Problems Needing Attention In Developing Textile Machinery Enterprises In Indonesia'S Textile Market

Textile machinery enterprises: is it ripe to invest in Indonesia?

There is no doubt that in recent years, Tianhong Textile Group has brought large scale, generous investment and high return investment in Vietnam with domestic equipment, which not only stimulated more textile enterprises' overseas investment desire, but also strengthened our textile machinery enterprises.

A confidence shift.

To avoid putting eggs in a blue basket, investors are not all clustered in Vietnam. Instead, they extend the radius of the textile industry to invest in the Southeast Asian countries such as Indonesia, Bangladesh and Pakistan.

Textile machinery companies sell themselves frequently through exhibitions.

Therefore, in recent years, "made in China" textile machinery has become a frequent visitor to the international textile machinery exhibition held in Vietnam, Indonesia, Bangladesh and Pakistan.

Indonesia held in Jakarta, Indonesia at the end of last month

More than 100 Chinese companies participated in the exhibition, accounting for 1/3 of the entire exhibitors.

It can be seen that Chinese textile machinery enterprises attach great importance to the Indonesian market.

So does Indonesia's textile industry have a special interest in China's textile machinery? What are the prospects for the development of Indonesia's textile industry? Is the opportunity for Chinese enterprises to invest in Indonesia mature?

Equipment aging efficiency is low

Huge space for renovation and pformation

Indonesia is ASEAN's largest economy, and its textile, clothing and footwear manufacturing industry ranks among the leading industries in the country in terms of output value, export and employment.

Indonesia's textile industry supply chain is gradually complete, chemical fiber, spinning, weaving, dyeing and finishing, garment manufacturing and so on, is the world's ten largest.

One of the producers and exporters.

At present, Indonesia's textile industry has 8 million ~1000 million spindles to solve the employment of 30 thousand people.

Hengky Iriawan, Secretary General of the Indonesian textile association, said in an interview with China textile daily that the equipment of the Indonesian textile enterprises was generally lagging behind and aging seriously, accounting for 20% of the machine age for 20 years and 60% of the machine age for 10 years, which resulted in the low efficiency of the textile enterprises, and the quality of the products was much harder to meet the requirements of the European and American markets.

In this case, in order to encourage textile enterprises to upgrade their technology and upgrade equipment, Indonesia's Ministry of Finance issued an incentive policy since 2007: all textile enterprises that purchase new equipment can receive 10%~20% government subsidies.

Driven by the government's encouragement and market demand, Indonesia's textile industry has experienced 7 years of rapid development from 2007 to 2013. This has also brought opportunities to machinery vendors and investors from all over the world.

It is understood that the local textile machinery enterprises in Indonesia can only produce some simple textile machinery, most of which are from China, Japan, Germany, Italy, China, Taiwan, Korea and India.

Japan, Germany and Italy

Although advanced, but the price is high, most Indonesian textile enterprises can not afford it.

Textile machinery products in China and India are of high quality and low price, especially China's textile machinery equipment, with complete categories, high cost performance, low maintenance cost, and easier to be accepted by Indonesian enterprises.

Statistics show that China's textile machinery and equipment exports to Indonesia have been increasing year by year in recent years, and the volume of trade is also expanding.

In 2010, China exported Indonesian textile machinery to US $116 million, in 2011 it was US $158 million, in 2012 it was US $210 million, and 2013 was US $232 million.

However, since 2014, Indonesia's textile economy has declined, and the pace of new projects and upgrading has slowed down.

Especially by the impact of the devaluation of the Indonesian shield, the purchase of new equipment was significantly reduced. In 2014, China exported Indonesian textile machinery to 197 million US dollars.

The Indonesian rupiah began to depreciate sharply in 2013. As of May 15th this year, the exchange rate between the rupiah and the US dollar was 1 =0.0001, which was about 25% lower than that of 2013.

This means that the cost of purchasing new equipment is 25% more than that of the previous two years.

"Indonesia's overall textile situation is not good this year.

Under normal circumstances, we will see a trend of improvement at the end of last year, but after the second quarter of this year, there is still no sign of improvement.

According to Hengky Iriawan analysis, the reasons for this situation are, on the one hand, being affected by the overall environment of the international economy and the devaluation of the Indonesian rupiah, and the declining ability of market sales. On the other hand, the entry of cheap textiles in China has also brought great impact on local textile products.

At present, Indonesia's domestic textile products can only get 40% of the domestic market share.

{page_break}

Government support is not big enough.

