Jakarta. Stephanie Suryani of Urbanlife reveals how her retail stores successfully sell premium, third-party gadget accessories in a market riddled with generic types.

There’s a famous saying that claims the United States created Facebook, South Korea developed Line, China created gadgets, and Indonesia made time to use all of those gadgets and applications. This might sound cheeky, but numbers don’t lie.

The AdReaction study, published by Millward Brown’s global media research firm last June, states that Indonesians spend more time on their gadget screens — especially smartphones — than anyone else in the world. After all, Indonesia is the social media capital of the world.

This world-record screen time is matched by Indonesia’s appetite for more and more gadgets. Research company eMarketer reports that by 2018 Indonesia will have 100 million smartphone users, making it the world’s fourth largest smartphone market in the world after China, the United States and India.

For a long time, brand awareness of the  Indonesian market was concentrated on the gadgets itself, and not the accessories. There was an ocean of third-party gadget accessories with no emphasis on brand value; simply on function. A visit to any mid-level shopping mall in Jakarta that focused on electronics, such as the International Trade Centers (ITC) at Mangga Dua, North Jakarta, and Kuningan, South Jakarta, would see endless varieties of China-made phone casings and power banks.

Quality and durability might be questionable as the objective was simply low price. You could guarantee that a power bank bought in one of these places boasting power capacity of 5000mAH was most likely not what it claimed to be.

Among the millions of active gadget users in Indonesia is Stephanie Suryani, a young entrepreneur from Jakarta who saw an opportunity in providing this big market with upscale gadget accessories with an emphasis on quality. So, in 2013 she founded the Urbanlife retail store.

“People might say that ‘it’s just accessories, and they are widely available in cheaper forms in the many electronic shopping malls,’ ” Stephanie said. “But we have identified a need from customers who are willing to spend on premium-quality third-party accessories.”

While gadget stores in middle-and-up shopping malls sell third-party accessories as a supplementary business line to support their main focus of selling laptops and/or mobile phones, Urbanlife focuses solely on accessories. The stores are designed to be hip, and do a good job addressing millennials with a distinct taste in audio and who seek high-quality accessories that match their prized gadgets.

“We are now in 10 shopping malls all across Jakarta and expanding to Bali,” said Stephanie. “When we started we served more iPhone users, but now we see that Android phones, particularly Samsung, are on the rise.”

Introducing, reinforcing cult brands

Urbanlife has four main product categories: gadget peripherals such as phone covers, audio devices such as earphones or multimedia speakers, travel accessories such as bags and lifestyle accessories such as watches.

The company was excited by the idea of bringing in Google Glass until the project was scrapped by the IT major. The concept of the store is “experiential,” allowing customers to test out the products in-store.

“Audio is a very personal experience, and each brand has its unique character profile,” Stephanie said. “In Urbanlife we have various types of headphones and speakers for our customers to try out.”

Urbanlife serves two types of customers: those who recognize and are loyal to a particular brand, and those who are not familiar with brand names but come into the store, experience the product and like the design and quality.

One brand found in Urbanlife is Marshall, which may not be a household nam  but resonates with those with an infatuation for music. Anyone with some exposure to the music industry will know that the brand stands for quality amplifiers.

Urbanlife also sells the Swedish-based brand’s headphones.

“Some of our customers are so knowledgeable and loyal to a particular brand that they are already asking for not-yet available products, but which are already on our order list,” Stephanie explained. “Another appealing factor is that we offer an official global warranty, and one-to-one replacement.”

Although the strong point of the stores is experiential service, Urbanlife also understands the need for an online presence, a project currently in development.

Urbanlife’s next move is into wearables, such as smartwatches.

Stephanie is also making a serious effort in not only selling drones, but investing in events held by drone communities. Urbanlife’s line of four-rotor helicopters can be used for various purposes, including aerial photography.

Also on the radar are multimedia speakers made by high-end home-system brands, such as Bang and Olufsen and Cambridge Audio.

“Some people say it’s a niche market, but for us it’s a growing one,” Stephanie said. “We see room to open up 10 more stores this year, including in other cities outside of Jakarta such as Yogyakarta and Medan [North Sumatra].”

