Khmer Green Charcoal (KGC), a leading company in South East Asia for the production of sustainable charcoal, is a flagship in the sustainable energy sector in Cambodia and is the result of the creative, innovative, and entrepreneurial Italian spirit. We meet Francesco Carocci, KGC’s project manager, to learn more about its success story.
Francesco: KGC’s founder, Carlo Figa’ Talamanca, is Italian and created KGC from an unfortunate event. Can you tell us about it?
Initially, Carlo was hired here in Cambodia as a consultant for GERES (Group for the Environment, Renewable Energy and Solidarity), a non-profit specialized in clean cooking, and for PSE (Pour un Sourire d’Enfant), a non-profit focused on supporting the community.
The project Carlo pursued had a social background: creating sustainable charcoal to reduce deforestation and poverty in the country. However, the funds for the project ran out and the two NGOs were about to close the factory. This is where Carlo comes in. In 2012 he decides to take over the project and invests his savings to restart it. From that moment, KGC was born.
What strategies were used to restore the company?
We moved immediately from a non-profit to a social enterprise business model. The funds received from international donors allowed us to expand the production capacity and the factory itself. Carlo’s entrepreneurial skills in particular have been an essential factor in our success.
Who is KGC in the local business environment today?
Today we are the leader for sustainable charcoal not only in Cambodia but in South East Asia. From 4 tons of charcoal produced per month in the past, today we can produce 4 tons per day! We also employ 45 Cambodian employees, of whom 35 are factory workers and the others employed in administrative activities.
What is the productive cycle of your charcoal?
- It starts with coconut shells. We buy them from small local suppliers who in turn buy them as a waste product in local markets and sell them back to us adding a small margin.
- We carbonize the coconuts and reduce the coconut charcoal into a powder. We mix the powder with a natural glue, cassava flour, and water, and then compress the mixture into blocks.
- In most parts of the world, the bricks (char-briquettes) are dried under the sun, a process that takes a lot of time and especially a lot of space. We have created a new process: a dryer that uses the heat of our furnaces and that can dry the charcoal within a day.
- Finally, the charcoal is packed into bags of recycled material and is ready for distribution.
- You can watch the production video here…
What market is KGC targeting?
In this part of the world, charcoal is widely used for cooking. The lower-income groups use charcoal in absence of an equipped kitchen. It is also widely used by street food vendors. Others buy it for barbecues at home, others for restaurants. So, ours is a democratic product affordable to all: private individuals, high-end restaurants, or street food.
What is your competitive advantage compared to your competitors?
The Cambodian market is not yet very sensitive to sustainability issues, so they turn to us because our product is high quality and has the same cost as traditional charcoal. Our charcoal is also healthier: it burns longer while producing less smoke and sparks.
What is your distribution channel?
We typically sell to distributors, who then sell to stores, malls, and supermarkets. You can also buy our products directly here at the factory.
Do you manage to balance profitability and sustainability?
Yes, it is a necessity to stay in the market.
To be competitive, we sell our sustainable charcoal at the same price as regular charcoal, which is very cheap in Cambodia (35 cents per kg). This of course means that our margins are limited but, over the years, we have always increased our efficiency and reduced our production costs, managing to find the right balance between sustainability and profitability.
Some funds received from international donors also allow us to undertake development projects parallel to our core business and explore new markets, always with an eye to sustainability. For example, our charcoal can be used in special pots to warm chicks in the farms in the countryside. The heat reduces chick mortality, increasing the profitability of this activity for farmers.
KGC is engaged on multiple Corporate Social Responsibility fronts, can you share a few accomplishments with us?
Our commitment to eco-friendly charcoal production allowed us to win the CSR Award for Small and Medium Enterprises from the European Chamber of Commerce in Cambodia in 2019.
- We offer to all our employees Western working standards, even if not required by Cambodian labor legislation: from insurance coverage to payment of incentives and bonuses related to punctuality and presence at work. We pay salaries in two monthly tranches, to help them meet small monthly expenses. As specific support to female employees, we offer maternity leave and help them access microloans by acting as guarantors.
- These are all things that help both the employees and, indirectly, the company itself. We also have a partnership with PSE (Pour un Sourire d’Enfant), an NGO that provides educational support and training to children from underprivileged areas. We have hired some of the parents of these children with one condition: that they send their children to school.
Let’s tackle the evergreen topic of the pandemic. How has it impacted your company?
At the beginning of the pandemic, in March 2020, we suffered a big drop in orders. We also decided to close the factory for a couple of days, to reorganize workflows in safe conditions. In the following months, especially since the reopening of the restaurants, we resumed our activities. Today we are almost back to a monthly sales level similar to the one before the pandemic.
What advice would you give to someone looking to invest in Cambodia?
Opening a business in Cambodia is easier than in other countries around the world. It is a dynamic, growing country with a rising middle class.
I would suggest starting with a long-term vision; to confront your company with the presence of China, an increasingly important player in the Cambodian market; and to have a trusted person who knows the country and can help you conduct business.
Finally, what outlook do you see for the post-pandemic future?
I believe in a positive future for both our company and the country in general: there will be no shortage of opportunities.
Article by Francesca Danni
Copyedited in English by Mayank Saini