Monthly Archives: August 2021
IT & Communications in Cambodia
IT & Communications in Cambodia
Hospitality & Tourism in Cambodia
Hospitality & Tourism in Cambodia
Construction & Maintenance in Cambodia
Construction & Maintenance in Cambodia
Banking & Finance in Cambodia
Banking & Finance in Cambodia
Starting a Business Cambodia
Starting a Business Cambodia
Are you considering starting a new business in Cambodia but need more information?
Look no further. You’ll find everything you need right here in our Business Cambodia guide. From how to open a business in Cambodia, necessary licenses, calculating and paying tax; right through to how to close your company when you’re finished.
If you can’t find your answer here, just ask us at Qbiz Solution Co., Ltd. and we’ll point you in the right direction.
Cambodia officially joined the Asean Economic Community (AEC) in December 2015. While it is still early to assess the impact the new membership has had on the country, we believe in the following years your startup could benefit from:
- Access to a market of over 600 million people (or almost 10% of the world population) in the ASEAN region.
- Lower transaction costs on trading, the import of materials by the elimination (or lowering) of tariffs and non-tariff barriers, as well as on the export of our final products.
- Advancements in processes for customs, logistics, and transport connectivity for trading.
- Access to skilled labour from other countries, as well as educational & comprehensive capacity building programs to train our existing staff.
- Access to ASEAN capital investment opportunities.
- Exchange of knowledge and improvement of processes to implement Good Manufacturing Practices, HACCP, Intellectual Property Rights, etc. For example, Cambodia has recently signed all three intellectual property treaties managed by WIPO: the Madrid Protocol, the Patent Cooperation Treaty, and the Hague Agreement Concerning the International Registration of Industrial Designs.
- With AEC membership we will see proper regulations and all the proper taxation put in place, making importing and exporting and other business-related activities much clearer and easier to understand. It will actually lower the price of a lot of goods here. For example, Cambodia recently abolished the estimated tax regime, forcing all enterprises to join the real regime.
- The country has recently signed Double Tax Agreements (DTA) with Singapore, China and Brunei, while a new DTA with Thailand is expected very soon.
- Cambodia also saw a 4 percent increase in new registered companies for the first three months of 2015.
- In 2014, almost 4,000 businesses registered with the Ministry of Commerce, marking a 29% increase on 2013.
- In addition, trademarks registered with the Ministry of Commerce rose from 4,199 in 2015 to 4,685 last year. The rise in registered trademarks follows Cambodia’s accession to the Madrid Protocol in 2015.
- The total number of active trademarks in the country exceeds 47,000.
- There were 513,759 non-street businesses in Cambodia as of 2014, however, only 10,565 of these are registered.
- Foreign firms are mostly operated by Chinese, South Koreans, Japanese and Vietnamese who are carrying out business in the garment, footwear, agriculture, agro-industry, tourism, construction and real estate sectors.
- 5,128 of the registered businesses operating in Cambodia are foreign owned. 2,028 of these are Vietnamese owned while 382 are US or European owned.
- These increases may also reflect the tightening of business registration requirements by the Cambodian Government and compliance with these laws across the Cambodian market.
- However, Cambodia is considered number 180 out of 190 countries on the Ease of Starting a Business, according to the World Bank Group, so challenges could be significant.
- Frequent challenges include a lack of access to information on regulations and licenses & permits needed for a specific industry and a lack of skilled labour.
- It boasts a relatively simple tax system offering several incentives, especially in select industries and those operating from a Special Economic Zone.
- Companies can be 100% foreign-owned.
- Offers duty-free avenues into the US and EU.
- Large, cheap workforce.
- Dollarised currency.
- Easy for businesses to move money in and out of the country.
- A hub for foreign businesses located in the heart of the ASEAN Economic Community (AEC).
- A valid visa, work permit and a bank account with a minimum balance of USD$1,000 (4 million riel) – you may withdraw this as soon as the business is officially established.
- A certificate of good health.
- More often than not, a police report from your home country identifying you as a person(s) of good standing with no history of criminal activity.
