The Opportunity of Fashion Export in Indonesia

by | Sep 9, 2021 | Study Insight | 0 comments

The Popularity of Indonesian Fashion Boutique

Source: Republika

As of this moment, the Fashion Industry in Indonesia is on the rise, and consumers nowadays prefer local brands to support the national economic recovery. This can be seen with the popularity of Erigo, a local company, that has been selected to participate in the 2022 New York Fashion Week (NYFW) big event, which will take place in September 2021. 

Learn more about the fashion industry in Indonesia and how COVID-19 making an impact in the industry through this article.

Overview of the Fashion Industry in Indonesia

In Indonesia, fashion trends are a reflection of social and economic standing, which is commonly defined as popularity. Fashion has recently emerged as a valuable industry in Indonesia, with its development rate continuing to rise. According to CNBC Indonesia (2019), the fashion business contributed roughly 18.01% or IDR 116 trillion to the economy.

According to Statista, in Indonesia, revenue in the Fashion segment is projected to reach USD 13,223 million in 2021. Revenue is expected to show an annual growth rate of 10.07%, resulting in a projected market volume of USD 19,408 million by 2025. The market’s largest segment is Apparel with a projected market volume of USD 10,641 million in 2021.

In its early stages, Indonesian fashion trends tended to copy western fashions, both in terms of materials and design. In terms of age, young people in Indonesia like to dress simply and casually, particularly for daily activities such as going to campus or simply playing with friends. Several variables can affect the evolution of fashion trends in Indonesia, including the mass media, the entertainment industry, business, and the internet.

The Indonesian Government has also been supporting the Indonesian fashion industry. Minister of Tourism and Creative Economy (Menparekraf) Sandiaga Uno appreciated and gave support to the local fashion brand, Erigo. This local brand from Depok, West Java, managed to penetrate the New York Fashion Week in the United States (US).

The Ministry of Industry is also supporting Indonesia’s fashion industry by aggressively encouraging Muslim fashion industry players in the country to be more competitive, to enter foreign markets. To introduce nationally superior Muslim fashion products, the Ministry of Industry will hold a virtual exhibition of the Indonesia Industrial Moslem Exhibition (ii-Motion) on 3-5 June 2021.

Success Stories of The Overseas Local Fashion Companies from Indonesia

Many of them have already expanded their brand. Starting from the regional areas, some of them have already reached the international market for the fashion industry. Here are some Indonesian local brands in the fashion industry who have spread their company brands all over the world.

Erigo

Erigo is one of the Indonesian local fashion brands, benchmarking street style fashion. Establishing their brands in 2010, Erigo started their brand’s name with Selected and Co. However, there is already one brand named as it and turned to Erigo as it is today. Erigo started to display its brand online and offline to boost the marketing system in 2015, and Erigo had a net worth of up to IDR 22 billion that year. 

Even through ups and downs, Erigo strived for their best endeavors, and started selling all over Indonesia. Alternating the private sector capital in several celebration moments in Indonesia, also with a good marketing system within Erigo, the brand has been recognized worldwide through fashion industry export and improving their product quality to be able to compete in the worldwide fashion industry. 

In 2021, Erigo has a chance to spread its wings to appear at New York Fashion Week (NYFW) in the United States of America. This opportunity has been brought by Erigo who remarked that Indonesian fashion industries have a great chance to compete and be looked up to by the global fashion industry. 

The Executive

The Executive, first presented in Indonesia in 1979 by Johanes Farial under the management of PT Delami Garment Industries, carried out the name “Wood and John Far” as their brand name. The name lastly changed to The Executive in 2000, after PT Delami Garment Industries started to focus on their subsidiary brands, such as Wrangler, Tira Jeans, et Cetera, and many more. However, The Executive remains their product in producing working attire and formal wear. 

To date, PT Delami Garment Industries as the overarching management of The Executive is projecting a net worth of up to IDR 1 trillion. In 2021, The Executive has already successfully expanded its brands to Southeast Asia regional areas, such as Indonesia and Malaysia. With the brand expansion to more than 60 outlets and 100 department stores all over Indonesia and Malaysia, The Executive is committed to stabilizing their product quality while delivering their products to the global fashion industry.

Edward Forrer

Edward Forrer is one of the Indonesian shoes and bags local brands, established in Indonesia in 1989. Edward Forrer currently operates six locations in Indonesia, including Bandung, Surabaya, Malang, Denpasar, and Papua. Edward Forrer is known for spreading their business through business franchises since 2008. To date, Edward Forrer has many branches with a minimum net worth of up to IDR 50 million for each franchise.

Edward Forrer not only expanded their market all over Indonesia but also throughout the world. Edward Forrer has strengthened their business through exporting its products worldwide, and until today, Edward Forrer also established their brand overseas in Malaysia, Australia, and Hawaii, United States of America.

