Global Business Guide Indonesia

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Joint Ventures | Export
Royal Puspita | Mrs Hartati Hartono
Mrs Hartati Hartono

Indonesian manufacturers in plush products and garments are more conservative than some of our regional competitors, who are more prone to taking risks

Mrs Hartati Hartono, President Director

Founded in 1993, Royal Puspita is a leading manufacturer of stuffed and plush toys and now serves clients in a host of international markets. What can you tell us about your company’s background and its strategies going forward?

Our company was initially established as a much smaller operation, with only 50 machines compared to now having 800. During the early stages our company’s development, we were not as export oriented and instead focused on opportunities to subcontract for larger international businesses. In 1994, we began manufacturing our own products but had to contend with competition from South Korean companies that dominated the market at that time. Over time we gained a foothold exporting stuffed and plush toys to Europe – particularly to Germany – and formed long term ties with a host of loyal customers from this market. The financial crisis of the late 1990s however came at cost to our progress, as shipments from Indonesia into Europe were subject to higher freight charges and buyers began moving to manufacturers in China. This impact was felt across the industry in Indonesia, as the country went from having 50 plush toy manufacturers to fewer than 10.

Our company was able to survive despite these challenges because we made sure to diversify our product portfolio and offered other plush goods such as backpacks for children. This particular product allowed us to reach out to the U.S., as backpacks from China into this market had high duties and had to deal with a restrictive quota system. Through this venture into plush backpack manufacturing, we moved further into the production of licensed products as our orders were primarily focused on making backpacks with Nickelodeon and Disney characters. This required us to keep evolving and updating our manufacturing capabilities so as to ensure high standards of production. We thus obtained certifications such as ICTI and differentiated ourselves from other Indonesian companies.

Having had considerable experience working in international markets, does Royal Puspita plan to further its presence in the domestic market?

95% of our production is currently dedicated to exports but over the past two years, we have made a concerted effort to penetrate the local market. This is because we recognised that many of the stuffed and plush toy products coming into Indonesia are from China and do not adhere to high standards of product quality and safety. These ‘unqualified’ products are not suitable for use by children and yet they continue to enter Indonesia despite the presence of internationally certified toy manufacturers in the country. High quality toys that are readily available are imported and can thus be expensive, and so we see opportunities to offer our products to local buyers.

What is your outlook for the stuffed and plush toys industry?

The plush industry will not grow bigger but will maintain its current position as there will always be babies. Today, children over the age of 8 years old tend to move away from plush toys and towards electronic goods and gadgets. As such, our products are largely targeted for young children. Within this context, emerging markets such as Indonesia with high birth rates have considerable potential going forward. China is also an interesting market given its size.

That being said, high purchasing power in markets such as the U.S. and Europe, coupled with lower birth rates means that families are able to purchase more things for each child, which also bodes well for our industry.

Indonesian companies are often of the mind that China is not an easy market to penetrate and do business in. Is this the case for the plush toy industry?

Setting up businesses in the Chinese market is not easy, particularly if you do not work with a local partner. However, rising labour costs has led to Chinese companies increasingly looking for opportunities to outsource production and we have already received enquiries from Shanghai. Should this type of venture prove successful we expect to be able to move further into this market in the future.

With recent reports of manufacturers in China having failed to meet product safety standards, international buyers now more than ever are paying close attention to the quality of toy products. What is the current state of the quality of Indonesian manufactured toys?

Indonesian manufacturers in plush products and garments are more conservative than some of our regional competitors, who are more prone to taking risks. Our company always strives to work with safe and thoroughly tested materials and unlike some manufacturers abroad, have full control over what goes into our plush toys and can thus guarantee adherence to strict product safety guidelines.

Do you plan to introduce new products in the near future?

Beyond producing licensed products for the established big brands in children’s toys such as Disney, Cartoon Network and Hello Kitty, we have also begun manufacturing toys for characters from popular mobile applications such as Doodle Jump. We also produce emoticon themed toys for Line, another well-known app.

Is your company open to cooperation with foreign partners?

Yes, in fact we are currently discussing business opportunities with a Korean company to pursue avenues in plush textiles. In addition to this, we are primarily interested in working with partners with expertise in marketing strategies. It is important for potential partners to understand that our company prides itself in forging long term relationships with customers, as we believe that this has been crucial to our success thus far. At present we work with around 10 buyers, but have worked with each for a minimum of five years. Prioritising loyalty is central to our approach in this industry.

As a final message, what would you like our readers to remember about Indonesia?
Indonesia is at times still perceived by international markets as a country in which manufacturing companies do not abide by strict safety standards. This should no longer be the case. Such are the standards of the manufacturing facilities at our company that we even hosted children to volunteer at our factory as part of a television program for the BBC.

Global Business Guide Indonesia - 2014

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