“The draw factors are political stability, increasing ease of doing business, consistent infrastructure development, inexpensive and plentiful labour, decades of robust economic growth and, of course, the Kingdom being a magnet for foreign direct investment.
“There is growing recognition that, although not on the scale of a Singapore or Hong Kong, Cambodia will grow to be more diverse and affluent, with expectations of a larger Chinese element in addition to Western expatriates.
“I expect corporations don’t want to be the last in but rather one of the first, which is a diminishing prospect,” said Galliano.
A growing aspirational middle class, increased disposable incomes, an affluent millennial consumers backed by powerful advertising – from traditional media outlets, 24/7 television channels and social media platforms, to attention-grabbing roadside billboards – are relentlessly drumming up global brands.
Additionally, the growth of quality retail real estate has provided increased opportunities for brand owners to display their goods in an upscale manner.
“The rise of the luxury malls and the persistent entry of international high-end brands substantiates the accelerating demand for luxury products.
“Cambodian shoppers are much less browsing traditional markets and are now crowding the capital’s upscale shopping malls. The advertising media presents the perception that international brands are of higher quality, more fashionable, potentially more reliable and target the status-conscious.
“For the nation’s youth, strong economic growth and development has resulted in better education, more attractive employment opportunities, higher disposal income and a larger wallet for consumer discretionary spending,” Galliano said.
With average per capita income of $1,771 last year – up from $1,043 in 2013 – greater disposable income is changing the face of consumerism in the Kingdom.
The urban and tech-savvy younger generation – who make up around 60 per cent of the Kingdom’s population of 16 million – want anything from designer clothes and the latest technology, to foreign cuisine and fashionable must-have items, mostly influenced by social media and the online shopping platforms that are driving the luxury retail sector.
“They are spending more and saving less, are more brand conscious, attracted to foreign fashion labels, and are seeking products that offer a personalised experience,” said Galliano.
The ease of opening a business with little restrictions and minimum capital, at a very reasonable cost, makes entry into the Kingdom’s market quick and uncomplicated.
In many sectors, competition is low, so there is room for new entrants, especially those that can demonstrate quality and value.
While new government initiatives in recent years have increased the cost of doing business, there has been continuous improvement efforts, with online business registration, e-filing and the national single window being good examples, Galliano added.
For the moment it’s a win-win formula, with companies able to expand their brands and consumers having plenty to shop for.
And while there remain many opportunities for success, the finance veteran issued a caveat.
“I expect only continued growth and expansion of international brands entering Cambodia, but that doesn’t mean all will be successful.
“There have been notable comes and goes, so it is important that aspiring brands do their research, understand consumer preferences and tastes, target the right market segments and simply have a coherent and executable business proposition.
“Just because its an international brand doesn’t mean it’s an automatic win,” Galliano said.
Source: The Phnom Penh Post