GlobeAsia

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Jakarta. At the forefront of the public’s love affair with Hermes for the past two decades are its Birkin and Kelly bags, both of which have reached iconic status, with a special language for its different colors and types of leather. Buying one is similar to ordering a personalized latte in Starbucks.

In a Hermes boutique, an avid buyer might ask: “Do you have in stock a small, rouge Casaque Epsom leather Birkin, with gold hardware?”

One can’t just say “red” as there are perhaps 50 shades of red. The arduous art of coloring leather is something Hermes has mastered.

Fancy a bag made from something exotic such as Himalayan crocodile leather perhaps?

“This whole Birkin craze is both a blessing and a curse,” said Florian Craen, executive vice president of sales and distribution for Hermes.

“It becomes difficult for us to tackle, and we have to be faced with everything around this,” he told GlobeAsia at the recently renovated Hermes store in Plaza Indonesia.

The brand has two arms: manufacturing and retail, and Florian is in charge of the latter.

Dating back to 1837, Hermes is still a family-owned, independent company that employs 11,000 people worldwide and has 315 exclusive stores, 203 of which are operated directly. All of its products are designed and made in France.

Hermes’ first foray into Indonesia was with the duty-free shop in Bali, and now it has two official shops in Jakarta, one at the Grand Hyatt, Central Jakarta, and the other at Pacific Place mall in South Jakarta. Hermes does not advertise much, nor does it employ brand ambassadors, and it rarely puts its logo on its products.

Florian even claims that there is no such thing as a marketing department at Hermes. High quality craftsmanship and scarcity, and the status that comes with carrying the holy grail of bags, are what make the brand what it is today.

In 2013, the Hermes group reported revenue of 3,755 million euros ($4.1 billion), a rise of 8 percent.

Topping their revenue stream are leather goods, accounting for 44 percent of sales, followed by ready-to-wear and accessories (22 percent), and finally silk and textiles (12 percent).

“Hermes has growth coming from all world regions and product categories, although watches were struggling a bit last year,” said Florian, who has been with the company for over 18 years.

“So Hermes’s success is not just about one bag, but really about 16 product categories,” he added.

In Asia, excluding Japan, the company saw 16 percent growth. And although Europe has gone through a difficult economic period, the company still booked a 12 percent increase in sales in the region — Florian hinted that foreign buyers, including Indonesian tourists, contributed to the European sales increase.

“I don’t think there is such a thing as the Indonesian buyer type or the Singaporean or Chinese buyer because in every market you have a spectrum of buyers,” he said.

“At one end are those who are very knowledgeable, who know Hermes for many years, and then at the other end of the spectrum you have new customers pushing our doors for the first time.

“One thing’s for sure, plenty of Indonesian buyers shop our products beyond the borders of Indonesia.”

The combination of Hermes’ scarcity and high demand has spurred a grey market and rampant counterfeiting.

“We are faced with something we don’t want. This reselling, parallel distribution is a big problem to us, but we can’t fight it in Indonesia because it’s not illegal here,” Florian said.

“In France selected distribution is protected, so it would be illegal. It’s an unfortunate situation that we have to live with,” he added.

In Jakarta, so-called “high quality” counterfeit Hermes bags can sell for well over $1,000. Not only are the bags are fake, but so is their certificate of “authenticity,”  and even purchase receipts — a must-have if one were to sell the item in the secondary market.

GlobeAsia

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Yves Saint Laurent once said: “I wish I had invented blue jeans. They have expression, modesty, sex appeal, simplicity — all I hope for in my clothes.”

One brand that is quite literally synonymous with jeans is Levi’s. Founder Levi Strauss patented the blue jeans in 1873 but the brand itself was established in 1853, and today its jeans can be found in over 2,800 stores in 110 countries.

Although long enjoying iconic status, it has been difficult for Levi’s to consistently stay relevant and be at the center of culture. It was 1996 when Levi Strauss reached its peak year, amassing $7.1 billion of global sales — even bigger than Nike, which booked $6.5 billion in sales that year.

Entering 2001, the denim maker saw its sales plummet to $4.1 billion — which for the next decade became the norm.

