Rudijanto, Contributor, Jakarta<\/p>\n
Indonesia remains a major battleground for the world's
\nelectronics giants as within many parts of the country there is
\nstill room for expansion while other Southeast and East Asian
\nmarkets, except China, are already saturated.<\/p>\n
While the Japanese, South Korean, Taiwanese and Singapore
\nmarkets, for instance, depend more on repeat customers rather
\nthan first-time buyers, a large portion of the Indonesian
\npopulation, especially those outside Java, Bali and Sumatra are
\nstill largely untouched by electronics companies.<\/p>\n
With this in mind, South Korean electronics giant Samsung
\nremains optimistic about the prospects for the Indonesian market
\nfor 2004 although many predict that there will be uncertainty in
\nthe security situation during the country's first direct
\npresidential election in the year.<\/p>\n
Samsung Electronics Indonesia's marketing director Christian
\nSudibyo estimates the market will grow by 10 percent.<\/p>\n
With already a strong presence in Java, Bali and Sumatra,
\nSamsung is eying Kalimantan, particularly areas with high
\neconomic growth such as Tarakan and Kutai.<\/p>\n
Korean electronics companies have made aggressive moves in
\npenetrating the Indonesian market, threatening the market
\nposition of and even replacing already established Japanese
\nelectronics companies in some market areas.<\/p>\n
If Korea's LG looks aggressive in television advertising,
\nSamsung is known for its low-price strategy. Some electronics
\ncompanies even suspect Samsung of subsidizing its selling price
\nin the Indonesian market in order to grab a greater market share.<\/p>\n
Certainly, Samsung rejects such an allegation. Samsung
\nElectronics Indonesia's marketing manager Budi Pramono said that
\nwhat Samsung is doing is simply adjusting to Indonesia's market
\nconditions. In spite of lower prices, Budi insists that Samsung
\nstill has a profit margin.<\/p>\n
More established Japanese electronics giants are greatly
\ndisturbed with the aggressive approach of Korean companies.
\nTechnologically, they have a hard time maintaining their
\nsuperiority over the Korean companies.<\/p>\n
In cognizance of Korean mastery in LCD technology, Japanese
\ncompany Sony Corp. approached Samsung Electronics Co. Ltd. for a
\npartnership in manufacturing Liquid Crystal Displays (LCDs). Sony
\nlacks its own production facilities for LCD production for large
\nTV sets.<\/p>\n
The company uses a lot of displays for its products such as
\nTVs, cellular phones and digital cameras. Sony considered all
\npossible choices before choosing Samsung to enter into a joint
\nventure for LCD production.<\/p>\n
LG has even claimed technological superiority in its
\nrefrigerator products over some Japanese manufacturers. LG
\nElectronics Indonesia's national sales and marketing manager Sung
\nKhiun reveals that the cooling system of its latest generation of
\nrefrigerator, Ice Beam Door Cooling, is already superior to
\nJapanese brands.<\/p>\n
PT Sharp Yasonta Indonesia's president director Kenji Okunaka
\nadmits the decline of some Japanese electronics companies due to
\ncompetition with technologically savvy Korean brands.<\/p>\n
\"Japanese companies that are losing their market are those
\nthat do not have technology. But we are able to maintain our
\ngrowth because we keep on developing our technology and make
\nadjustments to local taste. For instance for our audio products,
\nwe put in higher bass and eliminate the middle sound,\" Okunaka
\nsaid in an interview recently.<\/p>\n
He agrees that electronics companies need to put more efforts
\ninto research and development in order to survive. Sharp's strong
\npresence in Indonesia is partly attributed to its ongoing
\nresearch and development undertakings.<\/p>\n
But another Japanese company Toshiba believes that the
\nIndonesian market still prefers Japanese brands. Citing the
\nresults of market research, Hery Sugiarto, product manager of
\nTopjaya Sarana Utama (TSU), Toshiba's marketing arm, said that
\nthe Indonesian market still preferred Japanese brands over Korean
\nones.<\/p>\n
\"The market still perceives Japanese brands as more durable
\nand technologically more advanced than the Korean ones,\" Hery
\nsaid.<\/p>\n
Samsung's Christian admits that the middle and upper market
\nsegments with a strong brand consciousness still prefer Japanese
\nproducts. But he adds that for the middle and lower market
\nsegments, Korean brands have already dominated the market.<\/p>\n
\"In the long run, consumers will know that Korean products are
\nnot inferior to Japanese ones,\" said Christian.<\/p>\n
Jakarta's Glodok electronics market traders and Kelapa Gading
\nElectronic City sales personnel said in an interview that
\nconsumers no longer differentiated between Japanese and Korean
\nbrands in purchasing televisions and refrigerators.<\/p>\n
Amid such market conditions, competition will be tougher for
\nall brands.<\/p>\n
In anticipation of tougher competition in the years ahead,
\nOkunaka reveals that Sharp will increase its advertising budget
\nby 30 percent next year.<\/p>\n
Next year, the market is expected to be more competitive.
