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Consumer and Government Support Boosts Indonesian LED Market

Exhibitors at this year's Indo LED & Light Expo were upbeat, seeing huge potential for the LED sector among Indonesia's 260 million consumers. Concerns remained, though, over the increasingly price-sensitive nature of this nascent market.

Photo: Indonesian consumers and businesses are increasingly aware of the advantages of LED systems.
Indonesian consumers and businesses are increasingly aware of the advantages of LED systems.
Photo: Indonesian consumers and businesses are increasingly aware of the advantages of LED systems.
Indonesian consumers and businesses are increasingly aware of the advantages of LED systems.

This year's Indo LED & Light Expo saw the majority of manufacturers – both domestic and overseas – largely optimistic with regard to the prospects of Indonesia's LED lighting sector. Indeed it was pretty much consensus among the Chinese, Korean, Japanese and Indonesian exhibitors that the country's LED industry is poised for massive growth in the coming years. This wave of confidence has largely been spurred by the Indonesian government's commitment to replacing traditional advertising materials with LED displays and increased consumer awareness of the importance of energy-saving lighting options.

One company clearly keen to embrace these opportunities was Caiyida Technology, a Jakarta-based distributor of Chinese LED products. Founded in 2013, the company is a joint venture between Guangdong's Coleder and an Indonesian partner. At present, the company supplies LED displays and lighting for use at concerts, major events, advertising in major shopping malls and even provides illumination for religious services.

Explaining his company's confidence, Sales Executive Tri Yudha Kasman said: "The Indonesian government wants to replace conventional printed billboards with LED displays and transform Jakarta into something similar to Tokyo, with huge flashing LED boards. We want to be a part of that change.

"We were among the few firms that focussed on rental of LEDs for advertising clients. There were only very few competitors back then, but now competition is much more intense."

Many of the exhibitors were only too aware that Indonesia's LED lighting industry is still in its relative infancy. This, though, has encouraged them to believe that it has considerable scope for growth, with awareness as to the benefits of LED for either industrial or household use only now starting to spread across the country. With a population of 260 million, the Indonesian market is one that LED companies simply cannot fail to get excited about.

Yos Yarased is a Senior Sales Support Officer for Gema Visi Nusantara, a Jarkata-based distributor of Orly LED products. He said: "There is a really big market for LED lights in Indonesia. The people here are really taking to this kind of lighting. The market is vibrant and growing.

"Foreign products, however, are flooding the market and competition has become tough. We have to make sure that we offer only quality products in order to keep our customers happy."

At present, Orly LED offers a wide variety of LED products, from indoor and outdoor lighting to residential lighting, architectural and landscape lighting, as well as urban lighting.

The Indonesian government's policy of welcoming in overseas LED industry players has resulted in a flood of foreign products, with the cheapest items being brought in, perhaps unsurprisingly, by Chinese companies. This has led to other importers looking to compete on non-price grounds.

Highlighting his own company's approach, Phillip Hu, Sales Manager for West Java-based Cipta Mandiri, the Indonesian distributor of GOQ, a Korean LED range, said: "Korean technology is synonymous with good quality and, while our products are more expensive than the Chinese brands, we can assure customers that they last longer."

Not everyone, however, accepts this dismissive view of Chinese technology. Speaking off the record, one Executive Manager at Shenzhen Sunko Lighting Co, said: "It's a myth that all Chinese LED products have shorter lives. All of our LED products are of the highest quality.

Photo: Caiyida: Focussing on LED rentals for ad clients.
Caiyida: Focussing on LED rentals for ad clients.
Photo: Caiyida: Focussing on LED rentals for ad clients.
Caiyida: Focussing on LED rentals for ad clients.
Photo: Batara: Specialising in custom LED products.
Batara: Specialising in custom LED products.
Photo: Batara: Specialising in custom LED products.
Batara: Specialising in custom LED products.

"We have been in the LED lighting sector for more than eight years now and we have a strict quality-control system. All of our products are approved by various certifying agencies and our factory is managed in line with the ISO 9001 system standard."

Kasman also disagreed that all China-made goods are not of high quality. It is his belief that Chinese LED products will be increasingly popular in Indonesia, citing their existing success across the mainland as proof. He said: "Over the next five to 10 years, the LED industry in Indonesia is going to boom and Chinese brands will be the key players. The historic trend has been that everything that booms in China will also boom in Indonesia."

Perhaps in preparation for this coming boom, a price war is already taking place in the Indonesian LED sector, with both domestic and overseas companies determined to build their market share. There are, however, a number of businesses that continue to focus on quality or product differentiation as their prime selling points, largely as they cannot effectively compete on price.

One such company is Azaria Technology Indonesia, a distributor of Japanese LED lighting for industrial and household use. Eddy Nugroho, a Director of the Jakarta-based business, said: "We are introducing high quality Japanese products to Indonesia as a way of testing the market. We hope those who are looking for top quality LED lights and are prepared to pay a higher price will turn to us."

In the case of Korea's U-Vision, its focus is more on those customers looking to cut their electricity bills. Shin Seung-Hun, the company's Overseas Sales Team and General Manager, said: "We don't care if there are cheaper products in the market. We always emphasise that electrical expenses can be cut by almost 50% by using our products. We believe that, ultimately, our eco-friendly and highly efficient products will prove a huge success".

One advantage for companies such as U-Vision is the free-trade agreement between Korea and the Association of Southeast Asian Nations (ASEAN), of which Indonesia is a member. Shin said: "We don't have to deal with tax issues because of the free-trade agreement. That is huge advantage for us."

One company not overly concerned with the competitive nature of the market and price sensitivity was East Jakarta-based Batara Elektrindo. Explaining its particular USP, Managing Director Rachmat Jeny said: "We don't have a problem with competition or price because we offer customised LED lighting products, something that very few companies offer here.

"Companies like ours survive by offering custom products and innovating, providing something that is not immediately available in the market. As a result, we believe the Indonesian market will continue to grow for us. We are also looking for partners abroad who might be interested in our LED products."

Established some 15 years ago, Batara produces LED line counter displays, display information, digital scoring boards, and LED prayer timers. It also manufactures custom products for individual client's needs.

Another company claiming to have found a particular niche is Innograph, a 100% Indonesian-owned business that produces LED display boxes and digital signage displays. Mika Jayani, a Sales Officer with the company, believes that the scale of the market is such that that whole industry should thrive.

He said: "Indonesia is a huge market for LED light boxes. At the moment, we have still not targetted all of our potential customers in the country. We are also looking for more resellers to service demand.

"People want more interactive display ads and stores want these products as a way of enticing more customers. We believe the market is clearly growing and that it will only continue to do so for the foreseeable future."

Photo: Korea’s GOQ: Hoping that high-tech, high quality LED will prevail.
Korea's GOQ: Hoping that high-tech, high quality LED will prevail.
Photo: Korea’s GOQ: Hoping that high-tech, high quality LED will prevail.
Korea's GOQ: Hoping that high-tech, high quality LED will prevail.

The Indo LED & Light Expo 2016 took place from 5-8 October at the Jakarta International Expo.

Geoff de Freitas, Special Correspondent, Jakarta

Content provided by Picture: HKTDC Research
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