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Leather Products Essential sourcing intelligence for buyers Indonesia manufacturer profiles Detailed profiles of 32 suppliers with verified manufacturing and export credentials THAILAND
PHILIPPINES
MALAYSIA
Product & price trends Prices and specifications of 145 top-selling export products ranging from wallets & handbags to jackets & sandals
MALAYSIA
SINGAPORE
INDONESIA East Java
Jakarta West Java
January 2011
Bali
US$100
Design & material innovations Coverage of the latest trends in style and materials
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Leather Products EXECUTIVE SUMMARY
LEATHER PRODUCTS Supplier capability in Indonesia
EXECUTIVE SUMMARY Boasting a well-developed leather products industry that has been exporting since the 18th century, Indonesia has carved a niche for itself as an important source of midrange and high-end models in Asia. The line benefits from several advantages, chief of which is workers’ long experience in leather preparation and manufacture. This has allowed suppliers to achieve a high level of competence in producing buyerspecified designs. Another core strength is the capability to readily accept orders in small quantities. Companies routinely send shipments containing 20 pieces or less. The industry is highly exportoriented. Although the line is composed of SMEs that typically do not have direct export capability, output from these makers can reach foreign destinations through large domestic buyers and marketing agents. Products are mainly sent to the US and the EU, with the former accounting for about half of turnover in 2009. An increasing number of suppliers are shifting to the Asia-Pacific region, however, since demand in these neighboring countries is growing. The industry is divided into four subcategories. Among manufacturers featured in this report, bags comprise the largest segment as these take up nearly half of total exports. Fashion accessories, footwear and garments each account for roughly one-fifth of overseas turnover. The overwhelming majority of suppliers are locally owned businesses. A few are foreign-invested. Most were established within the past two decades, although a handful were set up in the 1970s and 1980s. The main sourcing centers in the country are the provinces of East and West Java, and Bali. The special region of Yogyakarta is also a key supply zone as makers set up shops there to
take advantage of its booming tourism industry. The leather products sector has remained relatively unaffected by the global economic crisis because of its competitive advantages. Nonetheless, a number of challenges are facing suppliers. The following are some of the key trends we see in Indonesia’s leather products industry: • Manufacturers are expecting difficulties in procuring genuine raw leather, particularly cowhide. Because the material is sold at higher rates when exported, vendors are increasingly shifting to overseas markets, creating a shortage in the local supply. • Prices are seen to remain generally unchanged over the next six months as makers take different steps to increase competitiveness. • Because of the improving business climate in various overseas destinations, suppliers anticipate export revenue to grow over the next 12 months. In fact, nearly three-quarters of featured companies expressed confidence in posting higher earnings this year. • Upcoming releases will have more embellishments and enhanced aesthetic elements. This report covers the main types of leather products made in Indonesia, including hand, shoulder, duffel and clutch bags, wallets, purses, pouches, portfolios, backpacks, casual and dress shoes, sandals, boots, jackets, pants, dresses, belts, and bracelets. The Industry Overview section discusses key issues affecting export manufacturers and elaborates on the composition of the industry. The Products & prices section details the features and price ranges of the various categories covered. It also lists the main materials used and sourcing centers where models are produced.
