Cambodia offers a bounty of business opportunities, but will a lack of innovative spirit see locals lose out?
By Sacha Passi Photography by Michael Klinkhamer
In a country where there has been a great necessity for resourcefulness, it is not hard to see the value of small business in sustaining daily life. From the sidewalk seller offering cheap knock-offs out of a makeshift briefcase to street vendors selling food for less than a dollar, Cambodia is seemingly brimming with startup initiatives. Yet these livelihood solutions are neither original nor filling a gap in the underdeveloped market for small and medium enterprises that is waiting to be tapped.
The notion of thinking on a global scale is still in its infancy in Cambodia, says Stephen Paterson, vice president of international affairs at the University of Puthisastra and coordinator of McKinsey Mekong Business Plan Challenge. “It is not just starting your own business, it’s the entrepreneurial mindset. It is thinking differently, looking for opportunities and a source of job creation,” he says. “In an economy where there might not be a lot of jobs, it is great when you can think outside of the box.”
A three-day workshop held in Phnom Penh in June encouraged participants to do just that. “It is a very long and slow process, but Startup Weekend helps people realise that, okay there is no problem with me being in Cambodia or being Cambodian, I can launch a startup and it can be a global business,” says Darren Jensen, the Cambodian event organiser.
The concept of the Startup platform originated in the United States in 2007 and was launched in Phnom Penh in 2011 with an inaugural 25 participants.
Over the course of 54 hours, expatriates and locals pitched ideas for a web or mobile phone application and formed teams to develop chosen prototypes with the support of mentorship from experienced business investors and entrepreneurs from the local and international community. “At Startup Weekend, you are dealing with earlier, smaller hurdles on this entrepreneurial path – you are putting your business idea in front of people, maybe for the first time,” says Shirley Fong from Emerging Markets Entrepreneurs. “Those people are going to challenge you to make sure it works, to make sure it has a future.”
In 2012, participation more than doubled compared to the previous year, yet with Cambodians accounting for an estimated 35% of the demographic, the event further highlighted a gap in the local innovation mindset.
Event judge and business investor for JFDI Asia, a digital incubator, Hugh Mason says it is not uncommon to see a high proportion of international interest at similar events across the region; or on a larger scale worldwide – half the startups in Silicon Valley were founded by immigrants, and companies including Yahoo, eBay and Google are all the result of migrants who seized opportunities in the US information technology market.
Mason says the value of foreigners is their ability to bring a fresh perspective into the fold, which can in turn develop an innovative idea that locals may otherwise not conceptualise: “As more Cambodians get the chance to travel outside their country they too will start cross-fertilising ideas with foreigners, which can be the quickest way to come up with something genuinely new.”
According to the judging panel, Cambodian-led teams performed to a similar standard to their peers, but isolation may have stifled an ability to see the ‘bigger picture’. “Perhaps they don’t realise that there’s a much bigger opportunity to create companies at low cost here that could sell to the world. Or if they do see that opportunity, they don’t know how [to implement an idea],” Mason says.
After a few months living in Cambodia, French-New Zealander Linda Bell used the Startup Weekend to test-drive her idea for a tourism business inspired by social enterprise and humanitarian opportunities she saw in the local market. Although her entrepreneurial venture was not deemed the winning prototype to secure $250-worth of business tools and additional web service vouchers, her awareness of the emerging market is a reflection of a larger scale trend across Cambodia.
In 2011 new business registrations in the Kingdom reportedly increased by more than 20% compared with the previous year, of which up to 40% were foreign-owned companies.
Kimlong Chheng, a lecturer of business and economics at the University of Cambodia, says the Kingdom’s young and dynamic workforce is one reason international interest is turning to the country’s emerging market to spin a profit.
“With some skill training provided to them and incentive packages embedded into their pay plans and benefits, the Cambodian workforce becomes an asset,” Chheng says. “Wage rates are low, even lower than the regional average rate – a competitive edge in price competition.”
Paterson argues it is this demographic that should be tapping in to the local market for independent gains, but an outdated approach to the educational format is serving as a roadblock to the entrepreneurial mindset. “In some ways when you look at the people in the society there is an entrepreneurial spirit, but still the education is very formal,” he says. “You have to hit it from different perspectives in terms of embedding it in the educational structure so people graduate with some sense of entrepreneurship.”
Further exposure to community events and competitions that encourage small business startups will serve to harness free thought, says Paterson. While entrepreneurial events are fairly new to the country, competitions are increasing, particularly through local universities that specifically encourage business startups by young Cambodians.
Entrepreneurship has been proven to drive and mobilise economies as it targets the use of idle yet productive resources such as natural and human capital. But it also requires a willingness to take a gamble. If critical thinking does not become ingrained in the local mentality it is likely that scalable business opportunities will end up in the pockets of savvy enterprises from abroad. And “that”, Mason says, “would be a shame.”