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Business owners express concern over competition from Chinese

Taing Vida / Khmer Times No Comments Share:
Chinese food store
Chinese restaurants line a street on Koh Pich in Phnom Penh. KT/Siv Channa

Chinese tourists topped the country’s tourism market in the first quarter of this year. However, not all local business owners are pleased about it. Business owners, both Chinese and local, speak of the challenges and how the Kingdom’s small and medium enterprises fare in the competitive business environment

Near Koh Pich island, where Chinese investment has skyrocketed and led to the construction of many skyscrapers, lies a small grocery store owned by Rath Sopheak.

Ms Sopheak says her regular local and western customers have slowly disappeared, while her shop is now surrounded by Chinese restaurants and massage parlours.

“I started to lose regular customers when many Chinese people settled nearby,” she says. “I receive Chinese customers, but they’re not regular customers. Many of my daily produce do not sell out.”

In order to make ends meet, Ms Sopheak says she had to rent out her storehouse to a Chinese national. However, even she admits that renting out to a Chinese national is more profitable than renting out to a local resident.

The storehouse is no different from what it used to be, aside from one difference: all goods sold are made and imported directly from China.

Wen Ming Zhang, the store owner and Ms Sopheak’s tenant, hailed from Guangzhou province in China. Mr Zhang says he first came to Phnom Penh as a tourist in 2015.

He says the Kingdom welcomes many tourists, especially those from China.

“Back then, I spoke with Chinese residing here. I learned that there’s good opportunity to run a business in Phnom Penh,” Mr Zhang says. “So, I decided to return in 2017 and applied for a business visa earlier this year.”

He says his store not only accepts US dollars and Cambodian riels, but also the Chinese yuan. Mr Zhang says his store, Mei Yi Jie, also accepts digital payments.

“My business targets Chinese customers, but I also welcome local people,” Mr Zhang says. “All products here are made in China. It’s good.”

Situated near the Koh Pich bridge lies a small restaurant that serves traditional Chinese noodles.

Its owner, You Lin He, says the Chinese believe that noodles are staple Chinese cuisine.

Ms He says she first arrived in Phnom Penh in January, and that she started her business in May with $20,000.

She says she came to Cambodia to start a business because in Nanning city, where she hailed, $20,000 is not enough to operate a restaurant.

“It’s very convenient to run a business in Phnom Penh,” she says. “You might need up to $40,000 or $50,000 to open a small restaurant in Nanning. I decided to come here with my husband.”

“My Chinese tourists come to my restaurant because they can find the authentic taste from their home country. Cambodian chefs cannot do this,” Ms He says. “I receive many customers every day and most of them are Chinese tourists.”

Sam Pisey, a manager at SKY cosmetics in Boeng Keng Kang I commune, says not many Chinese tourists visit her store or make purchases.

Ms Pisey says most of her customers are locals and westerners.

Chinese tourists flooded the Kingdom in the first three months of 2019. KT/Siv Channa

“In my experience, Chinese tourists show a strong tendency to favour Chinese-owned and run businesses,” she says. “Chinese companies or stores also prefer hiring Chinese nationals as employees rather than employing local residents.”

According to a Tourism Ministry report published in May, 683,436 Chinese tourists flooded the Kingdom in the first three months of this year, adding that the figure increases by 35.1 percent from quarter to quarter.

According to the report, Phnom Penh and its surrounding provinces are the most attractive destinations for international tourists, noting that the area received 1.08 million tourists during the first three months of 2019.

Veng Sothy, an undersecretary of state with the Commerce Ministry, says Chinese nationals are free to apply for a business visa, and that they can stay up to one year in the Kingdom if their application meets all criteria.

“We have set conditions for Chinese nationals who wish to run a business in Cambodia, including [conditions covering] hygiene, signature and location,” Mr Sothy says. “By doing so, we are able to manage them and their businesses.”

Tourism Ministry spokesman Top Sopheak says Chinese tourists are expected in every country in the world, noting that the Kingdom has a clear policy of attracting potential Chinese tourists.

“It’s not that we are not aware of this. The ministry has encouraged local business owners to ensure that their products and quality of services improve in order to attract Chinese tourists,” Mr Sopheak says. “It’s not strange that Chinese tourists prefer goods from Chinese shops.”

He says that Chinese tourists on average stay in the Kingdom for four to seven days and spend up to $300 per day.

“We still face a lack of human resources and Chinese tour guides at the moment [are used], as we strive to push for more training,” Mr Sopheak says. “We are also providing Chinese [language] lessons to our ministry officials.”

Tourism Minister Thong Khon recently said that the government expects at least three million Chinese tourists per year by 2020. Mr Khon said by that year, the number of international tourists will reach seven million.

Clais Chenda, president of the Hotel Association of Cambodia, says the arrival of Chinese tourists and businessmen illustrates growth in tourism and investments. However, he said business opportunities are given to Chinese investors.

“There are more Chinese tourists than other foreign tourists,” Ms Chenda says. “But in terms of contribution to local vendors, it can be said that it is very little.”

She says that Chinese tourists visit the Kingdom, but they do not purchase local products or enlist the services of locals.

Ms Chenda says Chinese nationals prefer hotels and guesthouses owned by other Chinese nationals.

“As I have observed, restaurants and hotels owned by Cambodians do not receive as many Chinese tourists as Chinese owners,” she says. “This trend provides good opportunity to Chinese startups because Cambodia targets Chinese tourists.”

Ms Chenda says language is another issue preventing local business owners from attracting Chinese customers.

“Some tourism service providers in hotels and restaurants don’t have Chinese speaking staffers and Chinese tourists themselves cannot speak English, so there are barriers,” she says. “Right now, Chinese tourists are managed by Chinese tour agents, stay in Chinese- managed hotels and eat in Chinese-owned restaurants. Only a small amount of money is generated for locals – the majority is taken back by Chinese nationals.”

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