For the future we want to produce air conditioning units and washing machines so the purpose of the IPO is to raise capital for the manufacturing facilities and other costs
Mr Rawono Sosrodimulyo, President Director
PT Aditec Cakrawiyasa was established in 1993 and has since expanded to become one of the leading home appliances players in Indonesia under the brand name ‘Quantum’. What is the background to the founding of the company and the strategies being followed to date?
We began in 1993 from a small garage with only four people including myself. We chose to focus on supporting products for the food chain as we saw that food was a primary need. Therefore we chose home appliances and specifically gas stoves. With a gas stove people can cook everything such as making rice or frying food. The product was created through reverse engineering by studying the components of existing gas stoves for six months and after this we learnt how to manufacture it and what materials were required etc. then we founded our own factory and in 1995 the factory was fully established and began production.
By 1997 we were already in profit but then Indonesia experienced the Asian financial crisis and a recession. The value of the Rupiah dropped six times against the US dollar which made it very difficult as we imported many of the components. The price of our product went from 300,000 RP to 1.2 million RP which was unaffordable during a recession. So the decision was made to stop production and carry out new research on how to make the product cheaper. This was achieved by reducing the luxury features of the product without reducing the quality or the function at a price of 350,000 RP. After the crisis we could increase production dramatically as we kept the price low which our competitors could not do.
Now we offer many other products such as gas cookers, rice cookers, fans, blenders and irons. This diversification into new products began in 2002.
How has the consumer market in Indonesia evolved since recovering from the Asian financial crisis in 1998?
After the crisis Indonesia’s economy began to grow again. We focused on improving the quality of the products so that we could take advantage of the middle market. The area with the largest potential in Indonesia is the middle and lower segment of the market.
Indonesia has also moved from being a price sensitive market to a product sensitive market as they have more purchasing power. The product features and quality are therefore a key consideration for consumers as opposed to just price.
One of the key factors of success in household products is the ability to innovate and offer the latest products as well as technology. How does PT Aditec Cakrawiyasa stay ahead when it comes to innovation and new technology?
We continuously innovate and this is the main strength of the company. We already have 13 patents registered in Indonesia and 17 patents pending. For example for the gas stoves we have created a single plate design that uses a single mould.
Also, for the energy efficiency of our gas stoves we have reached 68.9% which is far higher than our competitors. Our patented technology uses less gas which is important as energy prices continue to increase.
For the future, we will introduce stoves that use renewable fuel sources. Research has already been undertaken for CPO and ethanol as a fuel source for the stoves. This means we can respond quickly to changes in the fuel being most widely used and to the government policies regarding energy.
You have already exported to markets such as the Philippines, Vietnam, Malaysia and Australia. What else can you tell us about the markets that you are targeting for the future?
Right now our focus is on our regional neighbours in the ASEAN area. We will focus on these markets before focusing on other areas such as Europe and North America as those markets have different needs and require different qualifications. In developed markets, electric stoves are mainly used and we have a program to develop electric stoves that could be exported to Europe in the medium term.
The focus in the short term will be on developing markets still using LPG as the main fuel source such as in Asia and Africa.
To enter new markets you have to offer quality. For high technology it is difficult for Indonesia to compete globally but for middle technology we can compete as our labour price is still low and requires less investment so we can export internationally.
In what areas would the company be interested in collaborating with international partners and investors?
We are open to cooperation with foreign players in the home appliances sector as long as they do not compete with our existing products. Our advantage as a local partner is that we already have the distribution network and the service centre network for after sales care.
The most challenging aspect of business in Indonesia is to get the capital as opposed to the technology. We plan to list the company publicly on the Indonesia Stock Exchange (IDX) in 2013. For the future we want to produce air conditioning units and washing machines so the purpose of the IPO is to raise capital for the manufacturing facilities and other costs.
What should potential partners and investors remember about the company as a final message?
We have a very sophisticated network for retail and after sales service. Also, we know the behaviour of the Indonesian consumer so we can produce products for their needs. Finally, we are skilled in producing high quality products at a low cost and with our own high performance technology.
Global Business Guide Indonesia - 2013