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  5. Preparing MSMEs for International Trade

Preparing MSMEs for International Trade

‘Readiness’ is a critical factor that determines the effectiveness of implementing changes. Therefore, assessing the readiness factor of an entity is vital as it pinpoints the areas that need to be strengthened. In addition, such assessments can identify where support is required.
As part of the Improving Small Package e-Trade for SMEs (SeT4SME) project’s Intervention Workstream 2, i.e., E-Trade Portal Development and Promotion, a readiness factor assessment was conducted in December 2021. The evaluation aimed to understand the current and future capacity development needs of the Cambodia Women Entrepreneurs Association (CWEA) and the micro, small and medium enterprises (MSMEs) in Cambodia. 

Approach and Tool

The e-portal readiness factor assessment adopted a pragmatic approach in looking at the drivers of success for implementing and operating the e-trade portal. An assessment tool was then developed to include different important aspects such as vision, desire and willingness, strategic plan and partners, collaboration with government, sponsorship and leadership, governance, funding, IT capacity to execute the portal and existing IT adoption, etc.

The Readiness Assessment tool examined:

  1. Motivation for change – the willingness of individuals in an organization to change
  2. General/foundational capacity – the potential of an organization to initiate and sustain change in general and to run new projects
  3. Motivation for the specific intervention – the willingness or desire of individuals in an organization to adopt an intervention, as reflected in their beliefs and attitudes, and
  4. Project-specific capacity – specific conditions and supports needed to implement a particular program or practice effectively.

Key Findings

The preliminary findings from the assessment indicate the following:

  • Motivation for Change, the key findings were that CWEA shows motivation for change. The organization is currently developing a strategic plan for an MSME support center. The e-trade portal has been planned to be integrated into this MSME support center. It’s a positive signal that CWEA envisioned a complete integration of the e-trade portal as part of its activities and the ecosystem it wants to create. However, the implementation part is yet to be elaborated. Overall, CWEA considers the project a good opportunity to support MSMEs to export in the future. However, some finality around the resources and the future sustainability of the e-trade portal is still ongoing.
  • General/foundational capacity, the key findings showed that CWEA had strengthened its capacity over the previous years and through additional capacity in advocacy and an extensive network of members who are willing to contribute, CWEA is well equipped. The organization is also the recipient of several grants and donor programs. In addition, the organization’s relationship with its external partners is robust, and it has strong links with the Ministry of Women Affairs and other business associations and Chambers of Commerce.
  • Motivation for the specific intervention, the key finding was that MSMEs, in general, are not yet ready for export. This is because MSMEs currently exporting to the international market do so on an opportunity basis. For example, MSMEs have previous clients who have relocated abroad or met in Cambodia. In this regard, the e-trade portal can help smooth the process. However, all other aspects linked to market access and constraints, such as regulations, sanitary and phyto sanitary (SPS), export strategy, packaging, formalization, consumer protection, etc., are not covered by the e-trade portal, and there are very few export or internationalization experts who can provide adequate expertise. Therefore, more training, awareness-raising, and disseminating of important export-related information will be needed from the SeT4SME project to address this issue.
  • Project-specific capacity, five dimensions, including Resources, Organizational Processes, Knowledge and Skills, Culture, and Partnerships, were assessed. The key finding was that a targeted strategy regarding export promotion and niche markets for MSMEs was needed. This was recommended considering that not all destinations are suitable for Cambodian products, and not all Cambodian products can be exported through small packages.

Addressing the findings in SeT4SME

The assessment pinpointed three critical areas that need to be addressed. These include the readiness of MSMEs, the need for a dedicated export strategy, and the long-term sustainability of the e-trade portal.

To address MSME readiness and get them export-ready, the project is initiating the ‘Small Package Exporter Champions (SPEC)’ Program. The SPEC program will commence in April 2022 and involve a series of awareness training workshops conducted in collaboration with CWEA, Khmer Enterprise and the European Chamber of Commerce (EuroCham) in Cambodia. This program includes two training workshops for the selected MSMEs and a tailor-made, one-on-one mentorship program for three months, followed by certification for MSME champions. In addition, a training toolkit that can be used for future orientation to MSMEs on cross-border e-trade and capacity support programs will also be developed.

Another important finding was the need to address the sustainability concern around the operation of the e-trade portal. As a result, the project plans to work with CWEA to develop a promotional strategy for the portal to promote its local products to international markets and Cambodians living abroad through Cambodian embassies, other interested businesses associations, trade missions, and international expos.

Lastly, in addressing the need for a dedicated export strategy for Cambodian products through small parcels, one of the recommendations was for CWEA to set up a working group/think-tank in collaboration with the Ministry of Commerce. The working group would provide support in identifying products that have potential in e-commerce and the key markets, potential challenges, and the niche and potential partners.

Conclusion

The e-trade portal solution aims to help MSMEs and Women Owned Businesses by streamlining cross-border e-commerce and hosting an online store allowing Cambodian MSMEs to sell their products in international markets. Through findings and recommendations from the e-portal readiness factor assessment, the project aims to work with the project partners to address the systemic challenges identified. For example, one of the most significant systemic challenges identified was getting MSMEs export ready. Therefore, the SPEC program will play an essential role in determining MSME export champions and, through them, build the capacity of MSMEs and WOBs in Cambodia to be export ready.

About the project

Improving Small Package E-Trade for SMEs (SeT4SME) is a two-year project (2021-2023) of the Global Alliance for Trade Facilitation, implemented by Swisscontact in partnership with the Ministry of Commerce and with the collaboration of General Department of Customs and Excise, Cambodia Post, Universal Postal Union, United Nations Conference on Trade and Development and Cambodia Women Entrepreneurs Association.