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Text/ Ba Jiuling (WeChat public account: Wu Xiaobo Channel)

It took Wuling Motors nearly 10 years to achieve the breakthrough from 0 to 1 in Indonesia.

Wuling Motors is the only Chinese automaker that has implemented a full industrial chain in Indonesia. The automobile manufacturing industry only occupies an integrated position. The fundamental difficulty lies in the industrial chain and localization.

In order to enter Indonesia, Wuling Motors joined forces with 16 domestic parts companies to set up factories in Indonesia so that the core components of new energy vehicles can be produced locally.

But that doesn’t solve the biggest problem.After arriving in Indonesia, everyone found that the domestic experience could not be copied here at all, and problems always emerged.

For example, it rains half of the year in Indonesia. When building a factory, workers dig holes and drive piles in the ground. Often, the holes become reservoirs, and it rains again as soon as they are drained.

Indonesia's new energy ecosystem is not yet popular, and it is necessary to develop conversion devices that can be easily charged;

Consumer preferences and regulations are also different. Chinese people generally like to drive big cars, but the turning distance on Indonesian roads is only 4.5 meters. If the car is too long, it may not be able to turn...

Similarly, for Miniso, which chose Indonesia as its overseas base, opening its first store was extremely difficult.

In order to protect its local manufacturing industry, Indonesia has set up a wide variety of product certifications. Cotton textiles, plush toys, etc. must obtain relevant certifications before they can be imported and marketed.

When a new store opens, there are usually five to six thousand SKUs, and the staff needs to certify and communicate with customs one by one. It takes nearly two months for each product to be transported and cleared.

Is it worth going to Indonesia despite the difficulties?

The answer is here:

Today, 9 out of 10 new energy vehicles on Indonesian roads are made in China. In terms of market share, half of Indonesia's new energy vehicles are Wuling Motors.

MINISO has opened more than 200 stores in Indonesia, covering more than 90 cities, and its performance in the Indonesian market continues to grow.

Nowadays, many young people in Indonesia go to MINISO to choose things when they get married. Indonesia has become MINISO's second largest overseas market after the United States.

Why go to Indonesia?

Apart from the sea, blue sky, beaches and floral shirts, we know very little about Indonesia, and even think that Indonesia is a small, poor country with only tourism.

In reality, Indonesia consists of more than 17,000 islands, spanning three time zones and with a population of 270 million.

According to the "2024 Indonesia Overseas Operational White Paper", in 2022, Indonesia's GDP will be approximately US$1.32 trillion, with a GDP growth rate of 5.3%; in 2023, Indonesia's GDP will be approximately US$1.39 trillion, with a GDP growth rate of 5.05%, both higher than the global GDP growth rate.

Indonesia is the fourth most populous country in the world. Not only is it large in population, but the population is also very young, with a median age of only 29 years old.

From 2014 to 2023, the proportion of Indonesia's population aged 15-64 increased by 3.7 percentage points in ten years to 71.8%.

This means,More than 70% of Indonesia's population belongs to the working population, and the country will remain in a period of demographic dividend for a long time.

Accompanying this is a relatively high population growth rate. In 2022, Indonesia's birth rate reached 16.19‰, making Indonesia the country with the largest number of newborns among the ten ASEAN countries in the past 10 years.

Looking around the world, it is difficult to find such a potential market with a large, young population and fast economic growth.

Scan the QR code to receive the "2024 Indonesia Overseas White Paper"

my country is the second largest source of foreign investment in Indonesia. Indonesia has five pillar industries: infrastructure construction, downstream mineral development, energy transformation and low-carbon development, small and medium-sized enterprise development, and tourism.

China has rich experience in these pillar industries and can export models.

For example, in terms of transportation infrastructure, Indonesia has many islands and needs a lot of infrastructure to promote connectivity. In 2016, Indonesia launched a national strategic project. Among the 245 national strategic projects planned by the government, nearly 100 projects belong to the transportation field.

One of them is the Jakarta-Bandung High-Speed ​​Railway built by my country. It is the first high-speed railway in Southeast Asia, connecting Jakarta and Bandung, shortening the driving time from more than three hours to 46 minutes. It is the output of China's high-speed railway's entire system, all elements, and entire production chain.

The Jakarta-Bandung high-speed railway transported 283,000 passengers in just one month of operation, with the highest daily passenger occupancy rate reaching 98.7%.

With the development of infrastructure such as transportation, Indonesia's fast-moving consumer goods, e-commerce and other industries have also taken advantage of the favorable conditions.

Young consumer groups

The median age of Indonesians is 29, and younger groups are more active in consumption.

MINISO's hot-selling products in the local market are perfumes and cosmetics. Perfumes sold locally cost as little as a dozen RMB, which meets Indonesians' pursuit of cost-effectiveness for perfumes. YOU cosmetics sold by MINISO are currently the most popular cosmetics brand in Indonesia.

According to Statista data, Indonesia's beauty and personal care market size will reach US$9.6 billion in 2027, and the online market revenue will reach US$9.17 billion in 2024.

In addition to beauty products, there is also great potential for clothing products in Indonesia. my country is the largest exporter to the ASEAN clothing market and also has advantages in export models and industrial chains.

Among them, one category that has grown significantly in recent years is Muslim clothing.

In 2021, the global Muslim clothing market size was US$69.3 billion and is expected to reach US$95.1 billion by 2027, with a compound annual growth rate of approximately 5.42%.