“We lost our mojo, stopped innovating, and weren’t investing in the brand and organization,” said Chip Bergh, Levi’s chief executive since 2011. “We saw massive shareholder destruction, the company almost went bankrupt in the early 2000s.”

The challenge today is that customers in its biggest markets, the United States and Europe, are not out spending on retail. And Bergh sees that over the past decade, denim and apparel in general has been on the decline.

The denim category is incredibly competitive and very fragmented. Levi’s competes with large, global multinational companies like VF, producer of Lee and Wrangler, and large global vertical retailers such as Gap, Uniqlo and H&M.  It also faces a sea of local competitors in each market.

The biggest challenge is to become relevant with the core 18- to 25-year-old market as the company once was in the past.

Globally, and especially in Indonesia, Levi’s has invested plenty in its social media campaign.

“Our main strategy is to manage what is in our control. We can’t manage the economy, but we can control our innovation program, the new products that we launch, the way we connect with our consumers and how we spend our money to build our brand and business,” Bergh said.

“Do our customers find the product they are looking for, do they get the kind of service they deserve, and do they walk out of the store or buy our products, as that’s what it’s really all about.

“That’s how we’ve been able to grow successfully and profitably over the past two years, despite a challenging market. We got it two years in a row — the first time we’ve done that in a decade.

“Now lets see how we do that three, four and five years in a row. If we do that we can generate a lot of cash that we can invest back in the business and make this company great again,” he added.

Aside from building the right executive team, Bergh also launched a massive restructure program in March last year. The idea was to free up $175 to $200 million from overlaps and inefficiencies which would be invested to grow the business, especially on e-commerce.

“We built an innovation center two blocks away from our office, and now 80 percent of our product line is coming from that innovation center,” Bergh said. “It’s to get the designers and merchants a sandbox for them to play and create. It’s a creative industry and we never had that.”

One thing’s for sure: Levi’s is not going to drop its prices.

“We are never going to be the cheapest pair of jeans in a market and we are never going to be able to compete with a local player who doesn’t have the same standards of manufacturing, which is central to who we are,” Bergh said. “We’ve got our values which is the reason for us being around all this time.”

Bergh admitted that although Indonesia is not a significant market for Levi’s for the time being, the potential is enormous.

Heavily concentrated in the Americas and Europe, naturally Levi’s wants to grow its business in Asia, which currently accounts for around 25 percent of the company’s revenue.

GlobeAsia

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Jakarta. The Association of Southeast Asian Nations Economic Community, or AEC, which is set to come into effect at the end of this year, will provide an opportunity for local talent to move beyond borders and build experience overseas, enabling businesses to fill manpower shortfalls, local  headhunters say.

Commentators have said there is no single country which will benefit the greatest — or lose the most — from AEC, at least with regard to manpower, since each nation’s labor profile carries its own set of strengths and weaknesses.

According to Eko Nugroho, senior principal of JAC Recruitment-Indonesia, a management recruiting agency with a strong presence throughout Asia, countries with a highly educated population that are technologically advanced will benefit from tapping senior talent across Asean.

He added that the most multicultural regional companies will gain the most advantages by reaping stronger talent from across the region.

Faridah Lim, country manager for Jobstreet Indonesia, an online recruitment portal with branches in four other Asean member states, said Indonesia must improve education.

Indonesians must focus on language to remain viable within the regional labor market, she said.

“The AEC will be a positive impact for headhunters to be a mediator, focusing on senior-level management to provide talent for companies.”

“Incoming AEC companies will need more local talent with a greater understanding of the local market,” Faridah said.

“Indonesian headhunters will also play a role to recruit Indonesian talent to be placed overseas.”

Headhunters themselves will not be immune from regional competition, and Eko believes multi-region headhunters will lead the game.

Although JAC Recruitment-Indonesia already has a presence in the region, the company is enhancing its employees’ skill sets and work habits to be AEC-ready.

JAC employees are being retrained in “soft skills” for professional growth, through character and work ethic building, Eko says.

Employers will benefit from a wider range of talent, but higher skills will come at a higher cost, JAC officials say.