Limited investment comparative advantage

Compared to the dismal domestic market, the export performance of the Indonesian textile industry is still available, and the total export of textile and garment in 2014 is up to 12 billion 600 million US dollars.

Therefore, judging whether there is room for growth in Indonesia's future textile scale depends not only on the domestic market, but also on the future export potential.

A long-term textile business analyst said that if we refer to the proportion of population and textile size in China, we have 1 billion 400 million people and 120 million ingots. Then Indonesia has 240 million people, and there should be 20 million spindles, that is to say, there will be about 10 million spindles in the future.

Of course, this view has not been approved by most people, because this is a theoretical calculation without considering other factors, and whether there are many factors to be realized, and the 120 million scale spindles in China are not only Chinese consumers, but global markets.

Nevertheless, in view of the trend of development at this stage, we generally agree that Indonesia's textile industry still has the potential to expand its scale.

Especially after the devaluation of the Indonesian rupiah, many textile enterprises must shift their market targets to foreign countries, and the requirements of foreign markets for textile product quality will further promote the pace of renewal and pformation of Indonesian textile enterprises.

Compared with China, there are two advantages in investing in textile industry in Indonesia: first, the low labor cost; the West Java region where the Indonesian textile enterprises are relatively concentrated, the monthly salary of textile workers is between us $100 ~200 US dollars, far lower than that of China; two is the raw material superiority, and the Indonesian textile enterprises import cotton without restriction.

It is precisely these two advantages that allow domestic investors to focus their attention here.

However, from the actual situation, these two advantages do not seem to be enough for investors to make up their minds.

Compared with other Southeast Asian countries, first of all, the Indonesian government has little support for textile; secondly, Indonesia's land is private, so land acquisition is very difficult; third, Indonesia's textile enterprises are mostly small businesses, and bank loans are very resistant.

"If Indonesia has changed in the above areas, I believe there will be a large number of Chinese enterprises to invest in factories in Indonesia, which will also lead to the export of China's textile machinery and equipment."

Wang Zhijie, Secretary General of Jiangsu Textile Machinery Association, participated in Indonesia Textile Machinery Exhibition for two consecutive years and made an in-depth understanding of Indonesia's investment environment.

Of course, the change of Indonesian investment environment must be supported and helped by the government.

Prior to that, Ade Sudrajat, chairman of the Indonesian textile association, said: "unless the government comes forward, great changes can be made, otherwise the development of Indonesian textile and garment industry will stagnate in 2016".

Market information pmitted by Exhibition

Exchange rate fluctuations affect orders

Exhibition is the market's rain watch.

The Indonesian international textile and garment machinery exhibition held at the end of April is much smaller than last year.

China's textile machinery enterprises have also generally reflected that the orders received at this year's exhibition are obviously not as good as last year's.

"In fact, Indonesia's textile enterprises have the demand and desire to buy new equipment, but the change of exchange rate has forced enterprises to shelve their purchase plans."

Some companies that already have equipment exported to Indonesia generally feel that orders have fallen sharply from last year to this year, mainly due to the devaluation of the Indonesian rupiah.

Hangzhou Donglin dyeing and Finishing Machinery Co., Ltd. and Fujian Jinjiang Ju Wang printing and Dyeing Machinery Co., Ltd., the exhibition equipment has been sold to Indonesia's printing and dyeing enterprises ahead of schedule.

The company's responsible person said that Indonesia's textile enterprises had demand and desire for equipment, but the Indonesian shields had depreciated by 25% in two years, and the cost of importing equipment at that time was too high.

"In addition to the problem of capital, the downstream weaving and garment enterprises do not have special requirements for quality. This has led to the desire of textile enterprises in Indonesia to renew and pform, but there is no external impetus and progress is slow."

Feng Bin, deputy general manager of Jiangsu Kai Gong Machinery Co., Ltd. has a deep understanding in this respect.

Kay palace has been developing Indonesia's market for several years, and has sold nearly 100 comber machines.

However, compared with India, Vietnam and Pakistan, Indonesia has few textile enterprises to purchase comber, and its pace is relatively slow.

"There are not many orders in the exhibition, but the popularity is not diminished. The professional audience is very concerned about the new technology and new equipment."

Wuxi Si Lan air jet loom Manufacturing Co., Ltd. is not the first time to participate in the Indonesian exhibition. The high speed and low energy consumption SPR700-PT-ET4C-190 displayed at this exhibition is just in line with the needs of local enterprises to reduce costs and increase production.