In this report • 14 in-depth company profiles • 18 short company profiles • 145 top-selling export products • Supplier demographics • Supplier survey • Industry statistics and charts
OBJECTIVE & METHODOLOGY This Indonesia Sourcing Report is part of a series designed to provide buyers with information on new products from export manufacturers in supply markets that specialize in handmade merchandise. The Developing Country Sourcing Report series is part of Global Sources’ corporate social responsibility initiatives. It is offered in conjunction with The Kearny Alliance, whose mission is Aid Through Trade. The objective is to help create jobs in developing Asia through export promotion. To produce this report, larger, midsized and emerging manufacturers– all with substantial export experience– were surveyed. The selection of suppliers is designed to reflect the composition of the industry in Indonesia in terms of geographic location, materials used and range of products offered. For in-depth profiles, our researchers visited the facilities of each company and interviewed senior executives who discussed their recent performance and provided forecasts for the next 12 months. All other companies in this report were either visited or contacted by phone. In each case, companies were required to answer specific questions designed to verify their manufacturing and export credentials, including a breakdown of exports by product type and market. Suppliers also participated in a survey designed to provide insight into the industry. www.ChinaSourcingReports.com 3
Leather Products CONTENTS
CONTENTS
INDUSTRY OVERVIEW .................................................................................................................................................... 9 Supplier summary Export value
Products & prices ......................................................................................................................................................... 11 Production & export statistics Price guide
Supplier survey ............................................................................................................................................................ 13 Export prices Export sales Export markets Major challenges Product trends
SUPPLIER PROFILES ..................................................................................................................................................... 17 Supplier matrix Raw materials & exports Supplier profiles
PRODUCT GALLERY ....................................................................................................................................................... 65 Top-selling export products
CONTACT DETAILS......................................................................................................................................................... 93
Copyright 2011 Trade Media Limited. All rights reserved. Reproduction in whole or in part in any form or medium without express written permission of Trade Media Holdings Limited and Trade Media Limited is prohibited. Published by Publishers Representatives Limited (on behalf of Trade Media Limited) 4th Floor, Century Yard, Cricket Square, Elgin Avenue, P.O. Box 32322 SMB, George Town, Grand Cayman, Cayman Islands c/o 22/F Vita Tower, 29 Wong Chuk Hang Road, Aberdeen, Hong Kong ISBN 978-988-19235-9-2 Disclaimer: Any recommendation contained in this report may not be suitable for all investors or businesses. Moreover, although the information contained in this report is obtained from sources believed to be reasonably reliable, the accuracy or completeness of such information cannot be guaranteed. The author and the publisher of this report (and the publisher’s affiliates, agents, sales representatives and service contractors) do not make any representation or warranty whatsoever (whether express or implied) in relation to any of the contents of this report (including any information, opinion, recommendation or conclusion contained in this report) (collectively, “Contents”), whether as to the accuracy, completeness, quality, fitness, suitability or reliability of such Contents (or any portion thereof ) or otherwise, and shall not be liable under any circumstances whatsoever for any error, omission, defect or deficiency in, or for any use of or reliance on, such Contents (or any portion thereof ). All product images are provided by the companies interviewed and are for reference purposes only. Those product images featuring products with trademarks, brand names or logos are not intended for sale. Products that are not the specific topics of editorial articles are shown for illustrative and/or demonstrative purposes only. We, our affiliates, and our affiliates’ respective directors, officers, employees, representatives, agents or contractors, do not accept and will not have any responsibility or liability for product images (or any part thereof ) which infringe on any intellectual property or other rights of a third party.
