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Entrepreneur tries to clean up charcoal business

Entrepreneur tries to clean up charcoal business

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Hong Piseth of Khmer Clean Charcoal displays a bag of his new product.

STARTING a business is seldom easy and always requires plenty of research. In the case of local entrepreneur Hong Piseth it required getting his hands dirty - literally - as he spent three months looking for a better way to make charcoal.

The result is the Khmer Clean Charcoal company (KCC), which the 29-year-old set up last month with US$100,000 of personal savings.

Hong Piseth researched alternative charcoal manufacturing techniques in China, Indonesia, Thailand and Vietnam, all of which produce what he calls "clean" charcoal for export.

"I wanted to make a Khmer product to sell in the Cambodian market," he says, explaining his entrepreneurial decision. "I don't want [some countries] saying that Cambodia always imports its products, so I decided to manufacture this 'Khmer Clean Charcoal' myself."

Surely, though, charcoal is charcoal? What is his competitive advantage? Hong Piseth says his product is not only better-quality and cheaper, but is also smokeless, contains no chemicals, and burns hotter and longer.

He says it is also more environmentally friendly than standard wood charcoal because its main ingredient is coconut husks.

"My business helps society because we collect [discarded coconut shells] to make clean charcoal, which means people aren't cutting down trees ... and that's what the government wants," he says.

KCC needs 100 tonnes a month of raw material to make 30 tonnes of clean charcoal. Hong Piseth says the coconut husks come from across Cambodia. The charcoal also contains smaller quantities of rice husks which would otherwise be discarded by rice millers.

With its 50 staff, the Phnom Penh firm produces between 40 and 50 tonnes of charcoal monthly. Sales are lower than that at the moment - around 20 tonnes were sold last month - but interest from a new client makes him optimistic that he can sell 30 tonnes this month.

"Once we are able to sell 50 tonnes a month, the business will be generating net profits of $1,000 a month. So the object over the next six months is to expand production and boost profits through volumes," he says. "In around six months I hope to be able to sell between 100 to 200 tonnes of clean charcoal per month."

Hong Piseth says his clients come from the major population areas: Phnom Penh, Siem Reap, Takeo, Sihanoukville and Kampong Cham. He sells directly to restaurants, clubs, shops and hotels.

His clients pay 1.5 million riels ($375) per tonne for the charcoal. And although his factory does not yet have the technology to package the charcoal, that will change. When it does, he will target the nation's growing number of supermarkets.

Hong Piseth admits that his marketing strategy is to tap into Khmer identity by encouraging Cambodians to buy local.

"If one local family or one village makes one product, then as a nation we will growth together, and our economy will grow faster," he says, adding that awareness of his brand is growing in the Cambodian market.

And what of plans to target markets outside the Kingdom? He says in six months' time he will look to export once he has secured sufficient reliable supplies of the raw materials.

"We don't yet have enough demand from local users, but once that demand is there, I will start to export," he says.

But expanding for export costs money, and borrowing is not cheap. Hong Piseth says annual interest rates of 12 percent are simply too high to make borrowing viable.

"We lack the capital to manufacture as many products as I would like," he says, mentioning natural fertiliser as a possible future product.

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