- To register a company in Cambodia the name must also be registered with the MoC.
- To receive the company’s constitutive documents—which include the certificate of incorporation, the Articles of Association, and the business license—you will need to register with the Ministry of Commerce (MoC). The process can now be carried online here.
- Within 15 calendar days of having registered with the MOC, the new enterprise must register with the GDT. At the GDT, you will obtain the tax patent and the VAT certificate of the new company.
- Finally, all enterprises must pay a visit to the Ministry of Labour and Vocational Training (MLVT), which registers the company under the Labour Law, provides workbooks for Khmer employees and work permits and employment cards for foreign workers. If the new company has more than eight employees, they must also be registered under the National Social Security Fund.
- The World Bank latest estimation is that it takes 99 days for the whole process to be completed.
- The first food franchise in Cambodia, operating in Phnom Penh, was Thailand-based The Pizza Company. Launched in 2005 by EFG (Express Foods Group), they have also introduced Swensen’s, BBQ Chicken, Dairy Queen and Costa Coffee.
- A number of international brands have entered the Cambodian market, including; Burger King, Carl’s Jr., Circle K, Cold Stone Creamery, Domino’s Pizza, Krispy Kreme, L’Occitane, Levi’s, Lotteria, Pandora, and Starbucks, and more.
- In 2016, electronics and gadgets seller, T-Shop, became the first Cambodian business to offer franchise options.
- In 2020, Cambodia does not have any comprehensive franchise laws; these are being worked on by the MOC.
- Stay up to date on Article 19 of the Trademark Law, Copyright, Competition and Intelectual Property Laws which are being reviewed and updated.
Develop a pricing strategy
Develop a pricing strategy
Pricing is a crucial element of business. Find out what you need to consider when you price your products and services, types of pricing strategies, legislation obligations, what your price should include, and where to conduct research.
What is pricing?
Pricing is the process you use to set the price of your product or service. Pricing your products and services can be difficult to determine. If you set your prices too high, your customers may find your products too expensive; however, you can also affect your profits if you set your prices too low.
The following steps can help you through the process of pricing your products.Before you calculate your price, it’s useful to calculate how much it costs to produce or deliver your product or service. When coming to a figure, always consider the cost of producing your product or service as well as your overheads. Don’t forget to also factor in The standard rate of Value Added Tax (VAT) in Cambodia is 10%. However, 0% VAT rate applies to support industries who supply certain goods and services to exporters. and other relevant taxes in your costing.
When you’re pricing your products or services you need to remember to include:
- manufacturing cost
- market place
- competition
- market condition
- brand
- quality of product
Once you know the true cost of your product or service you can then start analysing other influences and set your objectives and strategies.
A key consideration when you develop your pricing strategy is to understand your objectives when you price your products or services. One objective of pricing is to make a profit on your products or services, but there are many other pricing objectives that can affect your pricing decisions including:
- position in the market
- competitors’ positioning
- ability to supply to or increase demand
Positioning
Positioning can help you establish your products or services in the market. For example, your business might sell high-end products, try to compete on price, or get into the budget level market. Price can indicate a level of quality so it’s important that the price of your products or services complement your overall brand.
Remaining competitive
For many businesses, being price-competitive is important, whether as a price leader or responding to the competition. When setting prices it’s always important to anticipate what your competition will do in response to your prices and ensure that you factor it into your strategy.
Increasing demand
Using price to increase demand in new or existing products or services can be a good objective for establishing customers or boosting lagging sales. When multiple products or services are involved, it’s a good idea to be aware of how the prices complement each other.
It’s important to keep your business and marketing objectives in mind when developing your pricing objectives to ensure they’re complementary to one another. By establishing your pricing objectives early, your choice of strategy may be easier to determine.
There are a number of pricing strategies you can employ when setting your price, including strategies based on:
- costs
- competition
- perceived value
- product
When choosing your pricing strategy, it’s also important to keep your overall marketing strategy in mind to ensure your strategies complement one another.