\nSharp predicts a flat growth in the Indonesian electronics
\nmarket. If this market forecast is true then next year
\nconstitutes the first time since 1999 that the Indonesian
\nelectronics market will be stagnant.<\/p>\n
In Okunaka's records, the Indonesian electronics market
\nenjoyed steady growth since 1999 until last year partly due to an
\nimprovement in the country's economy.<\/p>\n
One of the reasons for the predicted stagnancy of the
\nelectronics market is, according to Okunaka, lower growth in the
\nminimum wage of 6 percent in 2004.<\/p>\n
The minimum wage increased by 40 percent in 2001, 30 percent
\nin 2002, and 12 percent in 2003. With an expected growth of 6
\npercent next year, Okunaka said that people will have less money
\nto spend on electronics.<\/p>\n
In such a situation, Okunaka believes that manufacturers have
\nto adjust prices. This will result in a decline in electronics
\nproducts by about 15 percent next year. However, in terms of
\nproduction, there will be an increase of about 10 percent as most
\nelectronics manufacturers plan to further increase their
\nproduction this year.<\/p>\n
This year, Sharp itself increased its refrigerator production
\nto 600,000 units from 420,000 units as well as its TV production
\nto 1 million units from 720,000 units.<\/p>\n
Sharp also increased significantly the production of its audio
\nproducts.<\/p>\n
Another manufacturer, Samsung Electronics Indonesia, has also
\nraised this year's TV production by between 20 percent and 25
\npercent from 350,000 units to 500,000 units. The company also
\nincreased its refrigerator and washing machine production from
\n15,000 units to 20,000 units.<\/p>\n
With the increase in production and the expected stagnant
\ngrowth in sales, will the Indonesian market be saturated next
\nyear? Not at all. Okunaka still believes that Indonesia still has
\nroom for growth, especially since present TV sales have only
\npenetrated 50 percent of the total market, refrigerators 37
\npercent and air-conditioners 5 percent.<\/p>\n
As the market remains largely undeveloped compared to other
\nEast Asia and Southeast Asian markets, giant electronics
\ncompanies can expect a long, fierce battle to gain a sizable
\nfoothold in the Indonesian market.<\/p>\n
The battle to win the electronics market depends on
\ntechnological superiority. That is why, in spite of the small
\nmarket for technologically advanced plasma TVs, manufacturers
\nfeel the need to sell them in the Indonesian market.<\/p>\n
Plasma TV technology will certainly boost a manufacturers'
\nimage. Plasma TV has become the new symbol of technological
\nmastery.<\/p>\n
\"The fact that we can produce Plasma TV will boost our image,
\nwhich will positively affect our other products in the market.
\nConsumers will think that if we can manufacture technologically
\nsuperior products such as Plasma TVs, then they will have no
\ndoubt in our other products,\" Sung Khiun said.<\/p>\n
The Indonesian electronics market hold promise in the years
\nahead as a large portion of the country remains untouched. There
\nis certainly room for growth for major players but, of course
\nthis is for the winners in the high-tech war without which the
\nfate of electronics companies is already sealed.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/brudijantob-contributor-jakarta-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}