Is there ever a perfect moment to dive into a $100 million-plus investment?
That was the pressing question facing Chinese denim giant Panther Denim as it searched for the ideal location for its second manufacturing hub.
Later this year, the company will begin trial pilots at first fully-owned factory outside of China near Phnom Penh, the capital of Cambodia. Designed with a focus on renewable energy, recycling and a closed-loop waste system, Panther plans to increase capacity to similar levels as its China factory—3 million yards of PFD and 5 million yards of denim per month—by the end of 2026.
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After a short-lived joint venture with a partner in Vietnam, Panther set out to establish a fully owned and operated facility that would allow total control over its supply chain from fiber to final fabric. With competitors manufacturing across multiple countries and clients actively diversifying their sourcing strategies, the company recognized that delaying expansion could lead to greater challenges down the road. However, the company couldn’t have predicted taking that leap during a period of global trade upheaval ignited by President Trump.
Panther continued with its investment despite tariffs on Cambodian exports to the U.S. rising to 49 percent earlier this year. “Honestly speaking, everyone probably had panic days,” said Tim Huesemann, sales director at Panther Denim. The temperature has cooled, he added, as recent negotiations brought the rate down to 19 percent.
“Our biggest external pressure is geopolitical risk, which has created market instability and made it harder for buyers to make long-term decisions. However, we believe our expansion in Cambodia will help mitigate this risk by offering a more diversified and resilient sourcing option for brands,” he said.
Situated in a fully operating industry zone close to the Vietnam border, the new automated facility is designed to serve as a one-stop solution for brands seeking China-level quality from an alternative manufacturing hub. “We have to be honest,” Huesemann said. “Right now, everyone is pulling out of China as much as they can. We acknowledge this move by offering a different CO [country of origin].”
Clients are requesting a “strong cost option collection” out of Cambodia. “They want something very cost-competitive,” Huesemann said. He noted that while innovation remains important, it may take a backseat as brands adapt to newly imposed tariffs. “That’s the sad story of innovation.”
Innovation—from new fibers to sustainable dyes—will continue to come from China and be duplicated in Cambodia. Solar energy will power the entire operation. Huesemann added the same staff will oversee processes in both sites.
“We believe we will be in a good position to serve different markets from both locations,” he said, adding that some markets are fine with producing in China. Approximately two-thirds of Panther’s export business comes from the U.S. However, Huesemann said the share is “much less” when considering total sales, which include the company’s substantial domestic business in China.
Huesemann emphasized that Panther is not shifting business from China to build up Cambodia. “We are increasing our capacity all over because we see the demand for our product, but we also hear the demand to have a second CO,” he said.
Panther sees significant growth potential in Cambodia, particularly as Vietnam reaches capacity and brands begin to shift focus away from Bangladesh. “Cambodia is somehow underrated in terms of fabric. We will be the first mill operating in Cambodia, so this will help local garment makers source local fabrics,” he said.
Additionally, brands that manufacture garments in neighboring Vietnam can obtain fabrics faster and save on transportation costs.
Panther’s expansion marks a rare moment in the industry. While its not uncommon for companies to establish new garment factories, new mills are more challenging. With nearly 40 years of experience, Huesemann says the company is uniquely positioned to leverage its deep industry knowledge in a completely new setup powered by the latest technology.
“I’m very honored to be part of the Panther family, and to be able to show our strength from another location,” he said, adding that Cambodia and new colleagues to exchange ideas with will bring a new spirit to the company overall. “We dive into Chinese techniques a lot of times, and now we can dive into the Cambodian way. And I think it will be very interesting to see something new.”
