There is no doubt that in recent years, Tianhong Textile Group has made large-scale, generous and high-return investments in Vietnam with domestic equipment, which has not only stimulated the desire of more textile companies to invest overseas, but also strengthened the confidence of my country’s textile machinery companies to follow the textile industry. Confidence in industries moving together.
In order to avoid putting eggs in one basket, investors did not all flock to Vietnam, but expanded the radius of textile industry transfer investment investigation to Indonesia, Bangladesh, Pakistan and other Southeast Asian countries.
Textile machinery companies frequently promote themselves through exhibitions. Therefore, in the past few years, “Made in China” textile machinery products have become frequent visitors at international textile machinery exhibitions held in Vietnam, Indonesia, Bangladesh, Pakistan and other countries. At the Indonesia International Textile and Garment Machinery Exhibition held in Jakarta, Indonesia, at the end of last month, more than 100 Chinese companies participated, accounting for 1/3 of the entire exhibitors. It can also be seen from this that Chinese textile machinery companies attach great importance to the Indonesian market.
So, does the Indonesian textile industry have a soft spot for Chinese textile machinery equipment? What is the development prospect of Indonesia’s textile industry? Are the opportunities ripe for Chinese companies to invest in Indonesia?
The equipment is aging and inefficient
Huge space for renovation
Indonesia is the largest economy in ASEAN. Its textile, clothing, footwear and hat manufacturing output value, exports and employment scale lead all industries in the country. Indonesia’s textile industry supply chain is gradually becoming more complete, including chemical fiber, spinning, weaving, dyeing and finishing, and garment manufacturing. It is one of the world’s top ten textile and apparel producers and exporters. At present, Indonesia’s textile industry has 8 million to 10 million spindles, providing employment for 30,000 people.
Hengky Iriawan, secretary-general of the Indonesian Textile Association, said in an interview with a reporter from China Textile News that the equipment of Indonesian textile enterprises is generally backward and severely aged. 20% of the machines are 20 years old and 60% are 10 years old. This has caused textile enterprises to The efficiency is low and product quality is more difficult to meet the requirements of the European and American markets.
Under this circumstance, in order to encourage textile companies to upgrade their technology and update their equipment, the Indonesian Ministry of Finance has introduced an incentive policy since 2007: all textile companies that purchase new equipment can receive 10% to 20% government subsidies. Driven by both government encouragement and market demand, Indonesia’s textile industry experienced seven years of rapid development from 2007 to 2013, which also brought opportunities to machinery dealers and investors from all over the world. It is understood that local textile machinery companies in Indonesia can only produce some simple textile machinery. Most of the textile machinery equipment comes from China, Japan, Germany, Italy, Taiwan, South Korea and India.
Although the textile equipment from Japan, Germany and Italy are advanced, they are expensive and most Indonesian textile companies cannot afford them. Textile machinery products from China and India are of high quality and low price. In particular, Chinese textile machinery equipment has a complete range, high cost performance and low maintenance costs. It is more easily accepted by Indonesian companies and has become the first choice for Indonesian textile machinery imports.
Statistics show that my country’s exports of textile machinery and equipment to Indonesia have shown an increasing trend in recent years, and trade volume is also expanding. In 2010, my country’s export of textile machinery to Indonesia was US$116 million, in 2011 it was US$158 million, in 2012 it was US$210 million, and in 2013 it was US$232 million. However, since 2014, Indonesia’s textile economy has declined, and the pace of new projects and renovations by enterprises has slowed down. Especially affected by the depreciation of the Indonesian rupiah, companies purchased new equipment significantly less. In 2014, my country’s exports of Indonesian textile machinery also dropped to US$197 million.
The Indonesian rupiah has depreciated significantly since 2013. As of May 15 this year, the exchange rate between the Indonesian rupiah and the US dollar is: 1 Indonesian rupiah = 0.0001 US dollars, which is about 25% lower than in 2013. This means that companies spend 25% more on purchasing new equipment than they did in the previous two years.
“The overall textile situation in Indonesia this year is not good. Under normal circumstances, we will see an improvement trend at the end of the previous year, but after entering the second quarter of this year, there are still no signs of improvement.” HengkyIriawan analyzed that the reasons for this situation are: On the one hand, due to the overall international economic environment and the depreciation of the Indonesian rupiah, market sales capabilities have declined; on the other hand, the entry of China’s low-price textiles has also had a huge impact on local textile products. At present, Indonesia’s domestic textile products can only capture 40% of the domestic market.
