Why Are More and More Chinese Enterprises Choosing Indonesia?
The year 2023 was defined as the inaugural year for Chinese enterprises going global. In 2024, the global macroeconomic landscape underwent significant changes, with emerging markets gradually rising. The destinations for Chinese enterprises going global have shifted from Europe and America to Southeast Asia, then to Africa and Latin America. The forms of going global have evolved from exporting products, to exporting production capacity, to building brands, and then to establishing sales channels. Faced with intense domestic competition and a saturated domestic market, more and more Chinese enterprises are turning their attention to overseas markets in search of new opportunities for development.
Indonesia, as the largest economy in Southeast Asia, is gradually becoming a popular destination for Chinese enterprises going global. So, what attracts so many Chinese enterprises to choose Indonesia?
I. Vast Market Size and Consumption Potential
Indonesia has a population of nearly 280 million, making it the fourth most populous country in the world. Such a large population base constitutes a huge consumer market. With the continuous development of Indonesia’s economy, the income level of residents is constantly increasing, and their consumption capacity is also growing stronger. According to relevant data, Indonesia’s middle-class population is close to 90 million, accounting for 33% of the total population, with 7 million people joining the middle class every year. This expanding consumer group has a strong demand for various goods and services, providing Chinese enterprises with a broad market space.
Take the fast-moving consumer goods (FMCG) industry as an example. Since the first store of Mixue Bingcheng opened in Indonesia in 2020, by 2023, the number of its stores had reached 2,300, making it the largest chain in Indonesia. Yili Group, Genki Forest, and Codi Coffee, as well as Aixue (a subsidiary of Mengniu Dairy), have also entered the Indonesian market, attracted by its vast consumer market and growing demand.
II. Favorable Policy Environment and Investment Facilitation
To attract foreign investment and promote national economic development, the Indonesian government has introduced a series of preferential policies to provide a favorable investment environment for foreign enterprises. In terms of taxation, the Indonesian government offers corporate income tax exemptions and other preferential policies for enterprises that meet certain conditions. For example, enterprises in the new energy sector can enjoy tax exemptions and land discounts to support the development of industrial clusters. In the tourism and hospitality industry, large-scale resort hotel projects that can create a significant number of jobs can receive investment subsidies and have their approval times shortened.
In addition, as a member of ASEAN, Indonesia has signed and implemented several free trade agreements with countries and regions around the world, including the ASEAN Free Trade Area (AFTA) and the Regional Comprehensive Economic Partnership (RCEP). These free trade agreements reduce trade costs for enterprises and broaden market access channels, enabling them to more easily enter the international market.
III. Abundant Labor Resources and Relatively Low Costs
Indonesia has a rich labor force, with the population aged 20 to 65 accounting for more than 60% of the total population, and a relatively young demographic structure with a median age of 29. Compared with China, which is aging rapidly, Indonesia has a clear advantage in labor supply. At the same time, the labor costs in Indonesia are relatively low. The average monthly wage in the Jakarta Special Region is 4,901,798 Indonesian Rupiah (about $316), while the lowest in the Yogyakarta Special Region is 1,981,782 Indonesian Rupiah (about $128) per month. Compared with some regions in China, it is more competitive. This is highly attractive to labor-intensive enterprises, as it can effectively reduce production costs.
IV. Rapid Development of the Digital Economy and Its Huge Potential
In recent years, the digital economy in Indonesia has developed rapidly. According to a report jointly released by Google, Temasek Holdings, and Bain & Company, the value of Indonesia’s digital economy is expected to reach $124 billion by 2025, mainly in the fields of e-commerce, online travel, ride-hailing, and online media. Currently, Indonesia has more than 2,100 startups, and in the e-commerce sector, it is the largest and fastest-growing internet economy in Southeast Asia, with its total transaction volume ranking third in the world.
