French business comes home

Article taken from the newspaper "The Cambodia Daily" published on the October 6, 2006 and written by Erik Wasson. Available in .pdf here This article deals with the meeting of the two promoters of KhmerDev, Franck Touch and Ke Bin Soreasmey, and their risky bet to implant at Cambodia.

French business interests in Cambodia take many forms. At the top level is Societe Concessionaire des Aeroports, the French company partnered with Malaysian firm Muhibbah Engineering to run Phnom Penh and Siem Reap airports, and the French oil firm Total. Then there are big hotel operators such as Accor and a host of French businessmen running small hotels, guesthouses and restaurants. And in this “galaxy” of French businesses, as French Embassy economic mission director Jean-Daniel Gardere calls it, there are also a significant number of French Cambodians who, for reasons personal, patriotic or profit-oriented, have returned from France to set up shop. The French-Cambodian business community includes Vann Sou Ieng, the head of the Garment Manufacturers Association of Cambodia. It also includes entrepreneurs like Frank Touch. Four years ago, Touch, 40, who left Cambodia when he was six years old, relocated here to set up KhmerDev, a firm developing computer software. The decision to relocate came when he returned to his native Kompong Thom province in 2001 and discovered his grandfather was still alive. “My grandfather remembered me. When he saw my brother and I and said ‘Yanick! Frank!’ I decided to change my life and dismiss everything in France to move here,” Touch said in a recent interview. In some ways, Cambodia has a better business environment than France, he said. “We have legal corruption in France and it is called taxes. There, people work all the time and in the end what they have is very little,” he said, adding that because he exports his software over the Internet, he does not need to deal with Cambodia’s notorious customs officials. On the negative side, Internet costs are high. Touch cannot read Khmer but he is taking lessons as KhmerDev explores more IT possibilities in the local market. “In Cambodia it is very easy to get started because costs are so low,” said Soreasmey Ke Bin, 29, Touch’s business partner and fellow French Cambodian. “Now is the right time to come back. The country is stable.” Soreasmey Ke Bin said that he decided to go into partnership with Touch after meeting him while vacationing in Cambodia four years ago. “I was born in France. I went to the pagoda once in a while,” he said. “My dad came back to live here in 1991 so every year I would come on vacation to visit him.” Being partly Cambodian has helped him deal with authorities in Phnom Penh, potential clients and employees, but finding the right staff in a country with a poor education system is a challenge, he said. “The biggest problem is human resources. We try to focus on keeping the people we have. We sent staff to France for training.” Could Cambodia become a center for IT outsourcing for France like India has become for the US? “Tunisia, Madagascar, Romania, these are the competitor nations where France outsources,” Touch said. “The problem is that the salary costs there are the same while the quality of staff is better.” Despite the challenges, Soreasmey Ke Bin said the community of French Cambodians here is growing. Another emigre who has returned is Dipola Ung, 34, the head of the only eyewear chain in Cambodia, Eye Care, which now has eight outlets. But Dipola Ung said he would not be quick to encourage fellow French Cambodians to return to do business. “It is very difficult. You have to be flexible. You cannot talk about being completely transparent,” he said. Dipola Ung trained as a civil engineer in France, but he learned to be an optician after taking over his Cambodian wife’s family business. He said he brings from France an understanding of salesmanship, a skill he said he spends a lot of time teaching his staff. “You have to look the customer in the eye, and this is very different from the Cambodian way,” he said. Eye Care’s lowest-priced set of lenses and frames is $15, compared to as little as a few thousand riel in some markets. But competing with such cheap competitors is easy, said Dipola Ung, once customers understand how harmful eyeglasses with the wrong prescription can be. “Now we are looking to expand to Battambang and Sihanoukville. I want to have a branch in every province,” he said. Sometimes, given the lack of beauty in many new buildings in Phnom Penh, Dipola Ung dreams of returning to engineering. And sometimes he wishes business practices here were more Western. “Administration staff come by with taxes and paperwork. Let’s say the fee is $10 but they ask $5 more to do it for you. They are so poor and they are happy to do the service. This is a way of giving back too,” he maintains, adding that these unofficial payments also help his business. “The time is better spent managing the business rather than doing that paperwork anyway.” The small size of Cambodia’s market 14 million mostly poor citizens compared with Vietnam’s 77 million with a growing middle class means French businessmen need stronger incentives to relocate, said French-Cambodian Chamber of Commerce Director- General Ratana Phurik-Callebaut. “I would not say that investment is increasing. We are far below the Chinese,” she said. The chamber now has 83 members, and several times a year, Ratana Phurik- Callebaut travels to France to try to attract more investors. “It is very hard. They say first they will try Vietnam and then consider Cambodia,” she said. Lately, French gambling firms, silk producers and wine sellers have all expressed interest in investing. But, she said, the lack of rule of law worries many, especially after French insurer Indochine Insurance, headed by Philippe Lenain, was closed by the government in 2004. Officials claim Lenain did not have sufficient capital, while he alleges that the government closed the firm to aid a competitor. “This has had a big impact, unfortunately, on the willingness of French to come here,” Ratana Phurik-Callebaut said. On the plus side, French nationals can connect easily with ministers and other officials educated in France. “There is a network here,” she said. “Young people who left Cambodia as children, like me, or who were born in France, are very interested in coming here and doing something for Cambodia.” Gardere, head of the economic and trade commission at the French Embassy, said the French government builds on its historical connection to Cambodia to strengthen business ties. According to Cambodian government data, French products made up 6.9 percent of all imports in 2005 to the tune of $175 million. The big sectors include pharmaceuticals and medical equipment. “Many doctors have been trained in France” Gardere said, adding that Cambodian architects are often trained in France, giving them a natural familiarity with French materials and suppliers. “The biggest investments come from a sort of triad made up of airports, air Traffic control and tourism,” Gardere said. From 2001 to 2005, French investment totaled only $19.4 million compared to $594 million from mainland China. But that figure should change if Total is granted a contract to explore for oil here while SCA invests in rebuilding the Sihanoukville airport, Gardere said. France is not allowed to tie its foreign aid to the awarding of contracts to French companies, which puts French firms at a disadvantage, he said. Still, the connection between Cambodia and its former colonizer continues to produce a Frenchspeaking world of commerce, and a small community of people who are willing to invest here because of their affection for the country. “There is this big galaxy that includes French small businessmen that have come here and fallen in love with the country,” Gardere added.