Monday, December 7, 2009

Cambodian Business: Business in the developing world

I recently returned from a 1 month visit to South East Asia to visit my girlfriend who was completing a 6 month internship for an NGO in Cambodia. It was an experience which gave me a greater appreciation for my mentors over the past couple years and the structure of the Canadian system. So I decided to write an entry about what I feel differs between the 2 countries. Keep in mind that I’m in no way an expert and these are simply my observations that I felt other entrepreneurs would enjoy. As someone currently building a business I had taken for granted the simple factors that make starting a business a bit easier. I will break this blog post into a couple main compartments that I felt differentiated Canada and Cambodia.

1. Mentorship. If you haven’t heard of the Khmer Rouge, which I hadn't 1 year ago I recommend reading up on the Cambodian history. Often history skims over the small country but the atrocities committed should be understood and remember as to never happen again. The first book I read on the subject was called “First they killed my father” which explains the life of a Cambodian girl that escaped to the US after the communist regime fell. So what does this have to do with mentorship? During the Khmer Rouge 1/3 of the countries population died at the governments own hands. The country turned back their clocks to year 0 and became an agrarian society killing all intellectuals and members of the previous government and military. Today’s leaders had no structured society, no global perspective for around a decade and generation lost before them. Imagine trying to start a country essentially from scratch. The UN only entered the country in 92. With no role models, no one to provide advice, nobody with a successful career to follow and no capital (they also killed all the rich people) it seems like an unsurmountable task. (Side note: Some young men enter the army to develop connections that will later in life help them in business, this shows the level of obstacles you must overcome and the pockets that must be lined.)

2. Entrepreneurship. Over the past several years I have established a great interest in microcredit, third world business models and developing economies in general. Although visiting for the first time made me truly understand the concept of entrepreneurship on a scale like never before. People needed to be strong to survive. I believe the main difference other than the scale of the operations is the understanding of market forces. Cambodian businesses often became commodities with several identical stalls in a small area lacking a niche and creativity. Everybody sells the same guide books, the same table covers and the same t-shirts. I kept looking for the individual that sold something different for a premium price or asked what tourists might buy that’s not currently available.

3. Structure. Everything from roads to markets are chaotic in Cambodia, which for one month was an awesome adventure. Imagine the difficulties starting a shipping business when people drive on either side of the road slowly maneuvering across through traffic slowing things down to a crawl and cops pulling over cars for bribes. Then there’s the infrastructure with only 1 major port and bumpy roads.

4. Taxation. I never thought I’d say that I appreciate being taxed but after visiting a country with little to no government services it really makes a big difference. The side streets were dirt roads because in order to upgrade all landlords had to come to an agreement. ( That being said I'm a fan of Keynesian economics for essential government services only.)

Commerce at work:

If you want to see some of the biggest commercial mayhem visit Cambodia during the annual water festival at the start of November. The city of Phnom Penh swells from 2 million to 4 million as people come from distant villages and the main area is full of branded tents. Some of my favorites’ included diapers, scooter tire treads, multiple alcohols associated with body building (Wrestler wine, Golden Muscle Liquor) and whitening cream. Basically it was a giant outdoor Walmart! Watching villagers walking around with a tire over one arm, toothpaste in another hand and a big bag of diapers under their second arm was quite the site.

Overall I think Cambodia is shaping up for a big tourism boom in the next 10 years as it’s cheaper than Thailand, less traveled and have enough of a network in place to get around fairly easily. During the month I also spent a week in Malaysia and the differences were amazing from one of the poorest to the strongest country in the region. That wraps up my travel update and I hope every has a happy holidays!

P.S. For the beer fans that have continued to read all the way to the bottom here are my top 3 from SE Asia. Overall the beer was quite boring, a lot of lagers, a few dry beers and the odd pilsner. It’s still a luxury in Cambodia so unfortunately the honeys, winter ales, and heffervisens are still unavailable. Odd beer fact, they often serve it with ice and they provide a straw since the cans are not guaranteed clean. Other fun fact: they do have a bad Guinness knock off called Black Panther.

1. Tiger, 2. Leo, 3. Phnom Penh Beer

Recent Reads:

1. End of Poverty

2. Lucky Child

3. Confessions of an Economic Hitman (Current)