With the widespread use of the Internet and smartphones, the number of Internet users in Indonesia is constantly increasing. It is estimated that by 2023, more than 215 million Indonesians will be connected to the Internet, with 10% participating in online shopping. This provides great opportunities for Chinese Internet companies and e-commerce platforms to bring mature technologies and business models to Indonesia and explore new markets.
V. Close Economic Ties and Cultural Similarities with China
China and Indonesia have always maintained close economic cooperation, with frequent trade between the two countries. In recent years, China’s investment in Indonesia has increased by more than 17% annually, and the number of Chinese enterprises opening accounts with the Bank of China’s Indonesia branch has grown from over 700 to more than 3,000. This close economic connection provides Chinese enterprises with convenient conditions for entering the Indonesian market and reduces market entry risks.
In addition, Indonesia has a large number of overseas Chinese and Chinese descendants, and Chinese culture has a certain influence in Indonesia. When Chinese enterprises enter the Indonesian market, they can more easily understand and adapt to local customs and reduce cultural conflicts, thus conducting business more smoothly.
However, Chinese enterprises also face some challenges in the process of going global in Indonesia. For example, Indonesia’s policy and legal system is relatively complex and dynamically changing. Enterprises need to fully understand and comply with local laws and regulations to ensure lawful operations.
At the same time, Indonesia’s infrastructure construction still needs further improvement. Logistics and distribution, power supply, and other aspects may have certain impacts on enterprise operations. In addition, cultural differences may also bring some problems in enterprise management and marketing, which require enterprises to actively respond and innovate locally.
Overall, despite the challenges, the huge potential of the Indonesian market and its many advantages make it an attractive destination for more and more Chinese enterprises. In the process of globalization, Chinese enterprises should fully seize opportunities, actively meet challenges, and achieve sustainable development in the Indonesian market through localization strategies and innovative development, making greater contributions to promoting economic cooperation between the two countries.
Wanxinda Industrial Park in Batang National Economic Zone, Indonesia
Located within the Batang Industrial Special Zone (KEK Industropolis Batang) in Central Java, Indonesia, the Wanxinda Industrial Park offers flexible factory and land rental and sales services, and helps enterprises quickly establish a presence in Indonesia through a “one-stop” service.
In the current context of the global trade landscape being reshaped, inaction is the most expensive strategy!
As the largest economy in ASEAN, Indonesia is providing a “zero-time-difference” production solution for manufacturing with a combination of national-level economic zones and ready-to-use standardized factories:
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Tariff Breakthrough
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Bypass the U.S. 125% additional tariff list on China.
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Relying on the ASEAN Free Trade Area (AFTA) and the Regional Comprehensive Economic Partnership (RCEP), enjoy zero-tariff export benefits for 90% of goods within the region.
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Cost Lock-in
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Tax Policy: Enterprises in the Special Zone enjoy a 15-year corporate income tax exemption (full exemption for the first 5 years, and a 50% reduction for the next 10 years), and complete exemption of import tariffs on equipment.
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Labor Costs: 38% of the workforce is under 25 years old, and the average monthly salary in manufacturing is only one-third of that in China.
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Energy Security: Electricity prices are approximately 0.5 RMB per unit, with peak hours at 0.75 RMB.
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Employee Social Security: Health insurance premiums are paid at 1% of the salary by both the employer and the employee; pension insurance is paid at 8.4% of the salary by the employer, and work injury insurance is paid at 0.24% of the salary by the employer. (Total less than 10%)
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Ready-to-Use Advantage
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In Batang Economic Zone of Central Java, 1 million square meters of high-standard factories are available for immediate rent and use.
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Complete Facilities
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Adjacent to the highway
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Bonded area
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Green and energy-efficient factories
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One-stop service
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At this moment, what is rarer than a “cost valley” is a “strategic springboard” resource.
Please contact the Wanxinda Investment Promotion Team immediately to obtain a customized landing plan—starting while others hesitate is the true competitive edge!
The Management Committee of Central Java Economic Zone in Indonesia has bilingual (Chinese and English) staff available to respond 24/7.
