How Chinese Enterprises Avoid Detours When Expanding to Indonesia｜Live Interview Transcript (Part 1)

This interview is part of the Guardian for Global Expansion live‑stream series hosted by the Overseas Chinese Business Globalization Center for Industrial Clusters — Overseas Service Lounge.

Live‑stream Time: 20:30‑22:00, August 18

Host: Xing Qian, Secretary‑General of the Overseas Chinese Business Industrial Alliance

Special Guest: Chen Riling, Chairman of Wansinda Enterprise Group, President of the General Chamber of Commerce of Guangdong in Indonesia & Guangdong Chamber of Commerce in Indonesia

This live session targeted manufacturing, foreign‑trade and investment enterprises at home and abroad. Entrepreneurs joined from Singapore, Kuala Lumpur, as well as Suzhou, Hangzhou, Fujian, Wenzhou, Chengdu, Nanning and other cities across China. Drawing on his real‑world industrial overseas experience — starting with luggage manufacturing in China, suffering heavy losses from political unrest when building factories in Myanmar, then establishing long‑term operations in Indonesia and transitioning from a manufacturer to an industrial park operator — the guest shared in‑depth insights on Indonesia’s real business climate, market opportunities, workforce administration, site‑selection pitfalls and industrial implementation. He delivered hands‑on, on‑the‑ground experience for Chinese enterprises planning to enter Indonesia.

There have been many controversial online discussions regarding investment in Indonesia, including adjustments to nickel‑ore policies, viral open letters and rumours such as the alleged “21‑day equipment removal notice”. From your perspective as a long‑term Indonesia‑based operator, what is the actual current business environment in Indonesia, and what is the overall investment trend for Chinese enterprises entering the country?

A great deal of online content about Indonesia is produced by commentators who have never set foot in the country. Some widely circulated claims are unsubstantiated. For instance, the rumour that large‑scale factory equipment must be fully dismantled and removed within 21 days is unrealistic. Dismantling, loading and shipping heavy industrial equipment takes far longer. No specific company or location has ever been cited to back this story, yet it has spread widely across public‑media accounts.

Regarding adjustments to nickel‑ore policies: policy evolution is normal for the mineral sector in every country. China’s non‑ferrous‑metals industry has seen more than one thousand regulatory updates over the past two decades. As a mineral‑rich nation, Indonesia is exercising standard state governance by regulating domestic mineral exploitation. While policy shifts may alter some firms’ investment expectations, it is worth noting that many enterprises have achieved higher profit margins even with reduced output volumes.

By strengthening oversight over mineral industries and export channels, the Indonesian government essentially aims to standardize foreign‑exchange and profit management — a normal reform amid its development journey.

Such online public sentiment may dampen short‑term investment sentiment. On the flip side, it filters out speculators chasing quick returns, creating a better operating environment for enterprises committed to long‑term local development. Even with negative viral rumours, more Chinese companies are now paying attention to the Indonesian market.

Earlier in your career you ran luggage manufacturing in China, then built factories in Myanmar only to suffer damage amid political unrest, before relocating and establishing deep‑rooted operations in Indonesia. Could you elaborate on Indonesia’s core strengths and why it merits consideration by Chinese enterprises going global?

Global expansion has become an inevitable trend for Chinese enterprises. Domestic companies have built sufficient capacity in technology, management and capital to venture overseas. China’s manufacturing boom over the past four decades was driven by demographic dividend, political stability, sustained GDP growth and rising consumption fuelled by industrial development. Applying the same framework to Indonesia:

First, a massive demographic dividend. Its population stands at nearly 300 million and is projected to approach 400 million in the future. Java Island alone is home to 200 million people with extremely high population density. The population enjoys solid basic education: roughly 50 % have completed senior‑high‑school education and 20 % hold university degrees, providing abundant human resources for manufacturing. At our four Indonesian factories employing more than 4 000 local staff, only a dozen Chinese managers oversee overall operations. Harvard‑led research ranks Indonesia high globally for national well‑being and social‑ethics indicators.

Second, broadly stable politics. More than two decades have passed since Indonesia’s democratic reforms in 1998. Minor social protests occur from time to time, yet large‑scale upheaval is absent. Street demonstrations are a normal channel for public expression, while state governance remains steady. Mature presidential‑term rules and inter‑party checks and balances provide the essential precondition for manufacturing investment. By contrast, political instability in Myanmar brought devastating consequences for overseas factories.

Third, outstanding natural‑resource endowments. Taken together with its demographics and political conditions, Indonesia stands out globally as a key destination for incoming traditional‑manufacturing relocation. I myself am deeply engaged in local social‑development initiatives across Indonesia.

How do different segments of Indonesian society genuinely perceive Chinese‑invested enterprises? Are there frictions over foreign businesses displacing local industries?

It cannot be generalized as universal welcome or outright rejection; attitudes vary sharply across social groups.

Rank‑and‑file workers and white‑collar employees generally welcome Chinese‑funded projects, which create jobs and better‑paying opportunities. Domestic incumbent business owners, however, may resist intensified competition from foreign entrants.

