How Small Businesses Have Coped with the Impact of COVID-19

How Small Businesses Have Coped with the Impact of COVID-19: Case Studies of Young Women Entrepreneurs in Phnom Penh City, Cambodia

By Seng Sopheak – Policy Analyst of Cambodia Women Entrepreneurs Association

Key messages

  • Cambodia’s economy is predominantly private. Most private businesses are small and medium, and many of them are family-run. 65% of all small and medium-sized businesses in the country owned by women.
  • During the Covid-19 in 2020, a survey of Cambodia Women Entrepreneurs Association (CWEA) shows that 59% of women-owned businesses were affected by the pandemic, in which 17% of the businesses were closed. Nevertheless, 41% of women-owned businesses were reported still running as normal during the pandemic crisis.
  • In response to the Covid-19, young women entrepreneurs have tried to reinvent themselves by changing their sale strategies so that their businesses could still survive and even thrive during the pandemic crisis.

As of October 2020, COVID-19 has affected 215 countries and over 40 million people around the globe. Besides the adverse health effects and human tragedy, it is widely recognized that the pandemic has caused the most severe economic crisis in a century. The crisis has created great anxiety, with more than half of the world’s population experiencing lockdowns due to strong containment measures (OECD, 2020). The Organization for Economic Cooperation and Development (OECD) predicts global economic activity to fall between 6% and 7.6% in 2020, depending on whether the second wave of infections hits before year-end (World Economic Forum, 2020).

Cambodia has enjoyed rapid economic growth in the last two decades. In 2015, Cambodia became a lower-middle-income economy. According to official statistics of the Cambodian government, the country’s gross domestic product (GDP) per capita had increased from US$288 in 2000 to more than US$1500 in 2018, making Cambodia one of the best performers in poverty reduction (Green, 2020). Cambodia’s economy is predominantly private. The majority of private businesses are small and medium, and many of them are family-run. 65.1% of all small and medium-sized businesses in the country are owned by women (CWEA, 2020a).

While the growth was strong at 7.1% in 2019 (World Bank Group, 2020), the COVID-19 pandemic is severely affecting most economic activities in Cambodia, including micro, small and medium-sized enterprises (MSMEs) run by women. According to a survey of Cambodia Women Entrepreneurs Association (CWEA) conducted with 107 women entrepreneurs around the country in April, 59% of women-owned businesses were affected by the pandemic, in which 17% of the businesses were closed. However, 41% of women-owned businesses were reported still running as normal during the pandemic crisis (CWEA, 2020b).

In this article, we examine how the Covid-19 pandemic has affected small enterprises run by women, and how they tried to reinvent themselves, finding innovative ways to keep their businesses afloat during the pandemic crisis. Based on in-depth interviews, the article presents case studies of two women entrepreneurs in Phnom Penh city.

Case Studay 1

Ms. Vichka Vantha is a Chief Executive Officer and founder of Dai Khmer, a local enterprise that creates employment for rural women by   producing handmade natural health and beauty products using traditional techniques. Ms. Vichka started her business in 2018 in Siem Reap   province with a small retail shop. Thanks to the growth of sales, she opened another shop in Phnom Penh in 2019. After opening the new shop in   the capital city, her business started to gain popularity amongst tourists and local people who love natural products and support local products.

  Impact of Covid-19 on business

In March 2020, the Cambodian government imposed travel restrictions to prevent the spread of Covid-19 in the country. Due to the travel restrictions and fear of the virus, the number of visitors to Siem Reap province had declined dramatically. As a result, Ms. Vichka was forced to close her shop in this province. Then, Ms. Vichka’s two staff at her shop in Phnom Penh were also laid off because of the sharp decline in profit. Ms. Vichka was struggling to save her business from falling for three months, from March to June 2020.

 

Response to the impact of Covid-19

Having encountered such an adverse impact on her business, Ms. Vichka thought of rearranging her sales strategy to help her business survive. She talked to her business coach who assisted her in re-planning a business strategy and encouraged her to explore a new method of doing business. Having seen a huge rise of Facebook users in the country, Ms. Vichka started to promote her products via this so-called social media platform. She used a mixed method of posting good quality pictures of her products and doing live streams. This method helped her products reach the target customers instantly. Ms. Vichka also built customers’ trust by asking her customers who had bought her products to share their thoughts and feedback regarding her products and services on her Facebook page. By doing so, other new customers could see positive comments about the products, so they have trust in the products. Besides, she worked with Tuk Tuk drivers to ensure that her products could be delivered to customers as fast as possible.

