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.