This dynamic occurs worldwide. When large volumes of foreign capital entered China decades ago, some groups benefited while local firms faced competitive pressure. Outbound investors need long‑term thinking rather than pure profit‑seeking. Companies should assess what social value their operations bring and mitigate negative external impacts, and learn to mediate when conflicts arise. When you invest in a territory, ask what value you can create for it.

Audience entrepreneurs in the live chat ask: are there opportunities in Indonesia for children’s footwear and metal‑processing industries? Which sectors hold promising growth potential?

Opportunities in these sectors can be compared with China twenty years ago. For children’s footwear: Indonesia registers 6 million newborns annually, so market demand exists, yet local competitors are already well‑established. Simply exporting existing Chinese‑made products will hardly deliver competitive advantage.

To succeed, businesses must genuinely study local consumer habits and footwear needs, and tailor products for the Indonesian market. They also need to satisfy local compliance requirements including halal certification. Quick‑profit mindsets will not work; genuine local‑market understanding is essential.

Many outbound operators report operating losses in Indonesia driven by exchange‑rate volatility, hidden costs and compliance risks. Where do these pressures originate?

Numerous enterprises consult me about Indonesia investment, yet many disappear within one or two years. Losses frequently stem from short‑term thinking.

First, disregard of foreign‑exchange risk. Local Indonesian traders fully factor currency swings and hidden costs into quotations. Many Chinese outbound firms calculate only visible expenses and fall into losses once exchange rates move adversely.

Second, compliance failures. Cross‑border‑e‑commerce and trading enterprises without valid SNI and halal certifications may enjoy short‑term sales surges. Once reported by competitors, warehouse stocks can be seized, wiping out prior investments. Do not harbour illusions that personal connections or ad‑hoc arrangements can bypass regulations; Indonesian authorities conduct retrospective compliance enforcement.

Multiple Southeast‑Asian economies are receiving relocated manufacturing capacity: Vietnam, Cambodia, Myanmar, Thailand and Bangladesh. Against this backdrop, why are substantial volumes of traditional‑manufacturing capacity flowing into Indonesia?

Vietnam’s manufacturing sector is highly saturated, with light‑industrial exports to Europe and America reaching USD 220 billion; land and labour costs keep rising. Cambodia and Laos have small populations and limited seaport capacity. Myanmar carries high investment risks due to domestic unrest. Malaysia’s total population is merely 30 million.

Java Island alone has 200 million inhabitants, yet its light‑industrial exports to Western markets stand at just over USD 20 billion, leaving enormous room for growth. More than 1 800 product categories from Indonesia enjoy zero‑tariff treatment for access to the United States. Traditional‑manufacturing sectors such as luggage, footwear & apparel, furniture and building materials see factories spilling out of Vietnam, with Indonesia as the top relocation destination.

What are regional wage gaps across Indonesia? What are baseline production costs including labour compensation, social security contributions and industrial electricity tariffs on Java Island?

Costs vary widely within Java. Every additional half‑hour travel distance from Jakarta corresponds to a wage difference of roughly 200‑300 CNY. Wages around Jakarta stand at around 2 000 CNY per month, while average pay in Central Java is approximately 1 000 CNY.

Social‑security contributions for employers are low, at 5‑8 % of payroll. Industrial electricity costs are around 0.4 CNY per kWh, representing a notable energy‑cost advantage. Thanks to high population density, manufacturers on Java generally face no major recruitment difficulties.

Industry hearsay claims Indonesian workers have relatively low productivity. Having operated four factories and managed thousands of local employees, what is the real‑world labour situation, and what management lessons can you share?

Do not generalize the entire national workforce based on isolated factory‑management outcomes. Large‑scale Korean‑owned factories with tens of thousands of staff have operated smoothly in Indonesia for decades. At our facilities, a dozen Chinese managers oversee over 4 000 local workers, with front‑line supervisors promoted internally from local ranks.

Some Chinese‑assigned plant managers even find it hard to readapt to domestic‑factory management after working in Indonesia, because local staff demonstrate good discipline. Productivity hinges largely on corporate management systems. Within Wansinda Industrial Park, regular exchange and training sessions are held for tenant companies to share practical workforce‑management know‑how, such as handling religious‑holiday leave and labour‑relation communication. Park tenants can leverage management experience accumulated over years of local operation.

This instalment covers Indonesia’s real‑world business landscape, industrial opportunities, cost advantages and core workforce‑management pain points, countering one‑sided online rumours and stereotypes. It builds foundational understanding for enterprises considering expansion, clarifying Indonesia’s manufacturing‑investment value and labour‑market strengths. Still, grasping trends and baseline conditions is only the starting point for entering Indonesia. On‑the‑ground implementation details ultimately determine project success or failure. Part 2 will further unpack key risk‑avoidance strategies, industrial‑park policy incentives, real‑world implementation case studies and investment recommendations, helping enterprises mitigate risks and pursue stable development in Indonesia.