Inside a gleaming white and blue garment factory in Cambodia stand rows of second-hand Singers – weathered sewing machines transported from a plant in China, which closed last year.
The Hong Kong-based Top Form, which has 700 workers at the plant, is one of many businesses that have moved to Cambodia, mostly from China, in the past year or so to take advantage of its lower wages, which are roughly a third of those in China.
Double-digit wage increases in China and a shortage of labour for factory work have prompted several companies to move to cheaper countries such as Vietnam, Bangladesh and Indonesia.
Angie Lau, chief executive of bra-maker Clover in Hong Kong, says her company finds operating in Cambodia easier than in India where it also has a plant. She says productivity in Cambodia is rising rapidly towards levels seen in its Chinese factories.
Cambodia, a country of just 15m, is seeing its economy transformed by the influx and new factories are sprouting up around its capital Pnomh Penh and near the Thai border as investment also shifts from Thailand.
The inflow of investment picked up sharply last year as Hong Kong Chinese companies and Japanese companies sought cheaper labor. Peter Brimble, senior country economist for the Asian Development Bank, estimates that overall foreign direct investment will jump to $1.5bn in 2012, up from $850m in 2011, because of investment in manufacturing, agriculture and the finance sector.
(Read More: Chinese Workers' Salaries Rose 9.1 Percent in 2012)
Larry Kao, general manager of Medtecs, a Taiwanese company, which produces surgical suits at its 4,000-employee factory in the Kampong Cham province in the central lowlands of Cambodia near Vietnam, quips: "So many foreign companies are competing for workers we wish the population would double."
Mr Kao estimates that factory wages have risen to $110-$130 a month, compared with $85-$100 three years ago. However, that is still less than China's factory wages of $400 a month.
In addition to mainland Chinese and Hong Kong investors moving jobs from China, several Japanese companies have invested in the country in the past year, especially in the area near the Thai border.
In early December, Hun Sen, Cambodia's prime minister, attended the groundbreaking ceremony for a mall in Pnomh Penh being built by Japan's Aeon, whose president promised to invest in four more.
The languid tempo of the city's traffic is changing with many sport utility vehicles - some driven by Chinese businessmen – muscling their way through the streets. Chinese restaurants are packed with executives from mainland China.
However, with such a surge of investment comes problems; ranging from wage inflation to land grabs as industrialization proceeds apace. Medtecs saw a three-day strike last year, partly over wages but Mr Kao considers himself lucky because his factory only has two unions.
"I have heard of factories with 14 unions, which would be like having so many wives," he says.