KOMPONG CHAM - For the first time, a small Cambodian-owned industry has been
upgraded into a medium-scale factory. Five years after it started production in
Kompong Cham, the Flying Tiger bicycle tire factory has been modernized through
the International Labour Organization's Small Enterprise Development
Program.
The bicycle tire market in Cambodia is dominated by Thai and
Vietnamese products. Almost all home-produced tires come from a few small-scale
factories in and around Phnom Penh and they are steadily being squeezed out by
the mass-produced imports.
In fact, a survey by The Association of
Cambodian Local Economic Development Agencies (Acleda), a Khmer NGO which
implemented the ILO program, has found that most medium-scale industry around
Phnom Penh is owned by non-Cambodians.
Flying Tiger is now the market
leader in Kompong Cham province, and has also captured markets in Battambang and
Kompong Thom towns.
"Our products are known for their quality, and are now
preferred over Vietnamese, Thai and Phnom Penh tires," says manager Peng
Khean.
The upgrading was achieved by improving existing equipment and
retraining the factory's 37 workers, explained Wojciech Sobina, of the United
Nation's Industrial Development Organization, which helped with funding.
"There is no use importing costly equipment, given the shortage of
finance and skills," says Sobina. "We decided against using shock therapy." The
factory now produces about 250 pairs of tires every day at about 350 riels for a
pair. They are sold at the market for about 6,800 riel a pair. The business
makes a net profit of about $4,000 a month.
The workers had thought and
worked like craftsmen, rather than manufacturers, said Sobina, and there was
little emphasis on quality control or standardization.
An Acleda market
survey done before the training began showed that the main reason foreign
products were preferred was because they were standardized.
The basic
week-long training program and the following on-the-job training laid down
strict standards for width and thickness of tires and exact proportions of raw
materials.
"Workers were made to understand that changing the proportion
of a chemical even a little would affect the quality of the product in a major
way," Sobina says.
The tires are much less expensive than Thai brands
which cost 12,000 riel a pair. Meng Cheng, a wholesaler in Kompong Cham town,
says they are now of much better quality than the Vietnamese brands which sell
at 4,200 riel.
There are several factors which unnecessarily increase
costs, according to Peng.
Almost all raw materials have to be imported
from Vietnam, except natural rubber itself which is available from plantations
in Kompong Cham.
There is no financial assistance from the government,
and he has to borrow from banks and moneylenders at high interest for sufficient
working capital.
Peng himself found the going so hard earlier that he
temporarily switched to making rubber bands.
"It is not surprising that
Cambodian manufacturers find it difficult to be competitive," he says.
While the first phase has concentrated on improving existing facilities,
there are plans to expand to new markets in Phnom Penh, Kompong Chhnang and
Pursat.
The factory will also start producing motorcycle tires by the
year-end and breaking into a market almost completely dominated by Thai and
Vietnamese products.
Additional equipment will probably be second-hand,
bought from several tire making factories near Phnom Penh which have been closed
for years.