4 Indonesia Sourcing Reports
Leather Products INDUSTRY OVERVIEW
INDUSTRY OVERVIEW Although small, the leather products industry is a key segment in Indonesia’s SME sector. The line is well-established, receives strong support from the government and various trade associations, and benefits from a long history of manufacturing and exporting. The country, which is the fourthlargest exporter among members of the ASEAN, has been shipping leather goods overseas since the 18th century. The Netherlands, Portugal, the UK and Spain were some of its earliest markets. Today, items are exported to many locations worldwide, including the EU, the US and the Asia-Pacific region, which are currently the top foreign destinations. Indonesia boasts various competitive advantages aside from its extensive experience in exports of leather goods. One of these is the ready availability of the material. Suppliers are able to produce items in synthetic and genuine leather, as well as models in exotic hides and skins. In addition to these main materials, auxiliary components are sourced from numerous vendors located in various provinces within the country. These include several kinds of fabric, metal and plastic. Another factor that helps the industry thrive is the capability of most suppliers to accept small purchases. Unlike manufacturers in China and India that have minimum order requirements running into the hundreds, Indonesia makers generally send shipments fewer than 20 pieces. MOQ goes even lower for larger items, with some companies allowing orders of five pieces or less. Assistance extended by the national government and various financial institutions is another crucial pillar supporting the industry. An example is credit offered by PT Bahana Pembinaan Usaha Indonesia, a stateowned bank operated jointly by the Central Bank and the Ministry of
Finance. SMEs and cooperatives can borrow from the bank at low interest rates, which range from 0 to 5 percent per annum. Additionally, suppliers can obtain funding from four governmentaccredited commercial banks. These institutions charge interest rates higher than those of PT Bahana’s but significantly lower compared with other lenders. Another competitive advantage that has helped develop the industry is support coming from local trade associations. These groups assist small and midsize businesses by imparting technical, management and marketing skills, which allow suppliers to work with foreign buyers more effectively. NGOs such as the Bali Export Development Organization conduct seminars and workshops to enhance makers’ capability to meet international quality standards for leather products. These strengths have resulted in stability and resiliency, attributes which became apparent when the industry remained generally unaffected during and immediately after the global economic crisis. In fact, exports of raw and processed leather goods from Indonesia have seen slight to substantial increases over the past three years.
Supplier summary Suppliers surveyed Export sales Export ratio Capacity utilized Full-time employees
32 $18.6mn 98% 99% 795
Data: All surveyed suppliers
Official statistics show that overseas shipments of leather products such as garments, fashion accessories and bags in 2009 reached $193 million, which was 4 percent higher over the previous year’s figures. Growth in the raw leather segment, on the other hand, was more pronounced. This line generated total sales of $299 million in 2009, equating to a year-on-year increase of 27 percent. Challenges The industry faces some hurdles although it enjoys several advantages. The most crucial of these challenges is the shrinking availability of raw cowhide. Local vendors of this material now prefer to export as doing so is more profitable than supplying to domestic buyers. As of end-2010, cowhide is locally sold at $2.40 to $2.60 per kilogram. In contrast, the same amount can sent be abroad at $3 per kilogram.
Export value Genuine leather goods
Raw genuine leather
$mn
$mn
299 235 179
186
193
184
2007
2008
2009
2007
2008
2009
Source: Indonesian Central Bureau of Statistics
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Leather Products SUPPLIER PROFILES
Asri Collection Asri is a purely export-oriented supplier specializing in leather products. It was established more than 12 years ago. Sixty percent of the company’s exports go to the EU, particularly Italy and Spain. Japan accounts for 30 percent of turnout. The rest is sent to Singapore and Australia. ODM orders make up 100 percent of output. Although the designs are created in-house, most of the clients request a few customizations before they place orders. The company manufactures bags, belts, wallets, purses and sandals. Models are classified as low-end or midrange. A 12x8cm coin purse is the least expensive product at $2.80. A 55x34x16cm python skin bag is priced at $125. The main types of leather are snake, sheep- and goatskin, and horse and cowhide. All are sourced from East Java and Tangerang district in Banten. The company’s two-person design team can release 120 new models every year. It also coordinates with
clients who have orders in customized specifications. Samples are completed within two days, depending on the complexity of the design and the availability of raw materials. Asri operates two workshops and a showroom with a total area of about 400sqm. They are located in the Kuta and Legian districts of Bali. The company has five full-time employees. Thirteen additional workers are hired when large orders are placed. The manufacturing processes include raw material selection, coloring, cutting, sewing, finalizing and packing. The sewing machine used is made in Japan and bought locally. Five QC team members conduct inspections on all processes prior to packing and shipping. Asri produces an average of 400 products monthly, but has the capacity to manufacture up to 500 pieces every month. It takes 30 to 45 days to deliver the MOQ of 10 pieces per product style. Items are packed in plastic bags with silica gel.