Cost-based pricing strategies
- Cost-plus pricing: a strategy that adds a small margin or mark-up to the costs of producing and distributing the product or service. Care should be taken when calculating your price to ensure that all relevant costs such as cost of goods sold, fixed costs including Goods and Services Tax (GST) and other taxes are factored in. If your calculations are accurate this strategy can keep your price competitive while ensuring that you still make a profit.
- Charge per hour: this strategy is often used by service-based businesses and independent contractors. The ‘per hour’ method calculates all the relevant costs of a business at an hourly rate. When using this method it’s important to factor in all your business costs and not overlook taxes, a wage for yourself, superannuation and leave entitlements.
Competition-based pricing strategies
- Going rate pricing: this strategy is a safe way for small businesses to remain competitive without eating into profits. The strategy means you price your products and services close to the market price leader.
Value-based pricing strategies
There’s a number of value-based pricing strategies you can use including:
- Value pricing: this strategy is based on what customers think a product or service is worth, rather than actual costs. The value is determined through market testing and a price is set based on this value. For example, sometimes customers will pay more if it saves them a lot of time. The price reflects this saving.
- Premium pricing: this strategy reflects the prestige, luxury or exclusive value of the products or services you provide. Typically, at a premium price customers have high expectations of quality, performance and service.
Product-based pricing strategies
There’s a number of product-based pricing strategies you can use including:
- Penetration pricing: this strategy provides you the opportunity to set a low initial price on a new product or service to gain high sales or market share. Once this point is reached, the prices are increased to normal pricing levels.
- Skimming pricing: this strategy sets a high initial price which aims to excite audiences who desire products or services that are in high demand and are highly valued. Once the required profits are made, the price is then lowered for a wider market.
- Loss leader pricing: this strategy aims to attract customers by offering a product or service at below cost. The strategy hopes that customers will also purchase other products or services with a higher profit margin.
Research can help you find the optimum price for your products. Generally, the optimum price is one that your customers are willing to pay, without it affecting your profits. This isn’t a one-off activity, you must monitor your key pricing influences regularly as part of your overall market research to ensure your prices stay competitive and you still meet your customers’ expectations.
Market testing
To help you determine how much your customers are willing to pay for your product or service you should perform some form of market testing. As a start, research your customer’s purchasing behaviour such as:
- their current and anticipated demand for this type of product or service
- what they pay for similar products or services
- the quantity likely to be purchased
- additional features they value
With this customer information in mind, you can then develop a price comparison offering a number of different product or service options for testing to help you determine a price range that is acceptable.
Competitors
You should have already determined who your direct competitors are and how your business compares to them when you developed your marketing plan. This information can be useful to help you determine your price point.
If you decide to use your competitors’ prices as a guide, be careful that it doesn’t dictate your prices too much, as it can seriously undervalue your product or service and drive down your profits.
When you compare your business to competitors, it’s also important to ensure you look at the business as a whole and compare on other value-based traits (such as special features, quality and customer service) as well as price.
Influences
Pricing influences are external factors that can impact the price of products. Four influences that you may encounter include:
- price sensitivity
- level of demand
- level of competition
- government regulation
Price sensitivity
Price sensitivity refers to price fluctuations as customer demand increases and decreases. For example, commodity goods such as petrol have high price sensitivity. The difference of a few cents in price can impact a customer’s behaviour.
Some markets are more sensitive to price increases than others. Price sensitivity can change over time based on a number of factors including changes in the economic environment, competition or demand. Factors other than price, such as quality, service, and uniqueness, can also influence price sensitivity.
Level of demand
Product and service demand can influence your prices. If there is high demand, it is likely you can increase your price. Price can also influence demand. For example, if the price lowers, then demand can temporarily increase.
Level of competition
Competition can also influence your product’s or service’s price. In general, the less competition you have, the more demand there is for your product. If a new competitor enters the market, the competitor can affect your price.
Government regulations
Government regulation can influence your pricing decision, as additional fees or levies may increase the sale price of your product or service.
