Japan last week pledged to promote business partnerships between Cambodian and Japanese SMEs and proposed the creation of the “Cambodia-Japan brand”.
In a meeting last Thursday with the Cambodian Ministry of Commerce, Arai Hiroyuki, special advisor to Japan’s House of Councillors, said Japan will encourage Japanese investors and business leaders to team up with Cambodian entrepreneurs.
Speaking to Bun Chanthy, undersecretary of state at the Ministry of Commerce, Mr Hiroyuki said the Japanese government wants to see more business ventures between Cambodian and Japanese people to export abroad and supply the local market. Speaking about the local market, in particular, he said such partnerships “build trust.”
He suggested that the products of these joint ventures be marketed under the Cambodia-Japan brand.
Mr Hiroyuki said Japan is happy to come up with a strategy to promote such partnerships. These joint ventures, he said, can hire skilled Cambodian workers who are now working in Japan.
“In order for these plans to materialise, we suggest Cambodia organises business matching events for Japanese and Cambodian investors,” Mr Hiroyuki said.
“There are about 12,000 Cambodian skilled workers employed by Japanese enterprises which gives us a good starting point for these joint ventures,” he added.
Commerce Ministry’s Bun Chanthy highlighted the long-standing diplomatic and trade relations between the Cambodian and Japanese governments.
He pointed out that trade between the two countries has grown remarkably in recent years, reaching $1.5 billion last year.
Miyao Masahiro, chief representative of the Phnom Penh Office of the Japan External Trade Organization (Jetro), told Khmer Times that such partnerships with Japanese businesses are an ideal way of boosting the local SME sector, particularly in agriculture.
“We have a good example already, LyLy Food Industry,” he pointed out. “LyLy is one of the largest rice cracker manufacturers in the Kingdom and it is a joint venture with a large Japanese manufacturer.
“Its products are exported to Australia and other countries,” Mr Masahiro said.
He was referring to LyLy Kameda Co. Ltd, a recently-formed joint venture between Japanese firm Kameda Seika and local business LyLy Food Industry, started with a capital of about $16 million.
Keo Mom, LyLy Kameda chairwoman, said that ventures with Japanese companies help local SMEs grow faster, with the Japanese contributing their expertise in quality management and providing capital.
“Joining forces with a big company, Cambodian firms can quickly expand,” she said.
However, she warned that such partnerships would require Cambodian firms to meet higher financial reporting standards.
“To build trust with new partners, particularly Japanese companies, Cambodian companies need to strengthen their standards of quality and hygiene and carry excellent bookkeeping and accounting practices,” she said, adding that Japanese investors demand well-kept financial records before investing in a firm.
“Alone, we can only attract small buyers. The Japanese can help us attract big companies,” Ms Mom said.
LyLy Kameda exports to 14 countries, including the United States, Canada, Australia, Italy, and New Zealand. Kameda holds a 51 percent stake in the business, while the rest is owned by the local partner.
Cambodia is now the sixth country outside Japan where Kameda has set up operations, following Thailand and the United States. Kameda is the first Japanese rice cracker manufacturer with factories in the Kingdom.
Partnering with Japanese firms enables local entrepreneurs to process raw materials into more valuable products, said Jetro’s Mr Masahiro. Selling milled rice directly to a buyer abroad is not as lucrative as exporting rice crackers, which sell for much more.
“It is good to work with Japanese manufacturers who know about quality and safety standards and can help locals increase the value of Cambodian agriculture products. This is a good example of what we want to do,” Mr Masahiro said.
Taking advantage of the skills and know-how of Japanese manufacturers will be beneficial for everyone, particularly Cambodian SMEs and farmers, he added.