Guiding Regional Clean Cookstove Producers into the Cambodian Market

January 2019

Blog

With a virtually untapped market for cleaner cooking devices in Cambodia, and a lack of local suppliers to fill the gap, SNV looked for international stove producers who wanted to expand their presence in this promising emerging market.

With a virtually untapped market for cleaner cooking devices in Cambodia, and a lack of local suppliers to fill the gap, SNV looked for international stove producers who wanted to expand their presence in this promising emerging market. Solar Serve, a clean cookstove manufacturer from neighbouring Vietnam, was intrigued by the idea of testing its product in the Cambodian market, knowing that regional expansion could potentially be a boon for the young social enterprise.  

Mr Bich Tan Nguyen, Founder and CEO of Solar Serve, first expressed his interest back in 2016 to test the market in Cambodia with his 3G stove, a clean cookstove he currently manufactures and sells predominantly in Northern Vietnam around the city of Da Nang. With the support of SNV's Market Acceleration of Advanced Clean Cookstoves in the Greater Mekong Sub-region project that aims to increase the availability of and access to high-quality biomass cookstoves for households in the region, this soon became reality.  

Solar Serve first received assistance from the SNV project to have its stove tested against internationally recognised cookstoves performance standards in biomass cookstoves laboratories in both Laos and Cambodia. This was done to ensure that Solar Serve’s stove would indeed qualify for participation in SNV’s project by complying with the project's strict criteria for selecting only higher-tier cookstoves that are particularly fuel-efficient and reduce harmful emissions.

Having passed the eligibility check, Solar Serve shipped an initial 200 stove units to Cambodia in November 2016, so that the stoves could be auctioned off to local last-mile energy product distributors through the project's Stove Auction that functions as a trading platform to connect international stove manufacturers with local distributors in Cambodia.

This being Solar Serve's first foray into a foreign market, the company had to overcome a range of new challenges they had never faced before - from the intricacies of international shipping to dealing with transportation companies on both sides of the border, to import duties and tax regulations. The SNV project was there to guide them through the process. The company even took out an affordable low-interest working capital loan from its local bank in Vietnam so that it could pre-finance the shipment of stoves.  

Despite offering the cheapest clean cookstove at the auction, the stove at first did not sell as well as hoped. This was disappointing for everyone involved, including the SNV team that was certain that the stove would do well in particular with less affluent households due to its lower price point, and due to its similarity to the traditional stove design that would not require customers to learn a new way of using the stove.

Upon further investigation, including first-hand feedback from the local last-mile distributors and end-users, the issue was quickly identified: the stove had an image problem! It was perceived to be of low build quality and was lacking aspirational appeal that Cambodian consumers wanted to see when they invest in a new, more advanced cooking device. 

 

 

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The original 3G stove model
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The newer model

The new model (see photo) now consists of a stove body and stove mouth made from higher-grade polished stainless steel instead of sheet metal. Additionally, the stove bottom, feet, and fuel shelf are now painted black to give it a more high-end appearance, and the stove has more practical handles. Lastly, the cardboard box containing the stove was fully redesigned to be more visually appealing and include labelling suitable for Cambodian households, and a User Manual.

Mr Bich was very grateful for all the advice he received from the project, and with an increase of only EUR 2 in material costs, Mr Bich feels that the new stove design is well justified given that it also extends the stove's durability to an expected lifetime of two years.

Upon completing the changes, Solar Serve was invited to ship 1,000 units of the new stove to the Stove Auction in Cambodia. These stoves have since all been sold in Cambodia, and Mr Bich was proud to report that he shifted production of all his stoves ‐ including those for sale back home in Vietnam ‐ to the new model.

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Solar Serve stock room
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Mr Bich Tan Nguyen, Founder and CEO

In Mr. Bich's said  "It is a very good project for me to test the market in Cambodia. I actually learned a lot through this project – how to deal with export, customs, transport. It help us make us stronger, makes us more mature. We are now an internationally expanded company ‐ now we want to go to Myanmar ‐ now we know how to expand more."

Solar Serve has since invested in additional machines so that it can produce more components of its stove in-house instead of outsourcing production steps to external suppliers. Solar Serve now also plans to enter the cookstove market in Myanmar knowing that they are more capable than before in delivering clean cooking solutions in the region.

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Manufacturing cookstoves at Solar Serve
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Boxed and ready to go!

As the SNV project is nearing completion in Cambodia, Mr Bich has struck a deal with one of the largest local last-mile distributors in Cambodia who previously obtained Solar Serve's stoves from the Stove Auction. In a joint venture, the two parties will set up of a stove assembly facility in Cambodia that will see stove components shipped from Solar Serve in Vietnam to be assembled into a final product in Cambodia. Importation of the first container of parts for 500 3G stoves for local assembly has already been arranged directly between the local Cambodian partner and Solar Serve, without needing the assistance of the Stove Auction anymore to facilitate this.

The Market Acceleration of Advanced Clean Cookstoves in the Greater Mekong Sub-region project has facilitated the entry of Solar Serve, and other international Cookstoves producers, into a previously non-existent market for cleaner biomass cookstoves. By providing the right set of conditions and incentives, these enterprises are able to adapt to local demand and boost their sales, reaching end-user who are keen to try out cleaner cooking devices that previously were not available to them.

This project is funded by Energising Development and the Blue Moon Fund.

To learn what rural Cambodian households think of their new 3G stove, please click here to read some testimonials from happy customers. 

Expert

Bart Jan van Beuzekom

Sector Leader – Energy


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