FROM SUPPLY TO MANUFACTURING: A MARKET LEADER’S PERSPECTIVE

FROM SUPPLY TO MANUFACTURING: A MARKET LEADER’S PERSPECTIVE

For Meng Leng Eav Co. Ltd, regional economic integration will not result in any significant impact on business. Cambodia’s leading specialist in supplying quality power tools, agricultural, and engineering equipment currently distributes over 10 exclusive and another 5 non-exclusive brands after first establishing the business over 20 years ago. In today’s more competitive environment, the company is strategically transforming its position from a star distributor into the first manufacturing company of its kind on the Cambodian market.

Mr. Meng Reaksmey, Director at Meng Leng Eav Co. Ltd reveals how the company has prepared to consolidate and expand their business and tackle the challenges of the AEC in an exclusive interview with Construction and Property Magazine.

How have you upgraded your facilities and resources to cope with greater challenges as more suppliers and product ranges have become available in the market and in anticipation of the impact of regional integration?

We recruited more human resources this year especially in the sales team to visit potential customers like construction sites, factories and warehouses. We also have more delivery and promotion teams now. Besides this, our 3-floor showroom launched on 26 February will not only upgrade our image but also offer a more innovative experience to customers and visitors.

To maintain your leading status in the market, how have you expanded and structured your sale channels across the country?

Meng Leng Eav has applied all types of sales channels. Besides relying on the wholesalers and retailers of over 500 outlets nationwide, we also have our own sale teams that regularly visit every area on a monthly basis to ensure we don’t fall behind the market growth and trend. We supply products to our wholesalers and they continually supply to their partner retailers. However, retailers can take products directly from the main office or from nearby branches at the same price. As part of our marketing campaign, we have encouraged them via overseas trips and incentives annually.

You also produce your own brand. What is your strategy for these products in Cambodia and the region?

Few years ago, we have cooperated with a partner to produce power tools, pumps, ironing tools and agricultural equipment under the NIKATEC brand, we prioritized the quality and reasonable price for market. We offer maximum benefits and best after sale service to our wholesalers and retailers to inspire them to prioritize our products with their customers. Currently our brand position in the market is outstanding.

Do you have plan to set up a production factory in Cambodia?

We do have a plan to set up a production plant here to gain a competitive advantage ahead of our competitors. It should be in the next three years’ time. The factory will start as an assembly plant of our product range first before upgrading into a full production facility.

How would you describe the demand for power tools in the market now? What kinds of customers are buying them? Retailers, projects or for personal use?

Unlike before when electricity was not widely available, better access to electricity means people want faster work. This has propelled a greater demand for our power tools. For us, the great demand usually comes from our wholesalers and retailers because we focus on supplying nationwide needs. Demands from construction projects are the second largest customer base for us. Among our wide range products, power tools and agriculture equipment have been the major products to drive our growth.

What are the challenges and opportunities you foresee for the construction supply sector in the integrated ASEAN Economic Community (AEC)?

The opening of the integrated market is the driving force for a greater flow of investments in the construction and agricultural sectors in Cambodia. This, for us, is truly a great opportunity. But at the same time we have to face tougher competition when more brands emerge on the market, especially when it comes to a war on price and services.

ASEAN integration has removed tax from goods across the region. Is it a worry for you when competitive products from ASEAN members can enter Cambodia at a cheaper price?

It isn’t a big deal for my business when Cambodia removes all import tax for goods from ASEAN in 2018. But we also face the difficulty that the tax department rejects the Harmonized System (HS) codes of our imported products we have applied for tax exemption for some reason. It will be great if all taxes are removed so that we won’t have to care about these things when all businesses need to follow the same rule. So far, we import products from suppliers in Thailand, Malaysia, Singapore, China and Japan. I notice the government removed both VAT and import taxes from a wide range of products and materials such as iron and cement, but actually some particular products are still subject to these taxes even though they are under the forms D and E of customs procedures. I hope the government will reduce the tax for tools and appliances serving the construction and agricultural industries which is currently at around 5 percent. I also request the authorities to facilitate the tax clearance process as well as strongly prohibiting the distribution of products without clear supply sources.

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