Global Business Guide Indonesia

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Export | Joint Ventures
Star Cosmos Group | Mr Dharma Surjaputra
Mr Dharma Surjaputra

Indonesia is a very unique market; we have a very high consumer rhythm in that people spend more than they save.

Mr Dharma Surjaputra, President Director

Star Cosmos Group was founded in 1976. Throughout the years the company has expanded to become one of the leading players in Indonesia’s home appliances sector. What are the current strategies being followed by the group as well as your future vision for the company?

Star Cosmos as a brand was established in 1976 and our vision at the time was to provide replacements for Japanese products in the Indonesian market. Japanese products offered high quality but they were too expensive for the majority of Indonesians so Star Cosmos offered an alternative product range for the consumer market. We began with electric fans, then our well known rice dispenser. Now we have over 100 models in 14 or 15 business categories such as microwaves, ovens, gas cookers and pans.

Our vision and mission have changed. As the second generation I want to take the company to the next level. Right now we have around 30-40% market share in Indonesia and I want to move to the next stage in terms of going into the ASEAN region and to make this a global company.

The company’s philosophy is about balance; the company and its employees, the company and its distribution channels, the company and our customers, the company and the government etc. This means treating everyone fairly, following government regulations and also to expect the government to treat us fairly.

What are the main challenges Star Cosmos Group is facing to expand its market share?

The greatest challenge is government support and regulations as domestic companies face the issue of competing with foreign brands. The country needs FDI of course, but local companies also require attention from the government through regulations and guidance. Interest rates for commercial loans are very high compared to other countries in the region and China for example.

The rise of Indonesia’s middle class has had a significant impact on the electronics and home appliances sector. What is your outlook for the future development of the sector?

The electronics industry is a $3-4 billion USD per annum business with a growth rate of approximately 15-20% every year. Indonesia is a very unique market; we have a very high consumer rhythm in that people spend more than they save. It is also very interesting in terms of logistics, marketing and distribution. Logistics are very expensive in Indonesia and I believe this is due to the shadow economy and the fact that the country is the largest archipelago in the world.

In the market, brand recognition is very important as well as the after sales service. In general, I have a very positive outlook as the GDP per capita has passed the $3,000 USD per capita threshold.

The mining industry is also booming which is driving the economy and the price of real estate is also rising so I think this will continue for the next 3-5 years.

You mentioned the importance of brand recognition in the Indonesian market. How does Star Cosmos Group continue to build and maintain its consumer brand?

The brand was established in 1976 so brand development has been a long process. We maintain the brand through staying ahead in terms of innovation in our products and by offering benefits to our customers. As the leader we must keep innovating as there is a lot of plagiarism in Indonesia which means that a lot of effort must be concentrated on research and development. We also have a team that focuses specifically on packaging as this is extremely important in the Indonesian market.

At the moment the Indonesian government is focused more on SMEs like batik for example. Yet there is plenty that can be done with government support to make local brands competitive abroad.

How is the company positioned towards working with international partners for joint ventures and technological cooperation?

We always have an open policy towards technology. We had a technical collaboration with LG in 1991 whereby we had a transfer of technology for producing electric motors.

We are interested in working with foreign partners for the future for a joint venture or to take a share in the company. There are so many products that we can work on together as the market is huge.

For regional and international export, what are your main target markets?

The market that interests us in the medium term is the ASEAN such as Malaysia and Thailand. Singapore has high buying power but the market is very small, Vietnam is also very interesting for exports. We plan on entering the Malaysian market within two years and then to enter Vietnam. Vietnam is actually easier to enter for our products due to their electronics safety regulations; however it is more price sensitive than Malaysia.

What should potential partners and investors remember about the company and Indonesia as a final message?

Indonesia is an amazing country and is developing rapidly; it looks good from the outside but it is difficult to do business in. You must make sure that you choose the correct local partner and I believe that Cosmos is the right partner in our sector.

Global Business Guide Indonesia - 2012

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