Entrepreneur

Creating A Multi-Million Dollar Rice Enterprise

Rice entrepreneur Lay Chhun Hour has transformed his parents' small business into an award-winning multi-million dollar enterprise.
Andy Lay poses for picture after a recent interview in Phnom Penh. Kiripost/Siv Channa
Andy Lay poses for picture after a recent interview in Phnom Penh. Kiripost/Siv Channa

When Lay Chhun Hour started as a rice entrepreneur, he knew little about the sector but went on to transform his parents’ small business into a multi-million dollar enterprise.

Chhun Hour, 40, also known as Andy, is the CEO of City Rice Import and Export Co,. LTD, which he co-founded in 2012. Andy estimates that his company’s assets are today valued at $15 million. Last year, export sales were valued at $60 million.

Andy has five siblings and graduated from University of Wisconsin Superior majoring in Management and International Business. He also holds an MBA at California State University of Long Beach, majoring in finance and management.

He also worked full-time at a Japanese logistics company in the US when studying there.

Andy’s parents are from Kandal province and were evacuated by the Khmer Rouge to Battambang, which is known as the country’s rice bowl because of its fertile soil.

His parents were unable to cross the border to a refugee camp in Thailand and decided to stay in Battambang. His father began work as a mototaxi driver and his mother sold kuyteav after the fall of the Khmer Rouge. Later on, the family ran a milling business.

Andy Lay speaks with Kiripost in a recent interview in Phnom Penh. Kiripost/Siv Channa
Andy Lay speaks with Kiripost in a recent interview in Phnom Penh. Kiripost/Siv Channa

Andy inherited the rice mill from his parents in 2012 after returning from his studies in the United States. At the time, it could produce about 3,000 tonnes of milled rice per year for local supply.

When he returned in 2011, he knew little about rice.

The mill was traditional and was run by a car engine that often broke down. When Andy returned, the rice sector had somehow developed one step ahead.

He started running the business and was trying to find ways to improve the quality and start exporting.

With financial help from the International Financial Corporation (IFC) - a sister organization of the World Bank - he was taken on trips to Vietnam and Thailand. There, he learned how the rice sector had developed.

Agricultural And Rural Development Bank (ARDB) has also helped City Rice to grow by providing loans to purchase paddy from farmers and last year, they had helped build dryers, Andy said.

He was given a free booth at international exhibitions and as the next generation of rice entrepreneurs, he understands how important it is to have standard quality food products.

He faced many challenges including lack of funding, milling techniques not being modern and often broke down. The machine broke down about 20 days each month, disrupting businesses.

Andy was given a milling machine that sits on one hectare of land in Battambang. His parents also gave him some land titles in Phnom Penh to use as collateral to get loans from a bank.

As the oldest brother of the family, Andy’s parents thought he should lead the business, with any profits made divided among the family.

Today, City Rice Import and Export Co,. LTD focuses primarily on exporting rice. During its first three years, the company did not perform well, as they could not find clients and could only mill rice for other businesses to export.

He took out a $1 million loan and was nervous because during these first three years, the company did not perform well. From 2012 to 2015, it was only able to export between 100 and 200 tonnes of rice.

The Ministry of Commerce and the General Department of Taxation also continuously asked him why his business had not performed well, resulting in zero profits.

However, 2015 was the year that kicked off his rice’s reputation, following three consecutive wins by City Rice as the Cambodian best rice in 2014, 2015 and 2016.

“It was our selling point and in 2016, a Chinese business came to contact us,” he said, adding that his generation of entrepreneurs is different from previous ones, because he is more honest when doing business.

Andy also speaks Chinese and understands Chinese culture. While studying in the US, he also understood the concept of running a clean business.

The Chinese businessman who came to him placed an order to mill 3,000 tonnes of rice, worth $2.1 million, to export to China.

“We thought he was joking,” Andy said. The businessman paid him $500,000 and the rest when the work was finished.

Since then, Cambodian rice has been well known for its quality and despite the price is a little more expensive than the neighboring countries.

“I think what made us standout was the quality, even though we made small profits, we still produced high quality rice.”

City Rice kept increasing exports, up from a few hundreds tonnes to a few thousands, then tens of thousands. In 2021, he broke the record of exporting 10,2000 tonnes.

Nearly 60,000 tonnes of rice has been exported by City Rice so far this year, he said.

“What I learnt is integrity, it's important, the reputation in doing business with local partners, buyers and all stakeholders working with us. I am honest and when I do things, I help people around us grow so people support us."

“The agricultural sector will grow because other countries such as Thailand and Vietnam have moved to plant something that is more expensive than rice. Some regions have changed from agricultural land to commercial land.

“Cambodia still has virgin soil, some other countries almost lost that, we lack techniques and I understand that in the next 10 years through research we won't do just rice, but durians and now we grow some mangos,” he said.

Thailand is Cambodia’s rice competitor as the two countries have similar rice types and Thailand has bigger rice companies and government support. The Thai rice sector started about 200 or 300 years before Cambodia, which began producing rice to export in 2008.

Last year, international sales were worth $60 million. Andy married in 2017 and has three children, including identical twins.

“It's a miracle,” he said of his twins. “My family is fortunate, I have a son and daughters.”