PHNOM PENH: The business environment in Cambodia is based on hierarchy and respect. Cambodia is governed by principles of tradition and deference which affect the way in which business is conducted.
Business relationships are about mutual trust, which can require investing time in getting to know
one’s counterparts. The concept of “saving face” is everywhere, especially in the business world. Although it can be frustrating for expats, Cambodians prefer subtleness and indirect communication
in order to resolve a problem and this approach should be respected.
The business culture in Cambodia tends to be conservative. Business people are expected to dress formally and their conduct is expected to be always professional. Punctuality, mutual respect and deference to seniority are all valued principles and widely practiced.
Expats should be careful not to criticize, embarrass or insult a Cambodian counterpart as this can cause them to lose face. Pushy behavior is not tolerated and therefore if there is a disagreement over an idea, Cambodians will usually remain silent. Expats should be aware of the importance of face, in order to avoid conflict in the business or work environment.
For greetings, handshakes are commonplace. However, with a Cambodian female counterpart, it
is best to see if she extends her hand first. If not, you can salute her with raised joined hands, along
Cambodian customs. Cambodians address people with the honorific title “Lok” for a man and “Lok
Srey” for a woman, either with the first name alone or the first name and surname.
In meetings, prior to the discussion of work-related matters, small talk is always employed. Expats
will find that meetings do not stick to any schedule or agenda, but tardiness is always frowned upon.
Do’s and don’ts of doing business in Cambodia
Be prepared:
Good preparation is essential before doing business in Cambodia. Get to know the country and its culture, as well as the economic and political climate. Make good use of the knowledge and services available to new investors. Talk to entrepreneurs with experience doing business in Cambodia. The easygoing, warm welcome and the possibility of meeting many people, including high-ranking officials, should not fool you. More than anything, you should first and foremost do your homework.
Build relationships:
Building and maintaining personal relationships is essential for doing business in Cambodia. A reliable local partner can speed up the preparatory work considerably and provide market knowledge and access to established networks.
Understand business etiquette:
English is the business language. However, reliable interpreters are useful for key business discussions with SMEs. The safe dress code is to go formal and use conservative colors. Handshakes are common when Cambodians greet foreigners. Show up exactly at the agreed time, especially at meetings with the authorities and introductory business meetings. Do not show your anger and avoid conflict. Be patient,
very often things will not move at the same pace as in the West.
Know your challenges:
Cambodia has a lot to offer, but there are some challenges to doing business. Firstly, understand where to expect challenges such as culture and language, laws and regulations, trade barriers, and bureaucracy. Secondly, develop a solid business plan and undertake market research, set clear goals and ambitions, and know your market and your competitors. Thirdly, make sure you undertake due diligence prior to entering contracts or other commercial arrangements.
Act responsibly:
Corruption can pose a serious barrier to doing business in Cambodia. Businesses are expected to integrate social, environmental, ethical, and human rights concerns in their business strategy and operations.
