Indonesia's Fashion Industry

This assignment delves into the dynamic Indonesian fashion industry. It examines recent trends like rapid growth and Jakarta's emergence as a leading destination, along with insights into major brands like BritishIndia and Kapit Mas. The analysis also explores Indonesia's potential as a manufacturing hub for Asia and considers the impact of online platforms like Instagram on consumer behavior within this sector.

Contents
Executive Summary........................................................................................................................1
1) Firm Analysis for British India...............................................................................................2
2) Market Analysis......................................................................................................................2
3) Country Analysis of Indonesia as a Market for British India Products...................................4
3.1 Political Factors....................................................................................................................4
3.2 Economic Factors.................................................................................................................4
3.3 Social Factors.......................................................................................................................5
3.4 Technological Factors...........................................................................................................5
3.5 Environmental Factors....................................................................................................5
3.6 Legal Factors........................................................................................................................6
Demand Forecasting.......................................................................................................................6
Pricing Forecasting..........................................................................................................................8
Bibliography.................................................................................................................................10
Executive Summary
BritishIndia Company, is a Malaysian brand that plans to foray as a fashion brand in the
growing economy of Indonesia. This report highlights the analysis of Indonesia as a
market for BritishIndia. The country has seen rapid economic growth in the last few
decades and now has a growing middle class which is largely comprised of a young
population. Additionally, Indonesia is an easily access and is a party to ASEAN Free
Trade Agreement. The report also presents the expansion plan for British India in
Indonesia.

1) Firm Analysis for British India
BritishIndia, a Malaysia famous local lifestyle and fashion brand was established
in 1994 by Pat Liew. Currently, BritishIndia has over 40 outlets across Malaysia,
Singapore, Thailand and Philippines. There are 8 core collection of BritishIndia, namely:
classic, new classic, pure, adventurer, travel and yoga, women and classic. BritishIndia is
well known in its luxury, comfort and superior quality of product. Besides, BritishIndia
also expand from clothing to home furnishing mainly in Colonial and Easternised
Western designs in order to gain different experience for their customers (BritishIndia
2012).
The style of British India is conform with the Indonesian’s clothing style and Jarkata able
to provide a market which admit new brand in short time. Every year, Jarkata will held
Jarkata Fashion Week for introduce new brand to the market since 2008(Jarkata Fashion
Week 2017). Furthermore, the spending power of Jakarta is high and the number of
middle income group is rising in Jarkata(Europe International 2012). This provide an
opportunity for BritishIndia to target Jarkata market and get success. Last but not least,
Malaysia is one of the Indonesia import partner, we are the fifth largest partner of
Indonesia. Indonesia policy are friendly to Malaysia investor(Alliance Expert 2016).
2) Market Analysis
Indonesia has seen rapid economic growth in the past few years. Currently, Indonesia is
the 16th largest economy in the world and is predicted to grow rapidly in the next decade.
(Department For International Trade, United Kingdom, 2016)
The demographics of the country suggest that Consumer Spending is on the rise, thanks
to economic growth which in turn, has created opportunities for fashion brand like British
India.

 The middle class is growing. The demand for consumer and retail goods is
especially, expected to grow. (Department For International Trade, United
Kingdom, 2016)
 Domestic consumption is increasing. The youth form a big part of the population,
who would be likely to open to new fashion. (Department For International Trade,
United Kingdom, 2016)
As a coastal city, Jakarta presents a unique opportunity due to easy access by sea which
compounded and great consumer demand due to being a large metropolitan area. The city
of Jakarta has a population of over 9 million residents which makes it one of the biggest
urban agglomerations in the world. It is also a city that is becoming increasingly
cosmopolitan. Research indicates that the number of international travellers who travel to
Jakarta for business purposes is on an upward trend. Intuitively, international travellers
who travel for business purposes may have high discretionary spending budgets. A
survey indicated that these travellers spend 13.4 % of their budget on shopping. This
indicates that there is scope in terms of consumer spending for brands that match local
dressing sensibilities with international standards. (The Jakarta Post , 2017)
Additionally, the province of Bali is an international leisure travel hub. (Ministry of
Tourism, Republic of Indonesia, 2016) Bali , as a province is a popular destination for
international conferences and retreats. Thus, there is an opportunity in the form of
demand from leisure who may not only have high spending power but also, international,
modern tastes.
The Indonesian market is not only gaining significance for Malaysian exporters but also,
for brands worldwide. (Department For International Trade, United Kingdom, 2016).
This implies increased competition from all over the world. British India, being a
Malaysian brand, may appeal more to the dressing sense of the Indonesian population, as
compared to other International brands, such as brands from countries such as UK.
(Department For International Trade, United Kingdom, 2016) (Ministry of Tourism,
Republic of Indonesia., 2016)