About 87% of Indonesians believe in Islam, and there is a great demand for Muslim clothing.

With a younger population structure, Indonesians' demand for Muslim clothing is also becoming more diverse and younger.

During Shopee's Ramadan promotion in 2024, Muslim fashion became a hot-selling product on the platform, with transaction volumes of women's robes, women's headscarves, men's shirts and other clothing increasing by more than 9 times during peak periods compared to usual times.

E-commerce development in Indonesia is on the rise. Young people are price-sensitive and like to use shopping apps. Temasek's analysis report on Indonesia predicts that Indonesia's digital economy will surge to US$300 billion by 2025, with e-commerce, tourism and financial technology being the main driving forces.

Young people’s support for e-commerce will further boost online sales of all kinds of goods, giving brands an advantage in their overseas expansion.

Going to Indonesia may be the best solution

After reducing costs and increasing efficiency, innovating product categories, and optimizing the supply chain, the market growth of some domestic categories is still minimal, and some industries have entered into a competition for existing market share. Going to Indonesia has become one of the best choices at the moment.

For example, taking tea drinks as an example, the industry report of Guotou Securities in June 2024 shows that the tea drink industry is gradually turning to the stock market, and tea drink brands are collectively involved in scale wars and price wars. The overall growth of the C-end market is gradually slowing down.

Domestic tea beverage brands have to survive by adopting the strategy of “franchising, 10,000 stores, and low prices”, but the consumption frequency of consumers is no longer increasing, the control over the franchise format is insufficient, and the difficulty of innovation remains a difficult dilemma to overcome.

Therefore, it is very necessary to go overseas to seek a second growth curve.

When tea beverage brands go overseas, most choose Southeast Asia as their first stop.

This is not accidental. Southeast Asia has high temperatures all year round, eating habits are similar to those in China, there is a tea culture, and the tea supply chain is easier to reach than fresh food supply chains. The location of Southeast Asia also shortens the goods circulation cycle.

Mixue Bingcheng has chosen Indonesia as its bridgehead for expanding into Southeast Asia. Its prospectus shows that as of September 30, 2023, Mixue Bingcheng has a total of 3,973 overseas stores, of which 2,300 are in Indonesia, and half of its overseas stores are in Indonesia.

The "2032 Tea Beverage Market Report" shows that the global tea beverage market size reached US$3 billion in 2022 and is expected to grow to US$5.4 billion by 2032, with a compound annual growth rate of 6.3%.

Compared with the slightly growing domestic market, the global market for tea drinks obviously has a broader space. Other fast-moving consumer goods that are also in a red ocean in China are also suitable to go to Indonesia to find new growth space.

How to get the ticket

Indonesia is full of opportunities, but conquering Indonesia is not easy. Indonesia has been mediating in the international market for many years and actually has more experience in using certain rules than China.

TikTok has 120 million users in Indonesia, and its e-commerce business in Indonesia was banned in September 2023. The Indonesian Ministry of Trade signed new regulations prohibiting social media platforms "like TikTok" from conducting direct sales transactions.

This is a real game between TikTok and the Indonesian government. From the final solution, we can see how Indonesia can get a share of TikTok's e-commerce sector.

After TikTok's e-commerce app was taken offline, it merged with Tokopedia, the largest local e-commerce platform in Indonesia, within two months and once again returned to the public eye.

Judging from the data, the benefit of such "deterrence" is that it has improved the performance of local company Tokopedia. In 2023, TikTok and Tokopedia each accounted for 14.2% of the total merchandise transaction volume of e-commerce platforms in Southeast Asia.

But not all companies can find ways to stay immune from similar shocks.

For enterprises to embark on the Age of Discovery, geographical distance is not difficult to cross; the difficulty lies in bridging the differences in laws and regulations and cultures.

Therefore, companies need to understand local laws and regulations, as well as the differences in local consumer demand, and communicate with overseas pioneers and local companies to know whether their companies are suitable for going to Indonesia.

How to get the ticket to “go overseas”?

For entrepreneurs who want to go overseas for inspection in Indonesia, we have prepared itineraries including dealing with local governments, listening to the experience of overseas pioneers, and local inspections.

◎ Look at policies and communicate with government departments

Dialogue with Indonesia's Investment Coordinating Board BKPM, as an important bridge of communication between the Indonesian government and foreign investors. Enterprises that want to invest in Indonesia must first pass through this bridge before they can start implementing their investment plans.

◎Depending on the conditions, visit the industrial park

Suryacipta Industrial Park has world-class public facilities, infrastructure and supporting facilities. More than 150 large Chinese and foreign-funded enterprises, represented by Nestlé, Isuzu, and Zhongtian Technology, have settled in, with a relatively high concentration in industries such as automobile industry, photovoltaic cables, and food.

◎Look for opportunities and communicate with investment institutions and overseas pioneers

Dialogue with ATM Capital, a leading investment institution in Southeast Asia, to explore market trends and investment highlights in Indonesia.

ATM Capital is a venture capital fund focusing on the Southeast Asian market. So far, it has invested in a Hong Kong-listed company, two US-listed companies, two unicorns and several quasi-unicorn companies. The investment cases include: Jitu Express, Southeast Asia's leading maternal and child brand MAKUKU, beauty brand YOU, coffee chain TOMORO COFFEE, etc.

Learn overseas strategies and globalization approaches from companies such as Wuling Hongguang, MINISO, TikTok, and YOU.

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