Discounts can affect your bottom line. While you may quickly sell and remove stock from your supply, you also need to understand how discounts affect the rest of your business.
Your business can benefit from offering a discount. These benefits can include that you:
- attract new customers
- sell unwanted stock
- entice customers to return
There are different types of discounts. These include:
- special offers or pricing deals
- packages or bundles
- quantity discounts
- value-add offers
- seasonal or periodic discounts
If you intend to offer discounts, you should develop a plan specifically for that sale.
Tools and software to market your business
Tools and software to market your business
Learn about the digital tools and software available that can support your online marketing goals.
Marketing tools and platforms can help you conduct your online promotion and retailing. By streamlining how you deliver targeted messages to your customer, it can help you achieve your business goals.
These tools and platforms can help you:
- retain customers
- keep customers and clients up to date
- track your customers’ purchasing behaviours
- personalise messages to your customers.
The type of platform and tool you use will depend on what you want to achieve.
Email marketing systems are platforms that can help you send and schedule emails to you customers. You can use them to send emails advertising your products or services or to keep your customers informed of company updates and other news.
Use an email marketing system to help you:
- stay connected to your customers
- target email messages to specific groups of demographics of your customer base
- measure the success of your email campaigns with inbuilt analytics.
Marketing automation software platforms can help your marketing team be more efficient. They can allow you to market through multiple channels at the same time and automate repetitive tasks.
You can send out and track all your marketing messages from the one platform. You can use them for:
- email campaigns
- social media
- websites
- text messages.
Through a marketing platform, you can automate your marketing message to send at a specific time on a specific platform. You can also use them to create a more targeted experience for your customers, such as sending out messages to customers on their birthday.
By having all your platform data and information in the one place, you can be more effective when speaking to your customer and maintaining your brand.
A social media management system allows you to manage all your social media platforms from the one place. It will help you maintain consistency when speaking to your audience on each channel.
You may also be able to schedule social media posts ahead of time and then analyse the effectiveness of your posts. You can use both these features to help you better plan your social media communication.
Advertise your business
Advertise your business
Advertising is an effective way to promote or sell your product or service. Understand the benefits of different advertising types, what to include in your advertisements, and your legal obligations.
Advertising is a marketing activity that can help you to reach out to potential customers and encourage them to buy your products or services.
An effective advertising campaign can help you to:
- increase customer reach
- build customer awareness of your business and brand
- promote the benefits of your products or services
- communicate information about your business
- increase sales and demand
- gain an advantage over your competitors.
For your advertising to be successful you need to set yourself apart from your competitors and grab your audience’s attention. Identify your target market and tailor your message to connect with those customers.
When creating your ad:
- use a powerful headline
- tailor your message to suit your target audience
- talk about the benefits of your products or services
- have a call-to-action for the audience to take
- use exciting images and testimonials if relevant
- always deliver on what you promise.
Examples of advertising media include:
- digital channels (including websites and social media)
- television
- radio
- print (for example, in specialist magazines read by your target audience)
- cinema advertising
- billboards and transit signs
- door-to-door sales.
With a range of choices, finding the best advertising mix for your business can be challenging. The advertising you choose should depend on:
- your business
- your budget
- the types of media your target audience accesses.
For example, social media may be a free or low-cost way to advertise, but is used differently across different age groups. Make sure your target audience accesses your advertising platform. You may benefit from using a mix of media.
Digital advertising
Digital advertising allows you to reach a larger target audience, all over the world, 24 hours a day. You can focus your efforts on your ideal buyer and build a community around your product or service. You can reach your customers and your customers can engage with you in a two-way format.
Some digital options include:
- social media advertising
- mobile app advertising
- email marketing
- online promotion through website banner ads, display ads, keywords and video.
With digital advertising, you can:
- track your customers
- analyse their buying behaviour
- customise your message to their preferences.
Market your business
Market your business
Thinking about all your business activities can help you to position your business, and your products or services in the market. On this page you’ll learn how to use the 5 Ps of marketing to help build your business brand and target your customers’ needs.