3) Country Analysis of Indonesia as a Market for British India Products
For this analysis, the PESTEL Model has been used to analyse Indonesia’s potential for
the products of British India company. The following is the PESTEL Analysis
3.1 Political Factors
Indonesia and Malaysia are looking to improve Co- operation and this implies, better
opportunities for British India. Additionally, there is a generally, an increase in
political stability in the country. (Department For International Trade, United
Kingdom, 2016)
The countries of Malaysia and Indonesia have tried to build a better trade
environment under the ASEAN Free Trade Agreement which allows traders to trade
with great tax and custom duty benefits, better standardisation in export/ import
processes and transit procedures for goods and other support . British India aims to
capitalise on the better trade environment. Hence, the decision to export to Indonesia
makes sense. (Ministry of International Trade and Industry, Malaysia, 2017)
However, complicated bureaucracy, red tape and the uncertain nature of political
reforms are some of the political risks that must be considered. (Department For
International Trade, United Kingdom, 2016)
3.2 Economic Factors
The five provinces of Sumatra, Bali, Java , Kalimantan and Nusa Tengarra are the key
economic centres and have a major share in the total output of the country. As a country,
Indonesia presents a growth market for the next decade since the population has been
growing rapidly in the last few decades. (Department For International Trade, United
Kingdom, 2016)
Indonesia does not have great infrastructure such as well developed ports, high speed rail
and road networks, public warehousing, electricity etc. Poor infrastructure in the country
leads to high costs of logistics. This may result in high mark up costs for British India
products. . However, there are plenty of infrastructure projects in pipeline in the country,

that connect Jakarta to major economic hubs in the country, which may help reduce costs
of transporting goods as well as the speed of transporting goods. (Department For
International Trade, United Kingdom, 2016) Apart from costs of transporting goods,
speed of transit of goods is an important consideration for any fashion brand as fashion
brands must deliver the relevant fashion that is on trend at all times.
The currency appreciation trend that Indonesian Rupiah has shown in the last year is also
a good indicator. An appreciation of Indonesian currency makes imports cheaper, thus,
helping reduce costs of the products of British India. (Takashi Nankano, 2017) If the
economy of Indonesia continues this trend, the opportunities for British India products to
become cheaper will increase.
3.3 Social Factors
Indonesia demographics suggest that the young population is dominant in the country.
These consumers are IT Savvy and open to international brands and experimentation with
new styles and fashion trends. They are also, more easily targetable with new forms of
advertising such as social media advertising (Department For International Trade, United
Kingdom, 2016)
3.4 Technological Factors
Infrastructure technology needs considerable improvement. On the other hand, the
business culture is also very traditional and cannot be considered as a technologically
oriented. For example, response from business partner may be slow. Some business
partners may not be open to the IT savvy, modern way of conducting business.
(Department For International Trade, United Kingdom, 2016)
3.5 Environmental Factors
Climate Change seems to be gaining significance in the trade of goods and services. The
threat of tropical cyclones, hurricanes and floods can pose a serious risk to storage
capacity of goods and inventories. The country of Indonesia is an archipelago and plenty
of key markets such as Bali, Jakarta are located in coastal area. Jakarta, as a city, can be
prone to flooding. (Global Facility for Disaster Reduction and Recovery, 2011)

3.6 Legal Factors
The legal and regulatory environment is fairly uncertain and this must be borne in mind.
(Department For International Trade, United Kingdom, 2016)
Demand Forecasting
Based on the given market and country analysis, the demand for British India products
will depend on the following factors
 Total growth in retail spending by local residents: This factor will reflect the
consumption aspect of demand as well as consumer preferences (SLR)
 Total spending of business travellers on shopping: This aspect will reflect the
consumption demand from non residents. Leisure travellers may not have a
significant demand . Hence, their consumption is not included and will feature in
the error term (SBT)
 Exchange Rate of Indonesian Rupiah as compared to Malaysia Dollar: This will
reflect various aspects like political stability, economic outlook etc. This is the
exchange rate between Indonesian Rupiah and Malaysian Ringgit. (XR)
 Total Cost of British India products at location in Indonesia: The costs will
include production costs, advertisement costs, logistic costs, etc. (CB)
Let demand be DD.
The demand forecast will be a function of
DD = β1 + β2 SLR+ β3 SBT+ β4 XR + β5 CB +e
5.0 Proposed Expansion Strategy
5.1 Joint Venture
In order to expand the market, BritishIndia will be choosing the collection of
“women new classic” and joint venture with Kapit Mas as the entry mode. The selection
of this specific collection is because increasing of women shopper in Indonesia (HKDTC
Research 2017). Kapit Mas is a jewellery manufacturing company based in Bali
Indonesia which established in 1996. Kapit Mas is famous in producing high quality

