Global Business Guide Indonesia

Manufacturing in Indonesia Manufacturing in Indonesia Manufacturing in Indonesia Manufacturing in Indonesia Manufacturing in Indonesia
Joint Ventures | Distribution | Research & Development
Multi Indocitra | Mr Herman Wirawan
Mr Herman Wirawan

A lack of R&D is one of the primary challenges to local businesses in the baby care and lifestyle goods industry

Mr Herman Wirawan, President Director

Multi Indocitra is a publically listed distributor of health care and baby products, operating out of main distribution centres in Jakarta and Surabaya. Please present your company’s background to the GBG Indonesia audience and elaborate upon its strategies going forward.

Our company was first established in the late 1970s and at that time focused on the children’s toys industry. Over time, we moved into children’s fashion and licenced products for brands such as Disney, before specialising in baby products through the distribution of brands such as Pigeon and Combi from Japan. When I joined the company in the 1990s, we embarked upon a period of restructuring and in response to market trends decided to lessen our emphasis on children’s fashion and instead prioritised products for babies. In addition to this we also entered the market for skin care products, and hope to reach out to a wide consumer base of all age groups to diversify. This includes skin care products for teenagers and young adults that now make up a substantial proportion of Indonesia’s population. Among the brands we carry for our older customers is Astalift, a line of cosmetics products well established in international markets. It is our strategy for the future to develop our capabilities in this particular industry and to welcome new opportunities to expand further into the market for lifestyle goods.

With four million babies born every year, Indonesia is showing immense potential as a market for baby care products. Given this context, what can you tell us about your industry outlook?

The market for accessories for babies has in recent times developed considerably; our data shows a big rise in demand over the last five years in particular. Growing purchasing power in Indonesia has also had a positive impact on the industry, as this has enabled consumers to spend on higher quality baby products like the ones we provide as opposed to the less expensive but lower quality alternatives manufactured in China and Taiwan.

As is the case with the cosmetics market in Indonesia, there is a trend among the higher end segment of the market to prefer foreign brands when purchasing baby products but this is representative of only a small subset of the population. There is thus substantial room for local companies to serve the vast majority of consumers here.

In which areas do you see the most potential for further expansion and portfolio diversification?

We are still primarily interested in the FMCG sector and would like to explore new opportunities in making available lifestyle products. This includes a potential move into F&B through goods such as supplements and other health-related products. Over the last three years, we also entered the market for energy saving lamps though we expect to soon hand this area of operation over to another party and instead take advantage of our existing strengths in FMCG products for baby care and skincare.

In regards to our plans for further expansion, we are at the moment focused on developing our ability to reach out to the Indonesian market but are open to the prospect of regional expansion if presented with the right opportunity. ASEAN has the most potential for our products, due in large part to existing similarities in consumer preferences among Southeast Asian countries. Within Indonesia, we are moving beyond our extensive coverage of major cities such as Jakarta and Surabaya and are looking towards second cities across the archipelago.

What are your priorities when it comes to R&D and innovation?

We have an R&D team in the manufacturing division but are open to collaborating with an outside source for this. To save time in implementing new innovations, we do not wish to rely solely on research starting from scratch and are thus interested in working with companies that have already had success in developing new products and services.

The same can be said for our packaging, in that we have an in-house team but have in the past cooperated with outside sources to more efficiently create better packaging.

What are the main challenges that need to be overcome by businesses in your industry?

A lack of R&D is one of the primary challenges to local businesses in the baby care and lifestyle goods industry, as foreign brands tapping into the newest innovations have been entering the market rapidly. Even in circumstances where a local firm pioneers the introduction of new products/product features, we have seen that foreign brands are quick to emulate the innovation and as such creating a local brand capable of competing with international brands is becoming more difficult.

How is your company positioned towards working with foreign partners and international investors?

Besides our aforementioned interest in working with foreign partners for research and development, we are also open to cooperation that would facilitate our continued expansion into skincare products, toiletries, cosmetics and F&B. 

Prospective partners should keep in mind that we would like to pursue cooperation that extends beyond serving as a distributor and develops into a long term partnership. Working with a longstanding partner to manufacture and market products in Indonesia is but one possible opportunity to explore.

As a final message, what would you like our readers to remember about Indonesia?

Investors should keep in mind that Jakarta is not representative of the rest of Indonesia. To cover the Indonesian market, it is thus necessary to do some research first and working with a local partner is a good way to set about doing so.

Global Business Guide Indonesia - 2014

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