Government support is not strong
Investment comparative advantages are limited
Compared with the bleak domestic market, the export performance of Indonesia’s textile industry is acceptable. In 2014, the total textile and apparel exports reached US$12.6 billion. Therefore, to judge whether there is room for growth in Indonesia’s textile scale in the future, we must not only look at the situation of its domestic market, but also look at its future export potential.
A person who has been in the textile machinery business for a long time believes that if we refer to the ratio of my country’s population and textile scale, our country has a population of 1.4 billion and has 120 million spindles; then, Indonesia has a population of 240 million and should have 20 million spindles. This means that there is still room for growth of about 10 million tablets in the future.
Of course, this view has not been recognized by most people, because it is a theoretical calculation without taking into account the influence of other factors. There are still many factors that restrict whether it can be realized, and my country’s 120 million spindles are not just for Chinese consumers. , but the global market�.
Chinese textile machinery takes root in Indonesia
After-sales service must be followed up
Most of the companies participating in the exhibition for the first time come with a path-finding mentality. These companies generally do not bring equipment. They just use the exhibition as a window for information dissemination and use it as an opportunity to introduce their products to Indonesia. Textile enterprises, and collect information on the equipment needs of Indonesian textile enterprises through exchanges. In their view, although there were few orders received at the exhibition, they understood the market demand, made user friends, and contacted local agents, which paved the way for their future products to enter the Indonesian market.
Unlike other companies, China Hengtian Group, which participated in the exhibition this time, has a very mature market in Indonesia and has established a complete after-sales system locally. In the past seven years, they have sold approximately 3 million spindles of cotton spinning equipment and weaving, dyeing and finishing, chemical fiber and other equipment to Indonesia. At present, Hengtian Group’s cotton spinning equipment accounts for nearly 40% of the Indonesian market and is the largest brand here. Indonesian textile companies have labeled it high quality and low price. Local textile companies believe that Hengtian Group’s products have stable performance, high cost performance, can meet the needs of companies, and most importantly, can make them make money.
Qu Yinhong, manager of the third import and export department of China Textile Machinery and Technology Import and Export Co., Ltd., who has been responsible for the Indonesian market for a long time, believes that the sales of textile machinery must be linked to after-sales service. Without a complete after-sales service system, it will be difficult for customers to trust you. The most important reason why Hengtian Group’s equipment is trusted by Indonesian textile companies is that good after-sales service solves the company’s worries. It can be said that the cooperation between Hengtian Group and Indonesian textile companies has set a win-win model.
Some small and medium-sized textile machinery companies in my country have long realized the importance of after-sales service in overseas markets. However, due to their small scale, it is difficult for each company to establish a local service center like Hengtian Group. As a result, five companies, Wuxi Siplan Air Jet Loom Manufacturing Co., Ltd., Changzhou Hongda Electric Co., Ltd., Wuxi Xinlian Printing and Dyeing Mechanical and Electrical Co., Ltd., Boluwei Machinery Jiangsu Co., Ltd., and Jiangsu Textile Industry (Group) Mechanical and Electrical Import and Export Co., Ltd. They jointly initiated and established the Suzhou Textile Machinery Alliance to jointly expand overseas markets and provide supporting services to user companies. At last year’s Indonesia International Textile and Garment Machinery Exhibition, the Indonesian Service Center of the Suzhou Textile Machinery Alliance was officially established. The service center has hired dedicated after-sales service personnel in Indonesia to serve customers of five companies. At the same time, the center is equipped with various parts of the host. When user companies need to replace parts, they can be delivered as soon as possible.
The experience of Hengtian Group and Suzhou Textile Alliance tells companies that want to explore the Indonesian market: It is not enough to just win orders. How to establish an effective after-sales service system is an issue that every textile machinery company entering the Indonesian market must consider.
Textile machinery: Is the time ripe to invest in Indonesia?
There is no doubt that in recent years, Tianhong Textile Group has made large-scale, generous and high-return investments in Vietnam with domestic equipment, which has not only stimulated the desire of more tex…
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