Employees in both white and blue collar sectors will enjoy greater access to job opportunities, though with greater competition, according to Eko.

For professionals, such as lawyers and doctors, Faridah doesn’t see any direct impact as these require specific skills and licenses that differ in each country.

Eko, on the other hand, predicts that professionals too will be effected by the AEC and advises them to be prepared to adjust to the regional changes, or else they may be beaten out by counterparts from abroad.

Indonesia’s role

Eko believes Indonesia will, as a whole, rank in the middle among Asean countries, in terms of both income and technological levels.

Indonesia will probably sit alongside Thailand and below Singapore and Malaysia, he said.

He is confident, he says, in Indonesia’s ability to fill a wide range of positions, mainly in middle management.

“To say that Indonesia can only offer domestic and plantation workers is a myth,” Eko said.

“Indonesia has plenty of strong talent in a variety of industries including manufacturing, pharmaceuticals, plastics, automotive and retail.”

Faridah agrees that Indonesia has a lot of potential, but is less optimistic.

“Many talented Indonesians are unable to present and communicate themselves well, which lowers their opportunity to be competitive against foreign talent,” Faridah said.

Due to the complexity of full integration of regulation across the Asean region, both experts agree the manpower aspect of AEC may not be fully realized for a further two to three years.

Some sectors that are in particularly high demand for workers may see their situation change more quickly, however.

“Certain service professionals urgently needed in Indonesia include information technology and e-commerce professionals, consultants, physicians, and lawyers,” Eko said.

“These talents could be moving to Indonesia within a year.”

Yet with such a great need for foreign talent in Indonesia, some folks at home worry what the future holds.

“There is a misconception that home-grown industries may die due to overseas competition and many will go jobless. This is totally wrong,” Eko asserts.

“Exchange of cross-border talent will result in knowledge transfer, and this must be welcomed.”

“Indonesians get to learn from Asean perspectives which could improve the productivity of growing businesses.”

“If individuals seek to go up the ladder as well as on the learning curve, then embracing foreign talent is going to be of a very great benefit to exchange business views which was not practiced earlier on,” he said.

Several challenges must be addressed by manpower stakeholders in order to move forward, headhunters say.

Adapting management practices to cope with the changing nature of the workplace and preparing to manage internal supply and demand for labor while not causing the displacement of local talent and reducing local earnings are just some of the issues stakeholders will face.

Asean member states will need to answer these questions and concerns and issue clear to make the most of the AEC when it becomes a reality later this year.

The article first appeared in the April edition of GlobeAsia magazine.

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Jakarta. Of all the sophisticated equipment in a modern aircraft, with many different systems and devices that only an aerospace engineer could understand, the flight data recorder and cockpit voice recorder — collectively known as the black box — are the items best known to the flying public.

The recent hunt for the black box from crashed AirAsia Flight 8501 demonstrated just how important these items are. The hunt for the black box is what is plastered over the news every time an unfortunate aircraft crashes.

Since the 1960s, aircraft have been equipped with these close-to-indestructible devices that record data and communication within the aircraft, including words exchanged during a time of peril.

The information is critical in determining the cause of the crash, and then working out how to reduce the likelihood of airborne disasters.

Despite all the hype surrounding the black box, few are aware that many of the pieces of equipment are produced in Bintan in Indonesia’s Riau Islands province by Honeywell Aerospace, a division of US high-technology systems and hardware provider Honeywell.

Nor is the Bintan plant limited to just producing black boxes for Boeing and Airbus commercial aircraft: Within the world-class Honeywell Aerospace’s Bintan manufacturing facility, 200 employees — many of them Indonesians — produce an assortment of world-class avionics and flight management systems for business jets and helicopters for general aviation.

Aside from manufacturing cutting-edge aerospace solutions, the company also provides customized maintenance programs for aircraft fleets in Bintan and Singapore.

Among other safety devices Honeywell supplies to the aviation industry are emergency locator transmitters (ELT), one of which, manufactured by subcontractor Instrumar, caught fire aboard an Ethiopian Airlines 787 that was sitting on the tarmac at London’s Heathrow Airport in July 2013.

