On June 24, 2021 PT Visi Globalindo Data Utama (VISI) in collaboration with the Indonesian Chamber of Commerce and Industry held a Virtual Business Dialogue entitled “China Market Intelligence & Market Entry Strategy” by presenting a number of speakers who are experts in their fields from institutions such as the Indonesian Chamber of Commerce and Industry, the Indonesian Embassy for China, EximBank Indonesia, Shanghai ITPC, and representatives of CRIF China. This event is a series of Business Dialogues held to help Indonesian businesses, especially those engaged in international business, to carry out strategies in expanding into international markets. The following is a summary of the Business Dialogue which we have presented in writing to be useful for business people in Indonesia.
LPEI AS THE INSTITUTION THAT SUPPORTS INDONESIAN EXPORT ACTIVITIES AND DEVELOPMENT
The Indonesian Export Financing Agency (LPEI)-Indonesia Eximbank, previously known as PT Bank Ekspor Indonesia, is an institution established by the Government in order to support the implementation of national export financing activities. Based on the information submitted, there are several missions carried out to increase export activities in Indonesia including, encouraging a good sustainable business climate that is conducive to sustainable national export growth, providing national export financing services and quality consulting services as a solution to Indonesia’s export needs, and improve the ability of the business world, including small and medium enterprises, to produce good quality and competitive export-oriented products.
Some of the things supported by LPEI are:
- Export Financing
- Domestic Financing (Conventional/Sharia)
- Overseas Financing
- KURBE (Export-Oriented People’s Business Credit)
- SME Financing (Conventional/Sharia)
- Export Insurance
- Trade Credit Insurance
- Marine Cargo Insurance
- Advisory Services
- Development Program for New Exporters (CPNE)
- Marketing Hands-On Program
One of the programs to fulfill its mission, LPEI is to conduct exposure to China through the China Eximbank Cooperation. In April 2021, LPEI financed 47 companies exporting to the Chinese market with a total of IDR 11.2 trillion. The exporters are mainly Wood Products & Timber Products (27.66%), Agriculture & Fisheries (10.64%), Coal 8.51%, Mining Products (6.38%), Cement, and Building Materials (6.38% ), and others.
In addition, in May 2021, LPEI provided credit insurance facilities to 8 exporters to facilitate transactions with buyers from China. The total export insurance coverage for these exporters totaled IDR 163 billion which was distributed to several main commodities, including: Consumer Goods (37.65%), Cooking Oil (28.46%), Paper Packaging (13.14%), Used Manufacturing Hands (8.76%), Cooling Components (4.86%), and more.
BILATERAL TRADE BETWEEN INDONESIA AND CHINA
Bilateral relations between Indonesia and China continue to experience positive developments, even in the midst of the COVID-19 pandemic, including efforts to help each other in handling the pandemic. It was noted that Indonesian exports to China increased by 13.64% (yoy) from USD 28 billion (2019) to USD 32 billion in 2020. In addition, cumulative export activities to China during January – April 2021 were recorded at USD 14 billion. , up 63% (yo-y) (January – April 2020: USD 9 billion). This is also higher when compared to pre-pandemic levels (January – April 2019: USD 8 billion). This was driven by a surge in the prices of its main commodity exports to China, such as coal, palm oil, and copper, as well as improving demand from China.
PRODUCTS WITH AN EXPORT POTENTIAL TO CHINA
In order to be able to carry out export activities in the long term, businessmen in Indonesia are expected to know what products have export potential to China. The following are some of the potential and diversification of Indonesia’s exports to China.
- Potential (unutilized) is a combination of several variables such as (I) supply, (II) demand, and (III) ease of trade. Therefore, the measurement of export potential shows how much optimal value can be obtained by a country with its current conditions along with its advantages such as preferential tariffs, geographical proximity, etc.).
- Diversification is the degree of proximity of a product with other products that have become superior products. For example, a country that can export tofu must be able to export tempeh too, because the raw material is the same, namely soybeans.
COMPANY OVERVIEW AND CHINA CONSUMER TRENDS
Based on the information from CRIF China, there are 41.32 million companies and there are 84.18 million self-employed businesses. Along with its development, there are as many as 21,000 new companies every day. In 2019, there were 3.63 million companies closed and 7.52 million companies made business changes.
In the consumption trend, the Lockdown procedure in China has begun to be relaxed and non-essential retailers have reopened. This will help some of the non-essential segments hardest hit by the lockdown. However, there are some emerging demand-side risks among consumers globally and are likely to impact Chinese consumer spending habits during 2021, such as:
- Economic Reality Hits
Measures related to Covid-19 are having a negative impact on the economic outlook. This will cause consumers to trade price points, across all spending categories.
- Trigger of Reducing Purchase
Work and social spending patterns have been disrupted. The ongoing disruption will impact several categories of consumers, with cosmetics and hospitality the most exposed.
- Less Attractive New Normal
Temperature checks, health checks, storage and restaurant clearing, queuing and social distancing are the ‘new normal’ for many consumers who will adapt in the short term this action will negatively impact the attractiveness of shopping and eating out for consumers. The retail segments that will be most exposed to this risk are fashion, home appliances, cosmetics and food services.
- Remaining Fear
After being told to limit social contact and in some countries to stay at home during Lockdown, consumers need time to actively seek out more crowded settings, such as shopping malls and restaurants.
THE IMPORTANCE OF BUSINESS INFORMATION IN THE ERA OF NEXT DIGITAL CHINA
The current high business risk causes businesses to find it difficult and hesitant to make the best decisions in maintaining or even expanding their business. This is influenced by several factors, such as the lack of a detailed understanding of the updated conditions of the relevant business sector, the current and potential partners’ conditions and developments, the positioning of the businesses and products being worked on, and other factors.
Based on this, Business Information (BI) contains information or data that is very important in helping businesses to understand deeper conditions before starting high-value business transactions. BI is also integrated with information about customers and suppliers across all business units so that businesses can measure the total scope of their relationships with individual business partners or groups of companies. This allows businesses to better manage the risks associated with specific business partners. It can also assist businesses in identifying and further exploiting opportunities with customers and suppliers who are members of the same company family.
In today’s digital era, the use of Business Information is increasingly being simplified into the form of Realtime Intelligence (RTI). RTI helps businesses navigate the complexities of digital transformation and work to create the strategies needed to modernize existing data, build inventory/production/supply chain visibility, and achieve new and deeper cost-saving opportunities through integration and automation.
Therefore, in the current era, partners who can assist businesses in providing consultation and providing Business Information and Realtime Intelligence as a medium are indispensable.
REALTIME INTELLIGENCE SERVICES FROM CRIF COMPANY
CRIF as one of the Realtime Intelligence service providers that creates new value and opportunities for businesses by providing reliable information and solutions in generating stronger decisions and accelerating digital innovation.
Realtime Intelligence is tailored for companies, to provide solutions from several concerns, namely marketing services, opportunity management and risk analysis of a company or business.
One of the case studies in China is Realtime Intelligence for the Suzhou industrial park. Suzhou Industrial Park is located east of Suzhou City approved by the State Council in February 1994, with an administrative area of 278 square kilometers (80 square kilometers, of which are for the China-Singapore Cooperation Zone). In 2019, Suzhou Industrial Park achieved a gross regional product of 274.3 billion RMB, Public budget revenue of 37 billion RMB, and an import and export volume of USD 87.1 billion.
There are 120,000 companies in total where CRIF Company can perform various analyzes including risk analysis, industry analysis, industry structure, industry improvement, innovation, cross-border investment and so on.