The focus on the international market has been profitable for us. Even now, the demand for our products exceeds our production capacity
Mr Herris Nugroho, President Director
President Furniture is a leading manufacturer of furniture in Indonesia with a diverse portfolio of products. Furthermore, President Furniture has achieved notable success in export markets in the US and Europe. What more can you tell us about your company’s background?
Prior to establishing President Furniture, I worked as a transportation engineer. In 1998, I switched to working at a garment manufacturing company in Bali where I acquired most of my knowledge about production processes and industries. I eventually started my own business in 2000, initially as a distribution agent, before setting up a formal company in 2005. One of the owners of the garment company, a US national, became the first customer of my newly-founded venture. Since the early phase of this company, we have relied on the internet in marketing our products. It is only at a later stage that we began to participate in exhibitions, including in Jakarta as well as in overseas events such as in Singapore. Over time, we gained further international clients from the US, Europe and the Middle East. Among the foreign buyers in the ten years we have existed, the biggest have been from France and the UK.
Our products were initially sourced from suppliers. We succeeded in gradually halving the in-house to supplier ratio by developing and manufacturing furniture ourselves. President Furniture particularly acknowledges the abundance of skilled craftsmen from Jepara in Central Java. Hence, this led us to partner with suppliers as well as employ workers from that city. Among the materials used in making our furniture, 80% are teak wood while the rest include aluminium, synthetic rattan, mahogany wood, as well as imported materials.
We are primarily an exporter, being our strategy since the company was founded. In our business agreements with our clients, President Furniture commonly has a production contract in place. For example, we currently have an export contract with a certain company extending to 2016 which requires us to send a total of 130 containers of furniture until the expiration date. To meet that target, we have started production to average 10-11 containers per month. This is in addition to other buyers, 100% of which are foreign. The focus on the international market has been profitable for us. Even now, the demand for our products exceeds our production capacity.
What in your opinion is President Furniture’s strength in terms of product value compared to other teak wood-based furniture manufacturers in Indonesia?
President Furniture offers exclusivity by catering to custom orders. Many of our clients request this type of service, including large-scale hotel projects in the US, as well as from Dubai in the United Arab Emirates. This clearly sets us apart. Additionally, we also have products that combine teak wood and synthetic rattan which is a rare feature.
Very few companies have undertaken this path because of the stark differences in price and availability between the two as domestically-sourced raw materials. One such example is in China where there is plenty of synthetic rattan and aluminium but not enough teak wood.
What are President Furniture’s future plans in terms of innovation and new production facilities?
We have purchased an approximately one-hectare land bank on which a future production facility will be built. Our target is to complete this project by 2016 as the next important step in developing President Furniture, particularly to address our shortage of capacity in meeting the ever-increasing demand for our products. Additionally, we plan to expand our market beyond just wholesalers and extend it to the hotel industry. This is an exclusive market that applies higher standards for quality, but also promises larger profits.
President Furniture has also developed a partnership with a California-based client to contribute to design innovations for our products. This interaction should provide us with insights into the direction of furniture trends, especially in relation to the US market.
Foreign investors have been quite active in Indonesia in the last ten years. What is your company’s position towards working with international firms?
We already have experience carrying out cooperation with foreign partners in which a recent one was from France. We always welcome synergies as we can acquire new technologies and improve upon our management practices. Capital is also a viable opportunity, although due to the character of the industry, a big investment is not required, at least not until a company can expand its market.
In terms of position, Indonesia has a global market share of only 2%, which is even less than countries like Vietnam. To put it further into perspective, furniture is a $100 billion USD industry where Indonesia only contributes $1.8 billion USD. As such, there is still plenty of potential to be developed, especially through the use of unique materials such as teak wood.
What is your final message that you would like to share with our readers?
It would help foreign investors to first learn about the Indonesian culture as well as the characteristics of our workforce. The second vital information is about where to locate your investment. For the furniture industry, the cities of Jepara and Semarang are among the best places due to the deep-rooted crafting skills already prevalent within a well-established local industry. Raw materials are also easily obtainable in these regions.
Global Business Guide Indonesia - 2015