miss their family. Those who have been with us for a month are happy and stay for much longer,” he adds.

Employees don’t only work, eat and sleep on-site. They also learn. “Many didn’t have a chance to go to school. Most can’t even read or write Khmer. So we organise Khmer and English classes. It is also because we need them to understand basic processing instructions that are given by our Japanese, Thai, Malaysian or Chinese executives [in English]. We also teach them a sort of basic discipline, like good toilet habits,” says Katsuki. 

Producing abroad has always been part of the group’s business model. The first Thai plant was built in 1982. Today, Thailand is home to five factories with 33,000 employees, 61% of the group’s total workforce. In Asia, the group also has a presence in China, Singapore, Malaysia and of course Japan.

Katsuki explains how Cambodia became next on the list. “We needed to increase the production of our more value-added items at our existing plants in Thailand and China and move the labour-intensive production elsewhere. Extending our capacities in these two countries had become impossible because of workforce shortages and increased costs. The wages in the coastal regions of China, in particular, have dramatically increased,” he says. 

Minebea began scouting for alternative countries in which to locate its newest production facility. Central China, Myanmar, Laos and Vietnam were considered but rejected for a mix of reasons including potential workforce shortages, rising wages, political situations and logistical issues. Despite its weak infrastructure, Cambodia emerged as a logical choice thanks to its proximity to Minebea’s Thai production bases and low labour costs, which are almost a quarter of those in coastal China and Thailand. 

At this stage, the Phnom Penh plant is responsible for the final assembly of motor parts coming from the group’s Thai facilities. “For any product coming from Thailand, you normally have to change trucks at the border. Minebea doesn’t have to do this thanks to a special privilege granted to us by the government, which acknowledges our role in the country’s industrial development and the need for the economy to diversify,” Katsuki says.

Building such trust with the authorities is a key facet of the COO’s job. “When Minebea’s president told me that I would go to Cambodia, I was very surprised because my background was in sales and marketing, not production. But he thought the project needed someone with a lot of negotiation experience to help discussions with the government. That’s why I was chosen,” he explains. 

Today, the small motors are still re-exported back to Thailand, where they are inspected before shipment to destination countries. This may be set to change soon. “The quality tests show excellent results so far,” says Katsuki. “I am confident that as soon as next year, a part of our production will be directly checked here and exported through Phnom Penh’s airport.”

Within the next two years, Minebea also expects the Phnom Penh facility to start production of the motor parts it is currently just assembling. Looking ahead, the group wants to build local research and development (R&D) resources to support the production lines. Some may see this as an extravagant dream in a country whose government, according to Unesco’s Institute for Statistics, spends just 1.8% of its GDP on education, but Katsuki has optimism and more – a plan – to get hold of the engineers his company’s ambitions require.

“I am sure that many young Cambodians have the capacity to reach an excellent level,” he says. “I am now in discussions with the Institute of Technology and the Polytechnic Institute in order to set up vocational courses tailored to our needs. Next year, we will also organise several long internships at our factory so the students can better understand our business.”

Minebea also provides grants to Khmer students in order to study in Japanese universities and get their first professional experience at the company’s headquarters. “Of course, many of them will stay there because their salary is better than what they could get here, but in the longer term, I am sure some will want to come back and contribute to the development of their country,” says Katsuki. 

The COO sees Minebea as a pioneer, believing more Nippon companies will follow. “The Japanese Business Association of Cambodia’s members list has grown dramatically this year. Plus, since our arrival in March, we have been visited by 40 other foreign companies who are considering Cambodia for investment,” he says. “Thirty of them were Japanese.”