Global Business Guide Indonesia

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Joint Ventures
Tecstar | Mr Siauw Tjung Ming
Mr Siauw Tjung Ming

There is huge demand for this sector's products in Indonesia due to the size of the population; we still have not reached many people that need our appliances and electronic goods

Mr Siauw Tjung Ming, President Director

One of the leading brands under notable electronic goods producer Total Multi Anugrah, Tecstar specialises in manufacturing home appliances. What can you tell us about your company's background and strategies going forward?

The company was established in 1968. We began in the import business and over the course of 30 years became one of the largest distributors for major brands such as Panasonic. In 2000 the private brand Tecstar was born, focused primarily on small home appliances. In 2002 we established our first factory, which was quickly followed by a second in 2004 and a third factory in 2008. Having spent the past decade expanding and consolidating upon our infrastructure, we are now able to offer a host of household electronics and our goods are well distributed throughout Indonesia.

Tecstar has undergone many changes as I believe businesses must always adapt to survive. We began with low end products but since 2007 have been continuously upgrading our quality and our variety. As of 2010-2011, we have ensured that all Tecstar products are CE certified; thereby limiting the number of products that need to be returned and minimising damage associated with long term use.

This year, we are in the process of rebranding to get greater exposure in the market. We have emphasised our strength in an area that is crucial to the success of businesses in this industry: distribution. There are many foreign brands entering the market from countries such as China, but they lack the right distribution channels whereas ours have been growing for 45 years. Also, we know the market very well; I am personally in close contact with our customers and distributors as strong relationships are very important in this line of work.

How has the home appliances sector evolved since the Asian Financial Crisis of the late 1990s?

Previously, electronics and home appliances were luxury items to most people in Indonesia but as the country developed they became more of a necessity, particularly for the middle class. Fifteen years ago you did not see food processors or rice cookers in people's kitchens, even gas cookers were rare as people outside of Jakarta still used wood or kerosene to cook. In 2010, government policy obligated those using kerosene to move to LPG and that caused a boom in demand for gas cookers. This is very much indicative of the importance of government regulation in shaping demand amongst Indonesian consumers.

There is huge demand for this sector's products in Indonesia due to the size of the population; we still have not reached many people that need our appliances and electronic goods. Our distributors in main cities can provide Tecstar products to consumers in urban and suburban areas. However, there are many more layers at a provincial level currently beyond the reach of distributors in major cities, including remote towns and villages.

The opportunity to companies capable of reaching out to this segment is substantial, as Indonesians are very consumptive and there are many ways to sell to them. For example, people here often have more than one phone and many have flat screen televisions even though they would not be able to afford it without instalment payment plans. As such, over the next few years it is important that our sector focuses upon investing in improving distribution.

How does Tecstar differentiate itself from other brands in a highly competitive industry with several major multinational corporations?

We find niche markets through the knowledge that we have gathered over the years and do not actively compete head to head with the major international companies. It is our strategy to identify and enter markets that have not been tapped.

It is also useful to remember that while branding plays a significant role in attracting new customers, Indonesia has many types of customers, ranging from A+ down to D. Your products have to cater to certain types of people; what you sell to C class consumers has to be different to A+ customers. Lower end customers are not so brand conscious; they know some of the major international brands but they cannot afford them so their second choice is a known brand, like Tecstar, that is affordable, good quality and made available with a 1 year warranty.

What can you tell us about Tecstar's latest products and areas you plan on exploring in the future?

Lighting is the area that I see potential in for the future, and we are targeting expansion into this field within the year. More specifically, we are going to manufacture LEDs as these are consumables which have to be replaced and bought again. The growing property market also makes this sector attractive. Our products are therefore focused on the necessities required for a household such as gas cookers, rice cookers and lighting as basic necessities.

Is your company interested in working with foreign investors looking for a local partner? If so, in what areas would Tecstar benefit most from cooperating with an international company?

I am willing to enter into partnerships with compatible candidates. Through our local know-how, distribution channels and expertise in the sector we have a lot to offer. We would benefit from know-how regarding technology and also capital for investment.

Our vision is to bring our products to the most remote areas of Indonesia. Most people just look at Jakarta but it is home to only 20 million people meaning there is another 220 million people out there, many of whom are now able to afford our inexpensive products. We would like to work with a partner that has a similar goal in mind and that is capable of helping us achieve this target.

What would you like our readers to remember about Tecstar as a final message?

As a company we are in a position to benefit from sound government policies and have experienced tremendous growth. The growing middle class is shifting from just looking at price to now paying attention to quality and service standards so we will continue to improve the quality of our products and expand our service centres as well as distribution channels. I also believe in investing in people with experience in the sector as well as in individuals who can bring new ideas to increase our variety of products and innovations through research and development.

Global Business Guide Indonesia - 2014

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