Electronics firms plan to stay on top with high-end products
Electronics firms plan to stay on top with high-end products
Leony Aurora, The Jakarta Post, Jakarta
Korean producers have come to dominate Indonesia's electronics
market and they intend to maintain this dominance by introducing
new high-end products featuring the latest technological
advances.
It has been 13 years since PT LG Electronics Indonesia (LGEIN)
and PT Samsung Electronics Indonesia (SEIN), the local
subsidiaries of the Korean firms, began constructing factories in
Tangerang, Banten and Cikarang, West Java.
Yet in that relatively short time the companies have managed
to overtake Japanese manufacturers such as Sony, Panasonic and
Sharp in Indonesia's electronics industry.
Samsung, for example, ranked only fifth in Indonesia in sales
of television sets six years ago. Today, it is the leading player
in flat televisions, which use liquid crystal display (LCD)
technology.
"People's concept (of electronics) has changed from only
Japanese branding to include Korean brands as well," said SEIN
director Lee Kang Hyun.
SEIN's domestic sales have risen steadily from US$170 million
in 2002, to $280 million in 2003 and $350 million last year. The
company is targeting $500 million in sales within Indonesia this
year and another $1 billion in exports.
LG, which exports 35 percent of the refrigerators and
televisions it produces in Tangerang, has taken over the hearts
of many housewives, claiming the number one spot in washing
machine sales.
"On average, we see about a 30 percent increase in sales per
year," said LGEIN president director Kee-Ju Lee. LG's sales,
domestically and foreign, rose from US$275 million in 2003 to
$322 million last year, and are expected to rise to $420 million
this year.
LG's motto, "Life is Good", strikes a chord as the economy
slowly recovers from the monetary crisis -- the country enjoyed
5.1 percent growth last year.
And the increase in the availability of consumer financing is
also helping sales. For a down payment of between 10 percent and
20 percent, customers can happily take home the consumer product
they want and worry about the installment payments later.
However, the competition has gotten tougher as cheaper
electronics goods from China and Taiwan have begun to arrive
here.
"China is a big challenger. You cannot beat the Chinese in
commodity items," said Lee from LGEIN. "Our strategy is to move
to premium items."
LGEIN plans to start a new production line for high-tech,
high-end plasma televisions in Tangerang in July this year.
Another local LG company, LG Display Indonesia (LGDI), will start
producing LCD televisions in June.
The company is developing a wide range of products. Lee said
LG was the only manufacturer producing all kinds of television
sets, including conventional, flat, projection and plasma.
"That way, if the market wishes for one type to develop
faster, we already have the technology," he said.
Samsung sees the situation from a similar point of view. "We
will focus on our branding. Compared to other countries, high-end
products are not as attractive here. But it is developing," said
SEIN's Lee.
With updated technology and the appetite of Indonesian
consumers for top-end products, it seems that Korean electronics
will indeed continue to be a major force in Indonesia.