Local companies need x-factor to hit Indonesian market

Friday, Sep 20, 2013 07:00

Indonesia is one of the biggest markets in Southeast Asia with a population of more than 250 million.— VNA/VNS Photo

HCM CITY (Biz Hub)— Vietnamese companies need to clearly offer products with unique characteristics in order to sell to buyers in the Indonesian market, according to experts.

"Indonesia is one of the biggest markets in Southeast Asia with a population of more than 250 million. However, it is very hard for Vietnamese companies to get a foothold there," said Truong Cung Nghia, managing director of Truong Doan Marketing Group.

Nghia, who recently visited the country on an exploratory trip, explained that Indonesia buyers would choose locally made products over imported ones if the latter were similar.

Bich Chi Food Company, for example, has had success in the market despite having slightly higher prices.

Bui Thi Ngoc Tuyen, of the company's Import and Export Department, told Viet Nam News that "while other Indonesian food companies used aromatic spices, our company uses natural food and foodstuff to make our products, creating our own characteristics."

Likewise, a representative from Lien A Company that makes mattresses said local companies must define their own segment to deal with strong competitors.

Another factor in achieving success in Indonesia is price competition.

"In Indonesia, if Vietnamese companies choose to compete by price, they will totally lose," Nghia said, explaining that wages in Indonesia are lower than those in Viet Nam.

"It is better to find a niche market to develop business in Indonesia," he added.

Finding a partner is also necessary or no one would be able to sell in department stores or malls, he said.

"Imports come to Indonesia through agents and then are distributed to modern retail channels like supermarkets or trade centres. Fewer retailers can directly buy products from exporters due to complicated logistical procedures," he added.

Nghia also suggested that companies open manufacturing plants in Indonesia to enjoy cheap labour and then re-export products to Viet Nam and other countries.

Vu Kim Hanh, general director of the Centre of Business Studies and Assistance, said that entering the challenging Indonesian market was"difficult but we can still do it."

The Indonesia consumer market is expected to increase from 45 million in 2010 to 135 million in 2030. —VNS

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