Local furniture market offers big promise

Local furniture market offers big promise

Rudijanto, Contributor, Jakarta

The impressive newly opened Da Vinci Holdings tower in Jakarta's main business thoroughfare on Jl. Sudirman has opened the eyes of many people that the domestic furniture market offers huge potential if properly tapped.

With over 30 floors, Da Vinci Tower is the largest furniture and home accessory store in the country that sells high end products ranging from furniture, light fittings, door locks and handles and drapes to the Indonesian market.

Beginning as a company that sold premium kitchen utensils in 1974 for the Singapore and Indonesian markets, Da Vinci Holdings has become an international company with outlets in China, Taiwan, Malaysia, Brunei, Indonesia and Singapore.

Da Vinci Indonesia itself (DVI) was only formed in 1994, barely three years before the start of the monetary crisis that has crippled the country's economic growth. In spite of these harsh and turbulent times, DVI has grown tremendously and now has five outlets in Jakarta, Surabaya and Medan.

"Da Vinci's success only proves that our consumers still like to buy imported products," says general chairman of Indonesia's Furniture Industry and Handicraft Association (ASMINDO) M. Djalal Kamal.

Another Indonesian furniture maker Willy Wonoto of CV Jaya also concurs saying that rich Indonesians still prefer to buy imported products even though such products cost them hundreds of millions in rupiah.

Willy expressed his disappointment over the result of his recent promotion drive in local newspapers and magazines. Believing that he could tap this huge domestic market, he spent a lot to advertise his rattan furniture products in the local media.

"But I received a cool response from local consumers. They were even surprised about the prices of my products. For them, rattan furniture should not be that expensive because they still consider rattan furniture cheap," Willy says.

Willy's rattan sofa sets are sold for between Rp 8 million (about US$940) and Rp 13 million a set. Such prices are below Da Vinci's sofa sets which start from Rp 19.8 million, or imported Veranda Mobili sofa sets which start from Rp 18.8 million.

General Chairman of Indonesia Furniture Club Yos Theosabrata says that DVI's success shows that Indonesian consumers are still import-minded and highly obsessed by top brands and Italian- sounding brands.

"I am very concerned with the domestic market. Many foreign players have entered our market but our good players are only busy with the export market," says Yos.

Indonesia itself is one of the major furniture exporting countries in the world with exports reaching US$1.38 billion in 2001, and $1.47 billion in 2002. The country's exports are expected to drop by 10 percent this year due to a lower overseas demand and the scarcity of material.

The country has become one of the top 10 furniture exporting countries to the U.S., in terms of export value since 1995. Indonesia was the sixth biggest exporter to the U.S. in 2000 with a total export value of $486 million.

All of this proves that Indonesia is capable of producing high quality furniture that meets international standards. Indonesian teak and rattan furniture is highly sought after in the international market. The question is why are Indonesian manufacturers reluctant to sell in the domestic market?

"Their reason is standard, namely they are afraid that if they sell in the domestic market, then other competitors will copy their designs," says Yos, who is also the owner of Jakarta-based furniture companies Victor Furniture and PT Accupunto International.

As most start off as home industries, many Indonesian furniture companies lack marketing know-how. Accustomed to receiving custom-made orders, lots of Indonesian producers lack the initiative and creativity to develop both their products as well as their marketing approach.

While Indonesian furniture products are of high quality and already accepted in the international market, without a creative marketing approach at home, domestic producers simply cannot hope to profit from the huge potential in the domestic market.

"The success in marketing is that we can sell our own brands. If our brands are already known, the value of our product increases," says Yos.

With around 60,000 skilled workers in Cirebon alone, rattan furniture makers need a better marketing approach to change the image of rattan products among Indonesian consumers.

Rattan products are always associated with the cheap products that are commonly sold on the streets. Willy's recent intensive promotions of rattan products should become an incentive for others to promote the image of rattan among Indonesian consumers.

Long underestimated by most export-oriented Indonesian furniture companies, the domestic market remains largely untapped and undeveloped. The success of DVI is simple proof that this domestic market, if properly tapped, is capable of giving birth to giants.