Efficiency meets safety

Honeywell’s aerospace technology is designed to meet airlines’ needs to reduce costs and increase fuel efficiency and safety. The company has various ways to meet these needs, and some are already onboard Indonesia’s own carriers.

Aircraft operated by Garuda Indonesia, for instance, are equipped with Honeywell’s IntuVue 3D weather radar system. This advanced system has the ability to gather and analyze a great range of data to inform a pilot on how weather conditions might affect a flight, especially if the weather phenomenon is directly in front or just below the flight path.

“Garuda Indonesia pilots have commented that they’ve seen aircraft in front of them equipped with conventional radar systems diverting due to a weather condition ahead of them,” said Brian Davis, vice president of Honeywell Asia-Pacific airlines division.

“However on the Garuda aircraft, the IntuVue 3D weather radar system analyzed that the hazardous weather was actually below the flight path, thus there was no need to divert and in the process, saving fuel.”

Davis added that the IntuVue 3D weather radar system is also lighter than the conventional radar system and requires less maintenance.

Another Indonesian carrier, Lion Air, equips its planes with Honeywell’s Enhanced Ground Proximity Warning System (EGPWS).

Acccording to the National Transportation Safety Committee (KNKT), during the crash of a Lion Air flight on April 13, 2013, during its landing approach to Denpasar, Bali, it was only when the EGPWS called out a 20-foot height alert that the pilot commanded a go-around. One second later, the aircraft impacted the water.

Still Honeywell asserts the system helps pilots to consistently perform a stabilized, on-target landing approach and avoid unnecessary fuel consumption due to a “roll-around.”

A roll-around occurs when it becomes obvious a plane is going to run out of runway to land on due to miscalculation, and the pilot must therefore gain altitude again and come back for a new approach.

Overcoming over-capacity

With all of the high-technology equipment available today, it’s still not easy to handle rapid growth in air travel. Airports Council International, or ACI, reported that between 2012 and 2013 Soekarno-Hatta International Airport in Jakarta served over 60 million passengers, making it the world’s 10th busiest airport. This data is both surprising and alarming, considering the airport was designed to accommodate just 22 million passengers.

So busy is Soekarno-Hatta that some local flights have been moved to the Halim Perdanakusuma Air Force Base. Airport operator Angkasa Pura II is currently revitalizing the three terminals at Soekarno-Hatta in a bid to expand capacity to serve 61 million passengers a year.

That work is expected to be ready by the end of this year, even though it will only meet the airport’s current passenger load.

A new terminal is being built, with promises that it will be one the best in the world, but with no added runway it won’t necessarily fix delays that currently occur at the country’s main gateway.

The situation is turning out be an impossible game of catch-up.

Other major Indonesian airports are likely to experience the same problem in the near future.

Technology can help to alleviate congestion issues. A congested airport means an inefficient airport, and the right technology can help reduce inefficiencies.

Advancements have to be orchestrated simultaneously in the air and on the ground, since if only one part of the equation is improved while the other is neglected, it will only shift the congestion and not really solve anything.

Honeywell solutions also reach out to the tarmac with equipment such as a tracking system to identify where each aircraft is at all times and where they are heading.

This system is ideal for airports experiencing over-capacity; they can reduce a whopping 70 percent of communication between air traffic controllers (ATC) and pilots, so that the ATC can focus their attention on more important issues.

Davis added that many airports around the world, including Sydney and Pudong Shanghai, have adopted Honeywell’s SmartPath system with its ground-based augmentation system (GBAS) technology.

GBAS is a replacement for the traditional instrument landing system (ILS), and uses GPS signals offering pilots up to 26 varieties of precision approaches into the airport, even in low visibility conditions.

According to Davis, the Indonesian aviation industry needs to start creating a performance-based navigation (PBN) roadmap on the lines of principles set forth by the UN’s International Civil Aviation Organization (ICAO).

Compared to today’s ground-based navigation systems, PBN offers more reliability, guiding aircraft to fly more efficiently and reduce congestion.

PBN does, however, require a massive effort as it calls for redesigning airspace. As such the government, airlines and technology suppliers need to work together for the best interests of the nation’s air transportation.

Globe Asia

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