Dried-fish entrepreneur scales back amid slump

Photo by: HENG CHIVOAN

Workers fillet fish at Chanthou Dried Fish Enterprises, preparing them for the next stage of production: the drying process.

The Phnom Penh Post
Wednesday, 29 July 2009
Soeun Say

WHEN he was studying as an undergraduate at business school, Sen Nith wanted nothing more than to be an entrepreneur.

"I dreamed of becoming a manufacturer, producing something made in Cambodia," he says. "And now my dreams have come true - my business is a success."

But it took a lot of hard work to build up Chanthou Dried Fish Enterprises, a business that buys wet fish, sun-dries and smokes them, then packages and sells them.

Like most businessmen, Sen Nith started small. He was careful to research the market meticulously, spending two years working at his in-laws' dried-fish business and another doing his own research.

He then invested US$30,000 of his own money in 1996, setting up in Phnom Penh's Stung Meanchey district with three employees.

One employee would buy the fish from fishermen on the Tonle Sap river, two would work the production line, and Sen Nith would do marketing and sales.

He now has 10 staff and pays them $45 to 65 a month plus accommodation, food and health care.

Sen Nith admits he knew very little about running a business when he started. He knows a lot more now, including just how hard and time-consuming the drying process is.

"The difficulty comes in ensuring the finished product is good quality, has a good taste, and has a long shelf life," he explains. "We still lack the technical knowledge about drying fish so that it keeps for more than a few months. So we must do more research."

He worries that demand for dried fish will not increase without the ability to keep the product safe for more than the current limit of one year when refrigerated. And he is concerned that many Cambodian people tend to prefer the imported versions to his Khmer product.

Despite those difficulties he has clients across the country - from Phnom Penh to Ratanakkiri, Kampong Cham to Kampong Chhnang. He says wealthier people enjoy dried fish as a health snack, as do Cambodian-Americans visiting the Kingdom, and other Khmers from countries such as Canada, France and Australia.

"My products are sold in shops, restaurants and local markets, with most of my clients belonging to the upper and middle classes," he says. "The lower classes tend not to buy because it is too expensive."

So how does it work? Sen Nith says his factory can process up to 600 kilograms of raw fish daily. That generates around 250 kilograms of dried fish, which sells for around 30,000 riels ($7.50) a kilogram.

His suppliers are fish farmers around the country, including from as far afield as Siem Reap.

But his customers were hit hard by the global economic crisis, which has caused business to halve since late 2008.

"In 2007 and 2008 my business was running well," he says. "I was earning at least $2,000 a month net profit. These days I earn around $800 to $1,000."

He has considered exporting, but says the time is not yet right.

"I'm unable to export dried fish at this stage because I want to improve my sales to customers here," he says. "But I would like to start exporting in say five years' time."

In the meantime his strategy for dealing with the competition is to work hard on improving the product's taste, its quality and his firm's customer service.

Sen Nith echoes the call of other SMEs by calling on the government to cut interest rates and the cost of electricity. Cutting the former would allow him to afford a loan to fund expansion when the economy picks up.

"Interest rates locally are very high. They need to come down so that SMEs have the chance to grow their businesses," says Sen Nith.

"Lower taxes and interest rates will provide SMEs with the chance to produce more and to take our products to the international market."