Company facts
Processes performed Leather preparation & tanning Cutting Framing Assembly Sewing Finishing
Yes Yes Yes Yes Yes Yes
Exports by product Garments Fashion accessories Footwear Bags
– 10% 10% 80%
Exports by market United States/Canada European Union Europe (non-EU) Asia-Pacific Middle East Other
– 60% – 40% – –
Contact details
Year established Head office location Ownership Factory location(s) Full-time employees Part-time employees Total annual sales (all products)
1998 Denpasar (Bali) Locally owned Denpasar (Bali) 5 13 $250,000
Sales & output: Leather products Annual sales Share of total sales Annual export sales Total monthly capacity Average monthly output Capacity utilized Average monthly exports Export ratio
$250,000 100% $250,000 500 pieces 400 pieces 80% 400 pieces 100%
26 Indonesia Sourcing Reports
Capability
Business contact DARMANA Ketut Phone (62-361) 847-5760 Fax (62-361) 847-5760 E-mail
[email protected] URL www.asricollection.com Address Jalan Raya Seminyak 35, Kuta, Bali, Indonesia
Leather Products SUPPLIER PROFILES
Popular export models
Model: Clutch bag MOQ: 10 pieces Packaging: Plastic bag with silica gel Delivery: 15 days Price: $28.00 Description: Clutch bag; python skin body; 20cm cowhide strap; 23x7x13cm; in various colors
Model: Handbag 1 MOQ: 10 pieces Packaging: Plastic bag with silica gel Delivery: 15 days Price: $45.00 Description: Handbag; water snakeskin body and suede lining; 50cm handles; 35x40x13cm; in various colors
Model: Handbag 2 MOQ: 10 pieces Packaging: Plastic bag with silica gel Delivery: 15 days Price: $145.00 Description: Handbag; python skin body and suede lining; 46cm handles; 35x45x10cm; in various colors
Model: Handbag 3 MOQ: 10 pieces Packaging: Plastic bag with silica gel Delivery: 15 days Price: $168.00 Description: Handbag; python skin body, suede lining and copper studs; 45cm handles; 25x55x14cm; in various colors
Model: Handbag 4 MOQ: 10 pieces Packaging: Plastic bag with silica gel Delivery: 15 days Price: $88.80 Description: Handbag; python skin body and suede lining; 45cm handles; 21x21x37cm; in various colors
Model: Handbag 5 MOQ: 10 pieces Packaging: Plastic bag with silica gel Delivery: 15 days Price: $33.35 Description: Handbag; water snakeskin body and suede lining; 45cm handles; 23x40x10cm; in various colors
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Leather Products PRODUCT GALLERY
PRODUCT GALLERY Garments
CV Tunas Maju (profile page 32) Model: JK-01-2010 MOQ: 10 pieces Packaging: Plastic bag, carton Delivery: 7 days Price: $140.00 Description: Men’s jacket; sheepskin; size M; in various sizes
CV Tunas Maju (profile page 32) Model: JK-02-2010 MOQ: 10 pieces Packaging: Plastic bag, carton Delivery: 7 days Price: $125.00 Description: Women’s jacket; cowhide; size M; in various sizes
Gurito (profile page 40) Model: G-02 MOQ: 10 pieces Packaging: Buyer-specified Delivery: 30 days Price: $90.00 Description: Women’s pants; sheepskin; beaded motif; size M; in various sizes
Gurito (profile page 40) Model: G-03 MOQ: 6 pieces Packaging: Buyer-specified Delivery: 30 days Price: $112.00 Description: Dress; sheepskin; sleeveless; size S; in various sizes
Gurito (profile page 40) Model: G-04 MOQ: 6 pieces Packaging: Buyer-specified Delivery: 30 days Price: $168.00 Description: Women’s jacket; lamb- and snakeskin, and silk; size S; in various sizes
Vigor (profile page 52) Model: Army Jacket for Women MOQ: 1 piece Packaging: Plastic bag, carton Delivery: 14 days Price: $130.00 Description: Women’s jacket; sheepskin; four front pockets; in Australian sizes S to XL; in various colors
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