Thailand Garment Industry Expands To Indonesia

Thailand

The trend of industrial competition is further intensified. Expanding trade channels and investing overseas have become one of the magic weapons for enterprises to survive.

According to the Kai Tai Research Center, Indonesia is one of the investment destinations worth the attention of Thailand apparel operators in ASEAN countries. The reasons are as follows:

In terms of trade, Indonesia's economy grew strongly, its national income continued to rise, and the purchasing power of clothing products further enhanced.

Over the past 4-5 years, the total value of Indonesian clothing imports has continued to grow, and Thailand's clothing export value to Indonesia has also maintained a growth trend.

In terms of investment, Indonesia

The total foreign direct investment in garment industry tends to continue to grow. Moreover, the establishment of ASEAN Economic Community in 2015 is bound to attract more foreign capital to Indonesia. Because Indonesia has the advantage of abundant labor force and low wage level, its manufacturing industry has high competitiveness in ASEAN.

In terms of market, Indonesia's clothing retailing industry has considerable business opportunities. The support factor is the sustained growth of clothing consumption demand brought about by the development of urbanization in Indonesia.

In addition, because Indonesian consumers' taste for clothing is close to Thailand and their purchasing power is also increasing, Thailand clothing operators should seize the opportunity to set up Thailand clothing brand discount shop in the main cities with higher per capita income and consumption level in Thailand.

Kai Tai Research Center predicted that the above favorable factors will stimulate Thailand's total export value of clothing to Indonesia in 2012 reached 8 million US dollars, an increase of 43% over the same period last year.

During the 2013-2015 years of ASEAN integration, Thailand's clothing exports to Indonesia are also expected to continue to grow. Besides the Indonesian economic growth, support factors also come from more and more Thailand businesses, including retail operators and garment exporters, to trade and investment in Indonesia.

Thailand clothing has great potential in the Indonesian market with a total retail sales of 11 billion US dollars. The reason is that Thailand's products are of good quality. Thailand brand has a very good reputation among local consumers. It has become a passport for Thailand apparel operators to enter Indonesia, making it easier to launch marketing.

However, Thailand is also facing challenges in the Indonesian market. As foreign enterprises are trying to expand the Indonesian market and use Indonesia as a production base, the competition of Indonesian garment industry will further intensify. This may become an obstacle for Thailand enterprises to expand their markets in Indonesia and Thailand's export to Indonesia in the future.

Deliberate

Investors who build production bases must pay attention to the frequent changes in various domestic laws and regulations, and the labour laws are quite strict.

If the regulation is not closely followed, trade and investment will be affected and cannot be carried out smoothly.

In addition, although Indonesian workers are highly efficient in sewing, they are not competent enough for skilled work and become the soft spot of Indonesia's labor force.

In addition, the increase in foreign manufacturers investing in Indonesia may lead to labour shortages in the future and enterprises competing for labour.

Therefore, in the 2-3 years before the establishment of the ASEAN Economic Community in 2015, there will still be more business opportunities for Thailand operators to enter the Indonesian market, and the competition will become more intense after the establishment of ASEAN economic community. Thailand operators will also face more severe challenges.