jewellery with unique and creative design (Kapit Mas 2017). It is believed that
BritishIndia is able to produce a new concept in the clothing design if joint venture with
Kapit Mas by adding the jewellery such as diamond, gem, jade on the clothing in the
collection of “women new classic”. At the same time, BritishIndia also can save some
expenses such as R&D and training cost because BritishIndia can benefit from Kapit Mas
about the knowledge on how to produce the jewellery. Therefore, BritishIndia no need to
hire jewellery expertise to train or guide their workers in jewellery producing. On the
other, due to Kapit Mas is a Indonesia local manufacturer, therefore, Kapit Mas is able to
give the possible advice or recommendation on the design which suit local culture.
5.2 Raw Materials
In order to produce the luxury and elegant product, most of the clothing of
BritishIndia is made from Supima cotton, Italian and Irish linens, (BritishIndia 2017).
The clothing will be produced in Malaysia then ship to Indonesia. Meanwhile, the raw
materials for the jewellery will be manufactured by Kapit Mas. However, to finalized the
product (add on jewellery on clothing), it will be processing in the local manufactory in
Indonesia before distribute to the retail shop due to Indonesia is one of due to Indonesia is
one of the countries with low cost labour (CNBC News 2017).
5.3 Logistics and Warehouse
It is recommended to use sea freight to ship the clothing from Malaysia to
Indonesia because the price would be cheaper if compared to the air freight. The
recommended logistics company to collaborate with is the Mediterranean Shipping
Company because it is one of the Malaysia and global well known shipping company.
Choosing a good shipping company is very important in preventing or minimizing the
shipping risk. Other than that, MSC Shipping Company can also help to solve warehouse
and storage problem at the same time it also help BritishIndia to save the money in the
term of reduce inventory, lower container storage cost and lower demurrage
bills(Mediterranean Shipping Company 2017). Other than that, MSC Shipping Company
is able to provide the transportation services from the port to manufacturer clothing in

Indonesia too. The transportation from manufacturer to retail will be in charged by the
collaborate shopping mall.
5.4 Labour and Skills
Since BritishIndia is choosing joint venture with Kapit Mas, then it is not an issue
for the labour and skills to manufacture the jewellery which apply on clothing. However,
it is needed to hire local workers to work in manufactory to add the jewellery on the
clothing. Textile and Clothing Industry is one of the important sector in Indonesia
(Global Business Guide 2017), therefore it is believed that applying jewellery on clothing
is not a complicated job which need high technology skills for local workers. Other than
that, the worker who can speak local language and English is also needed to serve the
local customers and tourist in retail shop. Due to the joint venture policy, thus all the
sales and labour management will be control by the representative from BritishIndia and
Kapis Mas.
5.5 Marketing
5.5.1 Products
In order to enhance the features of British India’s clothing, BritishIndia will
collaborates with Kapis Mas and offers a new concept idea by applying the jewellery on
classic and new classic collection of BritishIndia’s clothing. This is because jewellery
sector in Indonesia is expected to grow until 2021 and its demand of is high in Indonesia
(The Jakarta Post 2017). Therefore it is believed that, the combination of jewellery and
clothing will be attracting those customers who like unique design in Indonesia. Due to
the trends nowadays, BritishIndia will also offers the customize services to customers. As
a result, they are able to customize their clothing by various type of jewellery according
to their preferences.
Pricing Forecasting
Based on the analysis above , the price (PP) of every product will be a function of :

 Costs of Raw Materials per 100 units: This will include costs of thread, cloth,
buttons, sequins etc. This will include fixed overhead costs (RM)
 Cost of Advertising and Marketing: The designated cost of advertising will be
factored (AM)
 Cost of Labour: Labour Costs over the entire production cycle will be included
(LL)
 Profit Margin: The decided profit margin for every product (PM)
 Taxes: all taxes will have to be factored in. (TX)
 Expected Logistics cost: All logistics cost at every stage of production will have
to be factored in. (LC)
Thus, the pricing will be a function of
PP = β1 + β2 RM+ β3 AM+ β4 PM + β5 LL + β6TX + β7 LC +
5.5.2 Place
Jakarta, the capital city of Indonesia is a big city which has more than 170 malls
(Kasdiono 2014). The new retail shop of BritishIndia will be located at Grand Indonesia
Shopping Town, Jarkarta because this shopping centre is one of the top 10 famous
shopping mall which sell various types of high-end product (Asia Web Direct 2017).
This also fulfils the target market of BritishIndia which aim for the high-income level
group. Other than that, set up the new retail shop in well-known shopping center also
help BritishIndia in creating awareness about the new opening among the customers.
Furthermore, the purchasing power of women shoppers in shopping mall also increasing
nowadays (HKDTC Research 2017), thus, set up the new retail in shopping mall gives
the opportunities for BritishIndia to attract not only local customers but also the
foreigner.
5.5.3 Price

