Cambodia market

1. Introduction to Cambodia

Cambodia’s real GDP growth reached 6-7% CAGR over the 2009-2013 review periods. Rapid economic development, coupled with low labor costs and the country’s proximity to key markets such as China and other emerging economies in Southeast Asia attracted foreign investors. Modern Cambodia is among the fastest growing economies in the world, averaging just over seven percent annual growth for more than a decade. Its young population – half under the age of 25- is tech-savvy and worldly: avid users of Facebook and YouTube, with increasing awareness of the world outside of Cambodia. This awareness shapes their preferences for how they want to live – and they want to live like the world they see through their smartphones: individual, independent but family oriented, self-directed, and with all the choices and accoutrements of a middle-income society. Table 1 shows the key country indicators in 2013, Cambodian incomes have moved into the World Bank’s Middle Income bracket, passing $948 GNI per capita. Income levels are rising across all socio-economic classes. A small but significant group of highly affluent families have emerged, of particular interest to luxury goods sellers. In remote rural villages, subsistence farmers now have income for the first time in their lives. And in the cities – where much of the action of economic growth is visible – educated young adults’ income is growing, and they expect to have more highly paid careers. Ownership of consumer electronics is growing quickly in Cambodia. Since ownership of most consumer electronics other than mobile phones is still relatively low, strong sales are expected to continue in the coming years.

Cambodians own few appliances, and many are not aware of the benefits of ownership of appliances beyond the basics (air conditioner, television, refrigerator and washing machine). Cooking appliances such as microwaves, toaster ovens, coffee makers, electric kettles, blenders, and food processors have not yet found their way into most Cambodian kitchens. Appliance makers that educate consumers on the benefits of these products will be rewarded with sales. Microfinance organizations are increasingly providing consumers with loans for appliance purchases, so that buying on credit is now possible and is accelerating sales. Over 2009-2013, all consumer goods categories recorded significant growth. The largest category was packaged food, reaching a market value of US$779 million in 2013, after registering a CAGR of 11% since 2009. The largest categories in packaged food in 2013 were bakery and dairy, while the most dynamic one was frozen and chilled processed food which recorded a CAGR of 28% over 2009-2013. Overall packaged food is anticipated to register a CAGR of 10% over 2013-2018. Consumer electronics was the most dynamic category during the 2009-2013 review periods, and it is expected to continue its rapid expansion during the next five years. Growth was driven by the emerging middle class that can afford to buy durables. The outlook for consumer electronics remains positive as the Cambodian government plans to ensure that all Cambodian households have access to electricity by 2020.

2. WDIRC selling

The forecast of WDIRC selling can be shown in Table 2 during the first ten years since product launched. Here the assumptions of households, occupancy ratio, initial sale, selling price, and manufacture cost are 2,841,897, 0.0040%, 114, 250 and 200, respectively. The first year is set as the baseline for comparison with the following years, the sale volume, year penetration, revenue, cost and profit are 114 (sets), 40 (ppm), 28,419 (USD), 22,735 (USD) and 5,684 (USD), respectively. As we think, the growth rate with years will be 1, 1.57, 3.41, 5.39, 7.29, 9.10, 9.37, 10.29, 10.86 and 13 times over the first year. The year penetration of WDIRC will be from 40 ppm to 520 ppm at the end of tenth year, the totally ownership (penetration) is close to 0.284%, it still is a low penetration ratio in Cambodia even WDIRC listed in market for ten years. However the revenue, manufacture cost and profit these three also present an ascending trend, the profit earned from Cambodia is about $ 0.073 million at the tenth year in an exclusive market, it owns a huge market and profit in this market. Totally according to our prediction and assumption, the selling in Cambodia will be up to 8,098 sets, even this; the penetration ratio is still lower than other consumption electric products such as TV, Refrigerator, Air conditioner, and Wash machine.

