Oppo F1 Plus, a smartphone that marketed as a selfie-expert, used local young celebrities as brand ambassadors. (Photo courtesy of Oppo)

Aggressive Chinese Vendors Dominate Indonesia's Smartphone Market


JULY 21, 2017

Jakarta. Popular Chinese brands are beginning to dominate Indonesia's lucrative smartphone market, according to a report from information technology research company International Data Corporation.

"The smartphone market in Indonesia as we know it has changed with the China-based vendors becoming more aggressive with their strategies," said Risky Febrian, an associate market analyst at IDC Indonesia, according to a Wednesday (19/07) press release.

"Their cash-rich initiatives have left local vendors struggling to compete in the market space with their limited resources."

The IDC Quarterly Mobile Phone Tracker, which monitors technology markets from more than 100 countries around the globe, found that smartphone shipments to Indonesia reached 7.3 million units in the first three months this year, a 13 percent increase compared to the corresponding period in 2016.

The research firm noted that China-based vendors took 31 percent of the market share out of the total 7.3 million smartphone units sold in the period, compared to 23 percent in the first quarter of 2016 and just 12 percent in the first quarter of 2015.

The IDC classified other vendors as "global," whose market shares have gradually declined due to the fast growth of Chinese competitors. These vendors took 47 percent of the market share in the first quarter, down 4 percent in the corresponding period in 2016.

Local vendors also suffered a continuous decline in market share, booking 17 percent of the market in the first quarter of 2017, down 3 percent from the same period a year earlier and 17 percent from the first quarter of 2015.

Source: the information technology research company International Data Corporation.

This year's top vendors include South Korean electronics giant Samsung, Chinese company Oppo Electronics, Taiwanese AsusTek Computer, Indonesian vendor Advan and China-based multinational tech company Lenovo.

The IDC said the Chinese vendors have been aggressively marketing their products in the country by utilizing billboard spaces, flyers and television commercials. Other strategies include featuring local celebrities to market their products, as well as a boost in hiring of sales personnel.

To remain relevant, local vendors have introduced competitively priced phones with similar specs to Chinese products, and have focused on marketing their products in rural areas of the country.

IDC Data shows that Chinese vendors typically price their products between $200-400 per unit, similar to local vendors that must compete in the low-end segment of the market due to a lack of brand equity.

Risky said "competition will further intensify" as multinationals look set to make a comeback in the Indonesian market, including Canada-based BlackBerry — operating through its local arm BB Merah Putih — Xiaomi and Nokia.

"While features and tech innovation are crucial to sustaining long term growth, some local vendors will continue to make efforts to localize their product and service offerings to address the specific needs and preferences of Indonesians, as we have seen with Advan's smartphones equipped with locally developed apps such as the Muslim Guide for Ramadhan," Risky said.