The price of the new product will be based on the types of jewellery and the
complexness of the design of the clothing for the customers who prefer customized. For
the entire of the product, the pricing will be based on the Malaysia price after converting
to rupiah and after adding the labour cost.
The pricing will, in general be a function of the exchange value of the USD
5.5.4 Promotion
In order to create awareness and reach wider target audience, BritishIndia is
encouraged to use social media such as Facebook and Instagram to spread the news.
According to the social media platform’s internet data, Indonesia has the biggest
Instagram users in Asia Pacific (Yosephine 2017). Othet than that, due to the new retail
shop will be open in shopping mall, BritishIndia is recommended advertised on the
billboard and hang banner in the shopping mall to attract the audience. Furthermore,
fashion magazines, such as Harper's Bazaar and Dewi are the effective primary
advertising tools which target higher-income female consumers.
List of References
Bibliography
Department For International Trade, United Kingdom. (2016, April 15). Doing business
in Indonesia: Indonesia trade and export guide. Retrieved September 28, 2017, from
Department For International Trade:
https://www.gov.uk/government/publications/exporting-to-indonesia/exporting-to-
indonesia
Global Facility for Disaster Reduction and Recovery. (2011). Vulnerability, risk
Reduction and Adaptation to Climate change. Washington DC: Global Facility for
Disaster Reduction and Recovery.

Ministry of International Trade and Industry, Malaysia. (2017, September 28). Asean
Free Trade Area. Retrieved September 28, 2017, from Malaysia free Trade Agreements:
Important Features/Characteristic of BritishIndiaBritishIndia, a Malaysia famous local
lifestyle and fashion brand was established in 1994 by Pat Liew. Currently, BritishIndia
has over 40 outlets across Malaysia, Singapore, Thailand and Philippines. There
Ministry of Tourism, Republic of Indonesia. (2016).
http://www.indonesia.travel/en/destination/province/bali. Retrieved September 28, 2017,
from Wonderful Indonesia:
http:/http://www.indonesia.travel/en/destination/province/bali/www.indonesia.travel/en/
destination/province/bali
Ministry of Tourism, Republic of Indonesia. (2016). Jakarta, A City that Never Sleeps.
Retrieved September 28, 2017, from Wonderful Indonesia:
http://www.indonesia.travel/index.php/en/destination/area/jakarta
Takashi Nankano, A. H. (2017, September 19). Export growth brings currency
headaches for Asia. Retrieved September 28, 2017, from Nikkei Asian Review:
https://asia.nikkei.com/Politics-Economy/Economy/Export-growth-brings-currency-
headaches-for-Asia
The Jakarta Post . (2017, September 27). Jakarta in big five world’s fastest growing
destinations. Retrieved September 28, 2017, from The Jakarta Post :
http://www.thejakartapost.com/news/2017/09/27/jakarta-in-big-five-worlds-fastest-
growing-destinations.html
HKDTC Research 2017, Targeting Indonesia's female shoppers – prime products and
channels, HKDTC Research, viewed 25 September 2017, < http://economists-pick-
research.hktdc.com/business-news/article/Research-Articles/Targeting-Indonesia-s-
female-shoppers-prime-products-and-channels/rp/en/1/1X000000/1X09WODN.htm>.
Kapit Mas 2017, About Us, Kapit Mas, viewed 26 September 2017, <
http://www.kapitmas.com/>.

BritishIndia 2017, Brand Story, BritishIndia, viewed 26 September 2017, <
http://britishindia.com.my/about-us/brandstory/>.
CNBC News 2017, Will Indonesia be Asia's new manufacturing hub?, CNBC News,
viewed 26 September 2017, < https://www.cnbc.com/2014/06/09/will-indonesia-be-
asias-new-manufacturing-hub.html>.
Mediterranean Shipping Company 2017, About Us, Mediterranean Shipping Company,
viewed 26 September 2017, < https://www.msc.com/idn/about-us>.
Global Business Guide 2017, Indonesia’s Textile and Clothing Industry, Global Business
Guide, viewed 26 September 2017,
<http://www.gbgindonesia.com/en/manufacturing/article/2014/
indonesia_s_textile_and_clothing_industry.php>.
Kasdiono, E 2014, Jakarta, a city with many shopping centers, The Jakarta Post, viewed
26 September 2017, < http://www.thejakartapost.com/news/2014/10/31/jakarta-a-city-
with-many-shopping-centers.html>.
Asia Web Direct 2017, 10 Best Shopping Malls in Jakarta, Asia Web Direct, viewed 26
September 2017, < http://www.indonesia-holidays.com/jakarta/top10/top10-shopping-
malls.htm>.
Yosephine,L 2017, Indonesia Instagram's biggest market in Asia Pacific, The Jakarta
Post, viewed 27 September 2017,
<http://www.thejakartapost.com/life/2017/07/26/indonesia-instagrams-biggest-market-in-
asia-pacific.html>.