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Countryside consumption

Countryside consumption

ALTHOUGH there are many factors that come together in producing demand for consumer goods such as electronics – among them a rise in disposable income, creation of a middle class and housing development – the slow evolution of the Kingdom’s fragmented and previously destroyed national grid has played a major part.

Development of electricity supply has been a slow process in Cambodia’s case after years of civil war left the grid in tatters. Still, Phnom Penh accounts for the vast majority of electricity consumption.

Since reparations work started in 1995, it took until around 2005, say analysts, for tangible results in terms of a rise in the average standard of living in the Kingdom, and much of this has come in the towns and cities.

This rural-urban divide is particularly acute because of the shortage of rural electrification, says Victor Jona, deputy general director of the Ministry of Industry, Mines and Energy (MIME).

“The difference in the use of electronic items between densely populated areas and remote areas is really significant because our power network is still unable to carry electricity to faraway places,” he said.

The result is that rural populations – which make up about 85 percent of the population – account for just 10 percent of electricity usage.

Demand for DVD players, TVs and audio equipment means suppliers have concentrated on urban centres such as Phnom Penh, Siem Reap, Battambang and Sihanoukville. Why set up a shop selling the latest electronics products in the likes of Mondulkiri or Svay Rieng? In terms of electrical supply, currently it makes little business sense, say retailers.

Taing Sothearith, marketing manager at electronics retailer Sunsimexco Ltd, says this gap has become more pronounced in recent years as the cities have received an increasing electrical supply. For his company, this has resulted in an expanding market and higher sales, he said.

“When people’s lifestyles get better and the electricity network is better connected, I believe that electronic items will be in higher demand,” he said.

The result has been a huge 30-percent annual growth in sales of washing machines, televisions, rice cookers, cameras and air conditioners in recent years, meaning Sunsimexco now sells around 1,000 items per month, said Taing Sothearith.

But it remains difficult to track total sales in the industry, given that still no official independent data exists. Nevertheless, Sunsimexco’s reported rise in demand tallies with the increase in electricity supply reported by the government – MIME figures have showed a 20 to 30 percent rise in annual output in recent years.

Anecdotally, buyers say that electricity supply has been key to driving demand for the expanding array of consumer products now on sale in Cambodia.

“I already have a television, a refrigerator and a washing machine, but I still want to buy other things because we have sufficient electricity supply here,” said Kuoy Chhaisong, a motorbike taxi driver who lives in Village 6, VealVong commune in Kampong Cham town.

He is now looking to buy items like an air conditioner and video camera to make his home more comfortable.

Taing Sothearith says a similar trend is shown in demand for Sunsimexco products.

“Electronic items which the company is selling the most of at present include LCD monitor television sets, refrigerators and air conditioners,” he said.

Taing Sothearith says there is a clear hierarchy of goods in demand depending on status and where the customer lives – people living in rural areas almost always target televisions, radios and cassette players. In other words, electronic goods that entertain.

Items such as washing machines and rice cookers are considered superfluous to everyday needs in the countryside, he added.

Once the state can provide electricity to an increasing number of rural communities, demand for air conditioners and washing machines looks set to explode.

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