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HSBC expects local producers to face more competition from Chinese firms
More Chinese firms will enter the Indonesian market as they face a weaker domestic economy back home and increased restrictions to enter European and United States markets, HSBC said.
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Workers produce backpacks on June 14, 2023, at a factory owned by PT Eksonindo Multi Product Industry in Katapang, Bandung regency, West Java. The company produces up to 6,000 backpacks on a daily basis for local brands Eiger, Bodypack and Exsport.
(Antara/Raisan Al Farisi)
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ndonesia may see an influx of Chinese companies entering its market as Chinese firms seek alternatives amid an economic slowdown back home and increased geopolitical tensions, which hamper access to the United States and Europe, global banking group HSBC said.
"We have seen consumer, healthcare and automotive companies [entering the local market], and I suspect we are going to see more. That means Indonesian companies will have to deal with more competition in the next couple of years," HSBC's Asia Pacific equity strategy head Herald van der Linde said during a press briefing on Jan. 16.
According to Van der Linde, the trend has been seen in the gaming, internet and cement industries.
This January, Chinese electric vehicle (EV) manufacturer BYD launched its vehicles in Indonesia and the company vowed to build a factory in the country, with experts saying the move would increase competition in the country’s Japanese dominated automobile industry.
However, Van der Linde opined that calling for a protectionist regulation may not be the best way out, as it may restrict consumers from getting the best prices.
Instead, he suggested that Indonesian firms think about other ways to increase their competitive advantage, such as through branding, and build on that.
"For example, local traditional herbal medicine, which I drink every time I cough when visiting Indonesia. That is fantastically strong branding. Having such a strong brand means similar companies can easily deal with competition [with foreign companies]," he stated.