Eiger Adventure

An Indonesian local brand for adventure and travel wear, Eiger Adventure, was established in 1993 and is currently under the PT Eksonindo Multi-Product Industry management. Eiger carried out its branding through natural exploring and adventure. It surprisingly engaged its customers not only in Indonesia but also worldwide including Malaysia, Brunei, and South Korea. 

However, even though Eiger Adventure experienced sales dropping in 2020 due to the Covid-19 pandemic, Eiger Adventure’s net worth has reached over USD 53.4 thousand in 2021, and predicted it would grow higher in the next year. It remarked on Eiger Adventure’s success story of expanding their market wider in the global fashion industry, especially in the travel and outerwear sector. 

COVID-19 Impact on Indonesia’s Fashion Industry

According to The State of Fashion 2021 research by The Business of Fashion and McKinsey, the Covid-19 epidemic and the economic crisis are the top concerns for the fashion business in 2021, according to 45% of respondents who are fashion executives.

The COVID-19 pandemic has created new habits and trends in society, including the shift from offline shopping to online shopping and choosing clothes that only fit your needs. National Chairperson of the Indonesian Fashion Chamber (IFC), Ali Charisma said that since the pandemic, people’s purchasing power for fashion products has decreased 14.9% in October 2020 compared to the same month in 2019, considerably. Boutiques or clothing stores are empty of visitors and most prefer to shop online.

Fortunately, Indonesian designers are starting to become literate with the digitalization era. “Indonesia is now aggressively pursuing social media, the global digital growth is extraordinary, internet users and social media users are very high,” said Aruna Creative.ID Owner and Designer, Yuliana Fitri, SE. YouTube and other social media are developed for sales, but according to him, sometimes he is talkative and the videos become monotonous, there is no difference. 

According to her, the post-pandemic Fashion Trend 2021/2022 has four themes, including essentiality, spirituality, exploitation, and exploration. Essentiality and spirituality are themes intended for groups who are very logical, careful, pay attention to the philosophy of life and respect the concept of local culture and wealth.

“Digitalization provides new optimism where 71% of fashion executives hope their fashion business will grow 20% or more in 2021,” said HerStory Editor in Chief Clara Aprilia at the HerStory Indonesia Best Local Brand Fashion Awards 2021, as quoted from an official statement, Thursday ( 1/4/2021).

Digitalization is considered useful in business progress, branding, and creating a good brand reputation in the eyes of the public. Digitalization is also considered to be the key or the biggest opportunity for the fashion industry to bounce back.

Apart from digitalization, the progress of the fashion industry in 2021 is also influenced by support from the government, in the form of national vaccinations. This vaccination is considered to make the fashion industry optimistic to bounce back.

The Prospects of the Fashion Industry in Indonesia

The trajectory of the Indonesian Fashion Industry has grown positively throughout 2019 with an increase of USD 3.8 billion dollars from 2018, making Indonesia one of the largest textile producers in the world. With a high purchasing power and being the top six in textile-producing countries, it is no doubt that local and foreign companies contend to achieve market share. 

Currently, the Indonesian government is finding strategies to enhance support for textile industries. One attempt that the government has made to resolve this problem is by constructing highways and ports. More institutions who are committed to the sector are strengthening their cooperation with local companies, which aim to produce skilled human capital who can keep up with the digital era in production, for example; 3D printing. Aside from institutions, the government itself reinvigorates this industry by providing financial incentives to invest in technology.Rp

Leading exporters in Indonesia are increasing their expenditure to prepare themselves for increasing worldwide competition. With this strategy, it promises sales opportunities for global investors that can supply machinery and expertise on production techniques to add more value for industrial use textiles. Textile companies who have lack funds to invest in themselves could become takeover targets.

The overhaul in Indonesia’s textile industry requires adequate funding, which is quite hard to obtain from domestic banks, as most of them are only willing to grant at high rates. This could be an opportunity for global companies to step into Indonesia’s textile industry. This could be done by partnerships with local companies; joint ventures and private equity investment, which could boost the industry and could potentially become one of the leading textile markets for both production and sales. 

Enter Indonesia’s Fashion Industry With Bright Indonesia

To enter Indonesia’s fashion industry, it is crucial to have the right local partner. BRIGHT Indonesia provides several services such as Market Insight Research, Business Partnership Engagement, Management and Strategy Consulting, and Foreign Direct Investment. The services will help your business to:

  1. Provide simple research that will not use an extensive in-depth interview, in case you need simple sized research.
  2. Secure the agreement between client companies and future Indonesian business partners by providing a list of potentially suitable partners, arrange business meetings, and act as a liaison.
  3. Supporting our foreign client companies from the private sector with developing corporate or business unit strategies or helping your company from public sector organizations with public policy.
  4. Link client companies both from the private and public sectors in global foreign direct investment (FDI) through training and assisting your company in entering FDI source countries to gather investment for your company’s local markets.

For more information, email info@brightindonesia.net.

*This article is written by Galih Akmal Latif, Candy Bestari, and Aurell

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