Marketing and position
Marketing aims to build your brand and business. It can help you to reach your customers, attract new ones and increase your profit. But before you plan your marketing, you need to have a clear idea of your business’s position in the market.
Positioning your business
Positioning is your business niche or how you want your customers to think about your products or services. For example, is your business a budget choice for families? Or do you offer more high-end services?
Positioning helps you to be clear and focused in your marketing efforts. It shows what your business does, who you do it for and why you’re different from your competitors.
You can use key features such as your location, your experience or packaging, to position your business. For example, a home-based accountant might use their international experience to position themselves as an up-market service provider.
The 5 Ps of marketing
Once you have a clear idea of your positioning, you can use the 5Ps of marketing to reach your target market. Working your way through each of the Ps can help you identify areas of your business you can change or improve on – to meet your targeted customers’ needs.
Product refers to what you are offering as a whole. What exactly are you selling to your customers? This includes the value added features, branding and packaging as well as service and warranty terms.
For example, if you’re a jewellery maker who is looking to grow your business, you might think about giving your customers a free gift wrapping service as an incentive to buy from you.
Price refers to the way you set prices for your products or services. It generally includes all the parts that make up your overall cost, including the advertised price, any discounts, sales, credit terms or other payment arrangements or price matching services you offer.
Your pricing will also depend on your business’s position in the market. For example, if you advertise your business as a budget car rental service, your pricing should reflect that choice. If you’re looking to grow your business, consider if your pricing reflects your positioning.
Promotion refers to all the activities and methods you use to promote your business and products. This includes sales, public relations, direct marketing and advertising. For example, if you’re growing your sports management business, you might add sponsorships to your marketing mix to help promote your business.
Your promotional strategy will be part of your marketing plan.
Things to consider before promoting your business
Your marketing and business plans
Consider what you want to achieve with your advertising or promotional campaign? Does it align with your brand and your business goals and objectives?
Before you start any promotion, write down your goals and objectives. You’ll then be able to track and evaluate your success after the campaign. This will help you decide whether to take this approach or to trial different promotions in the future.
Your target customers
If you’ve been in business for a while, you should have a good understanding of who your target customers are. These are the people who you expect will buy most of your products or services. If you’re not sure who your target customers are, then have a look at who is currently buying your products and services. Look for ways to make sure your promotional activities are reaching them.
Where to advertise or promote
How do your customers normally find you? Through the internet, social media, word of mouth, flyer, ad in a publication, online, on radio or TV? Find out how your current customers find you, then target your advertisements and promotions in these areas.
Your budget
Advertising and promotion can be expensive. Pick options that will give you the best value for money, while still reaching your target customers. Remember, the cheapest option is not always the best. The best option will be whatever is most effective for your business. Some budget-friendly advertising options include flyers, posters, social media and newsletters.
Place refers to how you deliver your product or service to your customers. This might include the physical location (such as a shopfront, online or a distributor), your delivery methods and how you manage your stock levels. For example, you could choose to provide your product from a shopfront, over the internet or through a distributor.
If you’re looking to grow your business, you might consider changing or expanding the way you sell your products and services. For example, if you’re a homewares distributor, you might think about setting up a new store in a different location or offering franchises. Or you might consider setting up an online website to supply other businesses.
People refers to you, your staff and your customers. This covers customer service, as well as communication and training for your staff.
For example, if you’re thinking of expanding your business online, you’ll need to think about:
- how your customers use the internet
- how comfortable would they feel purchasing your goods online
- whether they’d be willing to pay shipping costs for your products
- if your staff have the skills to manage a website
- if you need to provide further staff training
Examples of the 5 Ps
Here’s a couple of examples of the 5 Ps in action.
Family restaurant
Say you run a restaurant catering to families. To position your restaurant towards your target market, you might consider:
- product – food catering to fussy eaters
- price – affordable prices for families
- promotion – advertisements in school newsletters
- place – location and opening hours suited to busy, family lifestyles
- people – staff that are friendly and accommodating to the needs of parents and children.