After a while, Ms. Vichka noticed a significant rise in product sales via the Facebook page. She even mentioned that the volume of products sold via this social media platform was 50% bigger than previous sales before Covid-19 pandemic happened. The new sale strategy via media platform has not only helped her business survive but also thrive during the pandemic.

 

Case Study 2

Ms. Sokneang Neng is a Chief Executive Officer of Kokopon (Cambodia) Co., Ltd. Kokopon is a technology company that develops an e-commerce platform to help local businesses such as restaurants, salons, and spas to sell promotional and discounted services and products online so that people with an average income can afford the services and products. Ms. Sokneang started running her business in 2019. Before the Covid-19 pandemic happened, the company had dozens of business partners.

Impact of Covid-19 on business

In late January and early February 2020, all business partners of Ms. Sokneang’s company closed down. There were zero sales of both partners and the company. Ms. Sokneang described that her company was small and did not have enough budget to sustain operation while the company could not make any profit. Meanwhile, the company had to pay tax as normal. Facing such a severe financial crisis, Ms. Sokneang and her team members had a terrible shock and did not know how to deal with such a desperate situation.

Response to the impact of Covid-19

Due to the spread of Covid-19, all international borders of Cambodia were closed, resulting in a high price and limited supply of all food and agricultural products. Having observed the situation, Ms. Sokneang's business partners and some farmers asked her to help sell local food and agricultural products on her e-commerce platform. Ms. Sokneang then posted pictures of local food and fruits on her personal Facebook to test whether selling those local products online was commercially viable. Surprisingly, many of her Facebook friends were interested and ordered the products from her.

Thanks to the boost in sales of local products on her personal Facebook page, Ms. Sokneang decided to officially sell local food and agricultural products on her ecommerce platform. She soon noticed a quick huge sale of the products on her online platform. She emphasised that the sale was even higher than her previous sale business of promotional and discounted products and services before the Covid-19 pandemic happened. She described what made customers want to buy the local food and agricultural products on her e-commerce platform as below:

  • The price of products was set by farmers. The company did not increase the price for profits;
  • The price must be competitive with that of the market;
  • Good online presentation of products, including good photo quality of products, description of products, and stories behind them; and
  • Good customer service – The company dealt with all complaints and feedback from customers. The customers could even return the products if they were not satisfied with them.

Although the sale of the new products was quicker and better than the previous products and services, her company did not make a good profit from it. However, the reputation of Ms. Sokneang and her company has become widely known. Many non-governmental organisations (NGOs) running projects related to women, business, technology, and entrepreneurship hired Ms. Sokneang and her team to provide coaching and training to other women entrepreneurs across the country. Ms. Sokneang stated that the profit that her company made from providing services to NGOs was enough for the company to survive and thrive during the Covid-19 pandemic.

Covid-19 has great adverse impact on both human health and the economy of every country in the world. SMEs are seen as most vulnerable to the impact of the pandemic, particularly small businesses run by women. Some businesses were shut down because of the pandemic. Nevertheless, some businesses are able to cope well during the crisis. The owners of these business have something in common. They are active and change their business strategies in order to respond to the crisis. Consequently, their businesses remain resilient and are even thriving during the pandemic, as the two case studies showed. The case studies provide good lessons learnt for other women entrepreneurs to reinvent themselves and find other alternative ways to turn the desperate situation into an opportunity for growth.

 

Reference

CWEA, 2020a. White Paper: Enhancing Access to Education and Information for Women Entrepreneurs in Cambodia, Phnom Penh, Cambodia: Cambodia Women Entrepreneurs Association.

CWEA, 2020b. The Impact of Covid-19 on Women Entrepreneurs in Cambodia, Phnom Penh, Cambodia: Cambodia Women Entrepreneurs Association.

Green,S.,2020.Cambodia’s Economy – Rapid Development and COVID-19. [Online] Available at: https://www.khmertimeskh.com/50747261/cambodias-economy-rapid-development-and-covid-19/ [Accessed October 2020].

OECD, 2020. The Territorial Impact of COVID-19: Managing the Crisis Across Levels of Government. [Online] Available at: https://www.oecd.org/coronavirus/policy-responses/theterritorial-impact-of-covid-19-managing-the-crisis-across-levels-ofgovernment-d3e314e1/ [Accessed October 2020].

World Bank Group, 2020. Cambodia Economic Update, May 2020: Cambodia in the Time of COVID-19, Phnom Penh, Cambodia: World Bank.

World Economic Forum, 2020. Covid-19 Action Agenda: Leaders on the Front Line: Why Social Entrepreneurs Are Needed Now More than Ever, Geneva, Switzerland: World Economic Forum.