Ding Chaoying, chairman of the company, said that the company now has 100 air-jet looms running in textile enterprises in Indonesia.

Indonesia's textile economy has been sluggish this year, and new equipment capabilities have been weakened. However, there are quite a few professional spectators. They have conducted detailed consultation and understanding of the technology and performance of the exhibition equipment.

He believes that with the improvement of the market, the demand for renewal and pformation of Indonesia's textile enterprises is still huge.

Cui Guisheng, chairman of Changzhou Tonghe Textile Machinery Co., Ltd. also holds the same view.

He said the Indonesian market would be an important overseas market for Tonghe company.

Tonghe company is the first to participate in the Indonesian textile machinery exhibition. Its TH578J compact spinning doffer, which has been sold in Indonesia last year, has sold 100 thousand spindles.

Because of its high speed, high yield and high quality, the equipment is in line with the needs of pformation and upgrading of Indonesian enterprises.

At the exhibition site, some enterprises received orders on the spot. For example, a local printing and dyeing enterprise had to pform 4 TIS's dyeing cylinder electric control system, and found the Wuxi Dong Qing dyeing and finishing equipment company.

The general manager of the company rushed to the enterprise on the spot that day, and then took the order.

After that, the two sides agreed to meet in Hongkong to discuss the next plan for the new equipment.

The theme of this year's exhibition is non-woven equipment, so the exhibitors of the non-woven equipment business generally reflect the good results of the exhibition. Users who come to the booth are constantly consulting, and some have received substantial orders.

Changshou City Hongyi Nonwoven Machinery Co., Ltd., which has just been founded for a year and a half, has reached more than ten intentional orders at the exhibition.

{page_break}

China's textile machinery roots in Indonesia

After sales service must follow up.

Most of the enterprises participating in the first exhibition come from the mentality of exploring the road. These enterprises usually don't bring equipment. They just use the exhibition as a window for information dissemination, and take this opportunity to introduce their products.

And to collect information on equipment demand of Indonesian textile enterprises through exchanges.

It seems to them that although there are few orders in the exhibition, they understand the market demand, make friends with users, and contact local agents, which are the best bedding for their future products to enter the Indonesian market.

Unlike other companies, the China Heng Tian Group, which has been exhibiting in the Indonesian market, has already done quite mature and established a perfect after-sale system locally.

In the past 7 years, they have sold about 3 million spindles of cotton spinning equipment, weaving, dyeing and finishing, chemical fiber and other equipment to Indonesia.

At present, the cotton spinning equipment of Heng Tian Group accounts for nearly 40% of the Indonesian market. It is the first brand here, and the textile enterprises in Indonesia have labeled it with a good quality and low price.

Local textile enterprises believe that the products of Heng Tian Group are stable in performance, cost-effective and can meet the needs of enterprises. The important thing is that they can make money.

Qu Yinhong, manager of import and export of China Textile machinery and technology import & Export Co., Ltd., which is in charge of the Indonesian market for a long time, believes that sales of textile machinery must be linked to after-sales service. There is no perfect after-sale service system. It is hard for customers to trust you. Three.

Because the equipment of Heng Tian Group is trusted by Indonesian textile enterprises, the most important thing is that good after-sales service has solved the worries of enterprises.

It can be said that the cooperation between Heng Tian Group and Indonesian textile enterprises has established a win-win model.

Some small and medium-sized textile machinery enterprises in China have already realized the importance of after-sale service in overseas markets, but because of their small size, it is very difficult for every enterprise to establish a service center in the local area.

As a result, Wuxi siplanan air-jet loom Manufacturing Co., Ltd., Changzhou Hongda Electric Co., Ltd., Wuxi new union printing and Dyeing Machinery Co., Ltd., boerway machinery Jiangsu Co., Ltd., Jiangsu textile industry (Group) mechanical and electrical import and Export Co., Ltd. 5 enterprises jointly launched the Suzhou Textile Machinery alliance to jointly develop overseas markets and provide supporting services for users.

At the Indonesian international textile and clothing machinery exhibition last year, the Indonesian textile machinery alliance Indonesia service center was formally established.

The service center hired special after-sales service personnel in Indonesia to serve the customers of 5 enterprises. At the same time, the center has all kinds of components of the main engine. When the users need replacement parts, they can serve the first time.

The experience of Heng Tian Group and Su Textile Alliance has told the enterprises that want to expand Indonesia's market: it is not enough to win orders only. How to establish effective after-sale service system is a must for every spinning machine enterprise entering the Indonesian market.