Global Business Guide Indonesia

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Wim Cycle | Mr Andee Widjaja
Mr Andee Widjaja

We plan to expand our product range beyond bicycles and move into the manufacture of electric scooters as well as other more eco-friendly means of transport not reliant on petrol

Mr Andee Widjaja, President Director

Wijaya Makmur Bicycle Industries, also known as Wim Cycle, is a leading manufacturer of bicycles that has evolved substantially since its establishment over forty years ago. What can you tell us about your company’s background and its strategies going forward?

Wim Cycle was founded by my father, Hendra Widjaja, and started out as a provider of trishaws that we rented out in the morning and collected again in the evening. Wear and tear to these trishaws necessitated proficiency in building spare parts. Over time we had gained enough expertise in this area to be able to build our own bicycles and this became our company’s focus. Unlike other bicycle manufacturers in Indonesia, our operations are integrated – we produce the majority of our components in house – and thus can be differentiated from other players in the industry that typically act as assemblers. Our strategy has been to prioritise the in-house manufacture of major parts such as the bicycle frame and handles, and sub-contract parts for which we do not achieve economies of scale.

For the future, we plan to expand our product range beyond bicycles and move into the manufacture of electric scooters as well as other more eco-friendly means of transport not reliant on petrol. There is considerable potential for this type of product in parts of Indonesia currently lacking easy access to petrol such as Papua and Kalimantan. What is more, the removal of fuel subsidies has the market for electric scooters and bikes positioned to boom.

The domestic bicycle industry has grown by an average of 15-20% since 2010, spurred by rising purchasing power and the emergence of Indonesia’s middle class. Given this context, what is your outlook for the coming years?

Assuming that we are able to maintain political stability, my outlook for the bicycle industry in Indonesia is positive. As an emerging market, Indonesia benefits from a consumption driven population and the fact that it is easy to sell consumer goods here.

The government has also been supportive of our industry, as seen in the introduction of product standardization regulations as well as the implementation of a stricter monitoring process to ensure that bicycles coming into Indonesia follow the necessary procedures. Importers now must register the company and apply for a certain quota to import bicycles. For example, importers that apply for the right to ship 10,000 bicycles into Indonesia cannot exceed this amount and are required to submit a report every 3-6 months. Product standardisation is also to our benefit, as this will build towards a level playing field.

Which product within the bicycle manufacturing industry is poised to become the next big hit in Indonesia?

Our company has over the last few years begun paying more attention to bikes for adults, such as mountain bikes and road bikes. This field of bicycle manufacturing is more prone to price fluctuation than children’s bikes, as it is subject to seasonal demand with peaks coming twice a year: after the harvesting season and after school graduations. Because of this we in the past tended to export our MTBs and road bikes. We are now seeing a shift in this trend in Indonesia, with consumers drawn to the ‘biking lifestyle’ and purchasing more expensive, higher specification models.

Which markets have you identified for the future as key targets for cooperation with international brands and retailers?

Our products are largely catered to mass market retailers such as Walmart, Carrefour and Decathlon. We therefore plan to continue to target markets with large retail brands, and have identified Europe as our key export market going forward. At present, many of our biggest buyers come from Western Europe, while companies in Eastern Europe have potential as buyers for whom we prepare smaller orders and forge long term relationships with.

Indonesian manufacturers often have to contend with the perception that goods produced within the country are not of the highest quality. Do you have the same issue in your industry and what can be done to solve this?

Bicycles manufactured in Indonesia suffer from this issue of inadequate branding abroad. Indonesian bikes are still being perceived as inferior to specialist products manufactured in countries such as the USA, despite the fact that from a quality point of view we should be able to compete on the global stage. Perhaps the strongest evidence in support of this issue is the fact that when I launched our Thrill brand in Europe and sponsored a cycling team there without explaining that the bikes were made in Indonesia, the brand was more readily accepted by the international market. This strategy of launching products abroad as opposed to in the country of origin has had success for Taiwanese bicycle manufacturers, who face a similar branding problem. To improve the national brand, the industry needs first to identify the country’s strengths and find areas where we can offer unique products.

How is your company positioned towards working with international partners?

It is our company’s view that the only way for us to move forward is through increased cooperation with foreign partners. We are in need of the technical know-how to further our production capabilities, and continue our development from being a small family owned company specialising in spare parts to now being an integrated bicycle manufacturer. We are also interested in opportunities to distribute international brands within Indonesia.

Generally speaking from the perspective of Indonesian businesses, capital injection is another way that local companies could benefit the most from international cooperation, given the current high interest rates in the country.

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

Invest and believe in Indonesia. With more than 240 million people, this country has a huge market and potential that is largely untapped.

Global Business Guide Indonesia - 2014

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