Home appliance sales rebound to precrisis levels<\/p>\n
Jamuna Nair, Contributor, The Jakarta Post<\/p>\n
Home appliances. What are they? They are things that have made
\nus appear 20th century and our ancestors dated. They are godsends
\nfor without them we would have to contend with washerwoman hands,
\nchopping wood in the backyard for that morning cup of coffee or
\nbreaking our backs brushing out the carpet.<\/p>\n
As short as our memories are, today we take these household
\n\"cannot-do-withouts\" for granted, thanks largely to a deluge of
\nthese appliances sparked by the perception that every householder
\nwould surely need at least one appliance to make coming home from
\na punishing day at the office less unnerving.<\/p>\n
And blessed we are too that the gamut of electric and
\nelectronic home appliances, from air conditioners to hair dryers,
\ncome in a wide range of sizes, shapes, brands and prices to
\nfelicitously match the degree of comfort we seek and our bank
\nbalance.<\/p>\n
On the home front, Indonesia's 220 million something populace
\nis without doubt an extremely tantalizing proposition to
\nmarketers of home appliances. So it is no wonder that there is
\nkeen competition for a slice of this pie among the legions of
\nlocal, joint venture and foreign producers in the home appliance
\nindustry here.<\/p>\n
Sharp, Matsushita, Toshiba, Sanyo, Hitachi, Aiwa and Sony were
\nsome of the Japanese concerns that have set up factories and
\noutlets here as have Korea's LG, Samsung and Daewoo, and Taiwan's
\nTecco. On the other hand, Cosmos and Maspion are, among others,
\nhomebred Indonesian companies -- sons of the soil, if you will.<\/p>\n
Presently there are no such European or American ventures here
\nbut their products, including Electrolux (Italian), Kelvinator
\n(American) and Maitag (American), are available here.<\/p>\n
According to Jino Sugianto, general manager of Sharp Yasonta
\nAntarnusa, Japanese companies had captured 70 percent of the
\nmarket. For example, Matsushita's P.T. National Panasonic Gobel
\nhas the lion's share of the air conditioner market with 27 per
\ncent, with LG and Toshiba its closest rivals.<\/p>\n
Sharp, Jino said, was proudly holding a 20 percent share of
\nthe refrigerator market with LG and Toshiba close behind. Sharp,
\nhe added, also boasted a 40 percent share of the coveted color
\ntelevision market.<\/p>\n
Targeting the low and lower middle income groups, the
\nprincipal player for electrical appliances such as electric fans
\nwas P.T. Maspion.<\/p>\n
The Planet Group is another local enterprise that is making
\nheadway in the field with brand names including General, Fujitsu,
\nMedia and Dast.<\/p>\n
The obvious question that comes to mind is why are foreign
\nbrands more popular than their local counterparts, especially
\nwith respect to major electronic products?<\/p>\n
Adhi Sukmono, director of P.T. Top Jaya Antariksa, a maker of
\nToshiba refrigerators, contended that major electronic appliances
\nsuch as air conditioners, refrigerators and washing machines were
\ntypically purchased by the upper middle and higher income groups
\nwho were willing to pay a premium for reputable goods.<\/p>\n
Another reason for this phenomenon he declared was that the
\npublic had been longer acquainted with foreign brand names than
\nlocal ones.<\/p>\n
As a case in point, P.T. National Gobel, which produced home
\nappliances under the brand name National, was established in 1970
\nbecoming the first Japanese (Matsushita Electrical Industrial Co.
\nLtd.) and Indonesian (Rachmat Gobel) joint venture here.<\/p>\n
While Sharp too has been in the country for 31 years, P.T.
\nMaspion was only spawned about 10 years ago.<\/p>\n
So, although P.T. Maspion's electrical products, which are
\nsold under the Maspion and Uchida brand names, are more well-
\nreceived by the lower income groups, its electronic goods are
\nfacing an uphill battle wooing the brand-conscious upper middle
\nand higher income groups.<\/p>\n
Just the same, there is no room for smugness in this business
\nif the intention is to maintain or increase one's market share,
\nor simply stay afloat.<\/p>\n
Sharp, for instance, has been relentless in its advertising
\ncampaigns and has maintained competitive prices in its quest for
\na greater portion of the market pie.<\/p>\n
And to have an edge over one's competitors in this highly
\nlucrative industry, innovation is key.<\/p>\n
Matsushita introduced new models of air conditioners every
\nyear, said P.T. National Panasonic Gobel's general manager of
\nhome appliances Tan Hong Gie.<\/p>\n
\"Sharp launches new and attractive designs of its products
\nevery one to one and half years,\" Jino said.<\/p>\n
Many producers said that although sales of home appliances
\nfell at the onset of the economic crisis in 1997, they had
\nrebounded to precrisis levels.<\/p>\n
Indonesia's huge potential market (approximately 40 percent of
\nthe total population) for these appliances makes for plump
\npickings and, as a result, has propagated the marketing of
\noriginal equipment manufacturing (OEM) products where companies
\nbuy products of popular brands, sometimes with slight
\nmodifications in design and color, and trade them under their own
\nbrand name --- a short, safe and convenient road to success?<\/p>\n
There is also a great demand for cheap Chinese-made appliances
\nsuch as those produced by, among others, Haier, Changhong and
\nChunlan.<\/p>\n
So it is not surprising, as Adhi illustrated, that although
\nthere was an 11 million-unit demand per year here for
\nrefrigerators, the most popular was the one-door 140-liter
\ncapacity unit, which enjoyed a 70 percent share of the market
\ndespite the fact they need to be defrosted! Frugality is
\nobviously the order of the day.<\/p>\n
As far as washing machines go, there is only a need for
\nbetween 200,000 units and 250,000 units per year, Adhi said.
\nEvidently they are not the hottest household item in town.<\/p>\n
Similarly there is also no stampede for vacuum cleaners as
\nmost homes are not carpeted according to Jino. We are after all
\nliving in the tropics.<\/p>\n
To be a major player in the industry, the products must be
\nlocally produced, Jino pointed out.<\/p>\n
\"Imported goods are subject to high import duties and
\ntherefore can't be sold at competitive prices,\" he explained.<\/p>\n
Adhi regretted that imported finished goods were burdened with
\na 15 percent import duty tax, 10 percent government tax, 20
\npercent luxury tax and 2.5 percent prepaid income tax, which
\namounted to a debilitating 47.5 percent of the cost of the
\nproduct!<\/p>\n
This had encouraged smuggling, he lamented. However, smuggling
\nby sea was a thing of the past, he added.<\/p>\n
\"Today we have 'administrative smuggling' like under invoicing
\nand falsely declaring goods\" he said, stressing that these crimes
\nwould discourage foreign investors.<\/p>\n
So when buying home appliances, it would be well-advised for
\nconsumers to ensure the products had a valid warranty card with a
\nregistration number, cautioned Adhi, who is also the secretary
\ngeneral of the Indonesian Association of Electronic and
\nElectrical Appliance Industries.<\/p>\n
Jacobus Salim, general manager of P.T. Maspion also expressed
\nhis frustration that the government was not doing enough to stamp
\nout unfair business practices and protect the local industry from
\ncheap imports, especially from China.<\/p>\n
The Association of Electronic and Electrical Appliance
\nIndustries, which acts as a bridge between the industry and the
\ngovernment, had proposed that the government protect the local
\nindustry from a possible torrent of foreign goods when the ASEAN
\nFree Trade Area took effect next year, said Adhi.<\/p>",
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