Importing from China: Managing Cash Flow in Cambodia

This guide is intended for importers and distributors in Cambodia, especially expatriates who are launching or expanding an import business from China.

• Expat entrepreneurs: holders of a business visa (type E) or work permit, registered with the Ministry of Commerce.
• Local companies: businesses with Cambodian or mixed capital, holding an import-export license.
• Distributors: wholesalers or retailers who purchase Chinese products to resell in the Cambodian market.
• E-commerce startups: online sellers importing moderate volumes and needing to manage short cash flow cycles.

Importing from China involves different payment and delivery cycles than the local market. Here are the main differences to anticipate.

To avoid cash flow problems, follow these steps when planning your imports from China.

1. Step 1: Establish a full landed cost. Calculate the purchase price, freight, customs duties, insurance, and local delivery in a single currency (USD or riel).
2. Step 2: Map the four clocks. Identify key dates for the supplier, logistics, reseller, and end customer.
3. Step 3: Track actual currencies. Record each transaction in the currency used, with the applicable exchange rate and settlement date.
4. Step 4: Identify each product version. Ensure that each model, accessory, or packaging has a unique identifier from purchase order to final sale.
5. Step 5: Analyze credit extended to resellers. Distinguish between delivered, sold, and collected inventory, and track outstanding balances.
6. Step 6: Document discounts and returns. Link each discount or refund to a specific order and the relevant supplier.
7. Step 7: Simulate cash flow scenarios. Test payment delays, returns, and exchange rate fluctuations to identify the breaking point.

• Purchase planning: Importers in Siem Reap must order earlier to compensate for shipping and customs clearance delays.
• Currency management: Payments in riel from local customers can create a mismatch if suppliers require dollars or yuan.
• Negotiating with banks: Local banks in Siem Reap may offer documentary credit facilities for imports, but terms vary.
• Coordination with freight forwarders: Forwarders based in Phnom Penh or Sihanoukville must be contacted to arrange freight to Siem Reap.
• Adaptation to local markets: Retailers in Siem Reap, often seasonal, may require flexible payment terms, which lengthens the cash flow cycle.

Here are frequent mistakes made by beginner importers in Cambodia.

• Mistake 1 — Focusing only on margin. A high margin does not guarantee liquidity if payment terms are long.
• Mistake 2 — Ignoring settlement dates. Recording transactions at order rather than at payment distorts the cash flow picture.
• Mistake 3 — Mixing product versions. Without clear identification, it is impossible to know which product is causing a cash shortage.
• Mistake 4 — Extending credit without follow-up. Sending products to more resellers may seem positive, but it delays collection.
• Mistake 5 — Accounting for discounts before receipt. A discount promised by the Chinese supplier should not be considered as received until it is actually received.