Tapping Better Growth
    Category: Companies & People By : Sonya Angraini Read : 1516 Date : Monday, November 04, 2013 - 08:33:58

    Ahmad Zamroni / Forbes Indonesia

    German electronics giant Robert Bosch GmbH had $70 billion sales worldwide last year. Indonesia contributed only $115 million of that figure, not even 1% of global revenues. But the company's new factory, slated to open next year, will likely raise Indonesia's profile as it taps the country's emerging middle class consumers and their demand for cars. “Indonesia is very attractive,” says Rudy Karimun, managing director of PT Robert Bosch Indonesia. “If you want to be serious, you have to be there.”

    Five years after the company opened its import and distribution business here, Bosch is spending big to tap emerging markets by building a new factory in Cikarang with an initial investment of $13 million. The plant will churn out parts for Japanese automakers, which make up 90% of the local market. “We are now following our customers, Japanese carmakers, wherever they go,” says Rudy, 45, who graduated from the University of Stuttgart, majoring in aeronautical engineering.

    While coming off a low base, Bosch's domestic sales have posted impressive gains. In 2012 total revenue jumped 30% from the previous year, the company's fastest growth in Southeast Asia. The company is betting it can match that growth in 2013. Famed for its invention of components such as anti-lock brakes, Bosch is expected to benefit from the long-term relationship it has with many Japanese automakers. What's more, parts makers make it easier for the car companies to plan production and introduction of new models.

    “The more auto parts manufacturers that enter the Indonesian market, the better,” says Teddy Irawan, vice president for after market sales at PT Nissan Motor Indonesia. But for now, the overall auto market is stalled as tougher financing rules and higher prices crimp auto demand. Sales of new vehicles are expected to be little changed at 1.1 million this year. In June the government rolled back subsidies for gasoline. Still, new tax incentives for low cost, low-polluting cars may help drive local car output. 

    For its initial production, Bosch's plant will produce fuel system components including injectors and oxygen censors, with production of other parts in the planning stages, depending on demand. While the company won't be supplying components to domestic Mercedes and BMW assembly plants, it will sell a range of parts in the after-market. “We want people here to also know Bosch as a brand for auto parts,” says Rudy. “We will produce high-quality automotive component that are energy efficient and ensure comfort and safety.”

    Auto parts contributed around 30% of Bosch Indonesia's sales last year. This year that proportion will climb to about half. To boost its marketing, the company also has Bosch Car Service, which provides servicing and repairs. Bosch's other businesses include drive and control technology, security systems, packaging technology and thermo technology. “For Indonesia, it's not how much we have to spend, but how much we can spend to achieve our goals,” says Rudy. “Bosch does not have an issue when it comes to investing in Indonesia.”