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SHOULD YOU SET UP A
BUSINESS IN CAMBODIA?

This question crops up a lot, do you accept your fate and spend your time as an employee, allowing someone else to grow rich from your time and productivity, or do you risk everything you have to pursue your dream, setting up your own business?  It’s a big gamble with plenty of winners and losers.  To calculate your risks let’s look at the current market landscape of Cambodia.

A decade ago the business landscape in Cambodia was basic.  You had a bloated hospitality sector targeting the locals and expats with  mostly small, family guesthouses and restaurants and a few big, ugly Asian-style hotels, while subsistence and small-scale farming were (and in the countryside still are), the biggest source of income.

Factories were spreading around Phnom Pemh to tap into the abundance of cheap labour for the manufacturing of garments for European consumers.  There were the essential services of course, phone networks, a couple of breweries, a few banks, newspapers and so on, but the vast majority of goods were imported.

In Phnom Penh there were only a handful of buildings over 4 stories tall back then.  But that was a decade ago and things have changed at a remarkable pace.

Over the last few years a vast range of industries and services have appeared, along with an explosion in the range of products available.  The market is becoming quite diverse, but there are still opportunities.  The levels of market saturation and high costs we see in the west don’t yet exist here.

In the cites, skyscrapers now dominate the skyline and the sound of construction work engulfs many parts of Phnom Penh, Siem Reap and Sihanoukvile.  The pace of development is extraordinary.

While Cambodia lists 138th out of 190 in the ease of doing businesses ranking, you may not think that Cambodia is the best place to start your own business empire, but the kingdom does has its advantages.  Low costs, an abundant supply of keen potential staff, English speaking ability is good among young people and Cambodia is fairly unregulated in comparison to its neighbours, both to live in and to set up a business, although regulations are confusing and constantly evolving  In most cases a solution can normally be found to get things done.

It’s still easy to get your fingers burnt though, and after working closely with a range of businesses of different sizes from a range of different industries, we’ve picked up a few tips and tricks that might help you fulfil your dream of creating a thriving business here in Cambodia.

Don’t worry too much about what your read online

A quick Google search on this subject will bring up a range of expat forums filled with often naive requests for advice on starting a business.  Posts will often be followed by gloomy, negative responses from jaded, long-term expats on why you shouldn’t waste your money trying, you are garrenteed to fail.  There is a joke sometimes quoted to would-be entrepreneurs designed to put them off; “how do you make a small fortune in Cambodia?  Arrive with a large fortune.”

Some of the advice is quite appropriate though.  A wannabe tycoon without much start up capital should never try to plan a business remotely from outside Cambodia.  Instead you should get to know the lay of the land and build a few contacts first.  It’s also true that there are too many bars, resturants and hotels in Cambodia – far far too many in some cases, but that doesn’t mean that it’s not possible to build a successful small business here.  Many people have done, and many more will continue to do so.

Do you have the skills?

It might be your dream to open up your own hotel in Cambodia, but do you have the skills?  It’s hard work and if most of your experirience is in IT or finance then are your skills transferable?  Are you a people person?

Before you sell your house or plunder your savings then you need to really ask yourself some difficult questions.  Can I do it?  If not, maybe you can work for someone else for a while and learn how to do it first.

Once you know you have the skills there’s an even bigger question to ask, which brings us neatly to our next vital point…

Do you have the staying power and commitment to see it through?

It might look easy, but setting up a business in Asia is tough.  Half-arsed businesses usually don’t work and you’ll need to commit to working hard to make it success.  It will take time.

Your stress levels will be tested. You will make mistakes, be let down and will have the occasional drama to contend with.  Can you handle all of that?  If the answer is yes, then the next few insights will help you prepare for what lays ahead.

Dealing with people

Be careful who you deal with and trust.  You will need a licence, and there are a number of different licences for different business types.  Fixers can help, but at a cost.  Some are cowboys, so use your intuition and get to know people, do a bit of research, whatever you can do to minimise the chances of getting involved with a dishonest associate.

If you’re buying an established business, then people generally overvalue their businesses.  Pay attention to the lease term, as many people try to flog off their business with a year or two left on the lease.  Given the current climate the landlord could simply kick you out and sell off the land for a new Chinese condo project at the end of your lease, leaving you with nothing.  While there are a lot of horror stories about landlords, some can be lovely and we’ve had plenty of experiences of this.

The same diligent attitude needs to be applied to staff.  You will probably need some help from other people.

Many Cambodian companies are family businesses and trust does not come easily outside of family connectons.  In a cash-based society, corruption and embezzlement are tempting prospects to certain low-paid employees.  Paying your staff a good wage and cutting costs in other areas can be a good idea.  Low-paid staff can be fickle and often leave at the offer of a handful of dollars more from a rival.  If you find a good employee, do everything you can to keep them onboard.

Imitation

If you achieve your goals and start making money, then you will have a temporary moment of joy, but then a new challenge will come onto the horizon…  You will be imitated.

Asia in general is not big on intellectual property rights and chances are that a copycat operation will open up in a similar location just down the road.  Earlier in this article we advised you to work for others and gain experience, but some business copycats in Asia take it to a whole new level, not just taking the essence of your idea and adding their own personality to it, but actually copying your logo, issuing the same coloured uniforms and stealing photos and text from your company website.

If you have skill that is hard to copy, then you will put yourself at an advantage.  If you’re an expat and your copycat is a local then they will probably undercut you on costs, drafting in family members as staff.

Learn to Adapt

Cambodia is changing fast, and new opportunities are constantly popping up  Build a network and collaborate with others.

People are generally more flexible, friendly and encouraging than they are in many countries in the west.

Market your business well

This is the time for our shameless plug!  You need to stand out, do something better than everyone else – your USP as they say.

You will need to communicate your message effectively, whatever you are doing and different companies need different strategies.  A logo, a website, menus, brochures, apps…  Whatever you’re doing, we can help.

We work with businesses of all sizes and offer the support you need throughout your journey.

Get in touch with us using the contact button below.  Maybe we can answer your questions by email or set up a quick call.  We would love to find out more about your plans!

Get in touch now for more information:

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