How about the annual growth rate for selling WDIRC in Cambodia market? Fig. 3 shows the result. Here the calculation of revenue can use this equation as “WDIRC’s Revenue = Annual growth rate * Year + Baseline”, the formula can be written in a mathematic equation in Figure. According to this regression by data simulation, the annual growth rate it take about $38.086k per year (r² =0.9712), in other words, by averaged the annual revenue is $38.086k in Cambodia market for selling WDIRC product.

3. Rice selling

A ten-years forecast to WFR sale, after WDIRC launched in Cambodia market, is presented in Table 3. The first year since the marketing of WDIRC, online/offline deals for WFR sale are 6,022 kg, here the assumptions of population, rice consumption, sharing of WFR, online buying rate and market sharing are 15,827,241, 152.20, 0.01%, 5.00%, and 50%, respectively. How to calculate the WFR volume by online/offline sale, Eq. 1 is the equation for calculating the WFR sale volume.

Eq. 1 SaleVolume=Population x RiceConsumption x WFRratio x On/OffBuyingRatio x MSharingRatio

(eg. 6,022 = 15,827,241 x 152.20 x 0.0001 x 0.05 x 0.5)

The use rate of WFR is set as 0.00038 kg/person-year. Based on this, we can get the annual revenue is $ 3,011 (WFR priced as $0.5), and the profitability is set to 10%, so the profit that will earn $ 301. Changing with the time, the ratio of WDIRC in kitchens will increase and cause the use of WFR increasing. We assumed the series of growth rate (G.R.) by years is 1, 1.97, 4.07, 7.32, 10.74, 13.73, 13.86, 16.52, 17.64 and 21.31. G.R. it is based on the prediction of WDIRC’s growth. By this series of G.R., both revenue and profit, they will also be presented like this serial when the dealing cost of WFR through online/offline transaction is keeping constant. Whatever the cost of online/offline transactions depends on the volume of WFR’s selling, so if the volume with time is scaling up, the dealing cost will be significantly lowered, in other words, the profitability with time will increase more than our prediction. If all hypotheses are true, the profit in tenth year will approach to $ 6,417. Eq. 2 calculates the penetration of WFR which to be used in this country by people. From this indicator (URate of WFR), we can see the level of penetration of WFR, even at the tenth year, the level of WFR use rate in Cambodia is still underestimation, that’s meaningful for us to optimistically think, the use rate of WFR can be easy completed and it will be grew up more than our prediction.

Eq. 2 URate of WFR = SaleVolume of WFR / Population

(eg. 0.00038 = 6,022 / 15,827,214)

Regarding the revenue of WFR selling in Cambodia, Fig. 4 shows the result. This is a prediction by data simulation according to our assumption, the regression could be calculated as “WFR’s revenue = Annual growth rate * Year + Baseline”. The result shows the annual growth rate is 6.886k per year (r²=0.982), in other words, the increasing of revenue of WFR selling in Cambodia is $6.886k dollar per year. This growth can help the company to maintain its team in the local market for servicing customers.

4. To summarize the revenue and profit

Here according to the estimations above, we summarize the incomes from sales of WDIRC and WFR in Cambodia. Both revenues and profits are presented in Table 4. In the first year, the products of WDIRC and WFR are unfamiliar with Cambodia people; namely the recognition and acceptance aren’t well to local consumers, so on the beginning (1^st year) sales would be not good and the totally revenues and profits will be $ 31,430 and $ 5,985, respectively. Both of them will increase with years when selling with good experiences and promotions. Through our forecast, at the end of tenth year, the profits of WDIRC and WFR will be up to $ 73,850 and $ 6,417, and the totally profit will be $ 80,267, this is a huge profit which be created in Japan market by our novel products and services.

Totally the revenue of WDIRC and WFR (2W) selling in Cambodia market can be shown in Figure 5. The 2W revenue in first year is $31.430k dollars, after that the growth rate of revenue is $44.972k per year, this is a simple regression by mathematic model to predict the revenue on product selling. In practice, there are other factors that need to be considered much more, it could be higher than this or lower. Whatever by this calculation let us to trust that the market it always be there.