The Newsletter 76 Spring 2017

'Old' and 'new' Chinese business in Phnom Penh

Michiel Verver

<p>In June 2016, warm ties between the Chinese state and Prime Minister Hun Sen’s ruling Cambodian People’s Party (CPP) were once again reaffirmed. Reportedly, Cambodia demanded ASEAN to tone down its statement on China’s disputed claim over the South China Sea, after which China pledged US$600 million in loans and grants. Political interdependencies have emerged alongside the influx of Chinese investments, businesses and economic migrants in Cambodia since the 1990s. Chinese investors currently hold dozens of Economic Land Concessions (ELCs) allocated for the cultivation of crops like rubber, sugar and cassava, and Cambodia’s garment factories, which account for the bulk of Cambodian exports, are largely owned by entrepreneurs from China, Hong Kong and Taiwan. Petty traders from China sell cheap goods on Cambodia’s markets, while infrastructural development is largely undertaken by Chinese state-owned companies and financed by Chinese banks.</p>

In considering the ways in which China’s newfound assertiveness affects Cambodian society, the perspective of the domestic private sector is particularly intriguing for at least two reasons. First, Cambodia’s private sector, especially in the capital Phnom Penh, reveals an internal division between the politically connected and bereft. An exclusive group of tycoons enjoys privileges and protection from top-CPP officials and own the country’s large and diversified business groups, while the majority of the private sector comprises small and medium-sized enterprises (SMEs) that cope without political backing. Second, most entrepreneurs in Phnom Penh, both tycoons and SME owners, are children or grandchildren of Chinese migrants who came to Cambodia especially during the French colonial period. Cambodia’s ethnic Chinese, who trace their roots to South China and are mostly of Teochiu descent, have come to dominate trade and commerce over the centuries. Overlaying the two begs the question of how various local entrepreneurs are embedded differently ‘in between’ Chinese ethnicity and Cambodia’s political economy, and how this enables or constrains them from linking up with and benefitting from ‘new’ Chinese investments and commerce in Cambodia.

Drawing on ethnographic accounts of a variety of business owners, my chapter explores the linkages, collaboration and competition between the ‘old’ Chinese business community in Phnom Penh and ‘new’ Chinese traders, investors and economic migrants. The chapter details how, in various economic sectors, the ‘old’ Chinese play an important role in bridging ‘new’ Chinese involvement in the Cambodian economy. Newly created links between ethnic Chinese in Cambodia and China have facilitated the burgeoning trade of consumer goods and raw materials, and enabled joint ventures in real-estate, industry and natural resource exploitation. At the same time, under the broad umbrella of ‘Chineseness’, actual business exchanges among ‘old’ and ‘new’ Chinese often rely on family connections (among SME owners) or CPP matchmaking (among tycoons) more than shared Chinese ethnicity per se.

Phnom Penh’s business community offers a valuable window into the impacts of ‘new’ Chinese involvement on Cambodian society. I argue that, although not fundamentally altering Cambodian society, in two ways the ‘new’ Chinese have further perpetuated the established political economy. Firstly, ‘new’ Chinese involvement propels the revival of ethnic Chinese culture, language and economic dominance in Cambodia. China has supported Chinese schools, while Chinese investors, white-collar workers and tourists are omnipresent. This has contributed to a newfound cultural confidence that holds sway especially over younger generation Cambodian Chinese, many of who speak Mandarin and who have been spared the discrimination and atrocities of the Cold War period. Second, ‘new’ Chinese involvement in Cambodia has augmented the divide between the elite and the general population. By channeling aid and investment into Cambodia via politically connected tycoons and in accordance with Hun Sen’s development agenda, Chinese private and public investors have provided Hun Sen the resources to oil the patronage system.

Looking ahead, it is unlikely that renewed Chinese commercial dominance and cultural salience will backfire on Cambodia’s ethnic Chinese. As before the Khmer Rouge, anti-Chinese sentiments are largely absent. However, the growing divide between chiefly exploitative elites and exploited local communities, who face land evictions, human rights abuses and low wages, is problematic. While the excesses of Hun Sen-style authoritarianism spread across Cambodia, the CPP is gradually losing its constituency, which bodes ill for political stability in the near future.

Michiel Verver, Lecturer, Leiden University Institute for Area Studies (LIAS), the Netherlands (