In­done­sian na­tion­al­ism takes bite out of Ap­ple

The Myanmar Times - - International Business -

AP­PLE is bat­tling to gain a foothold in In­done­sia af­ter na­tion­al­is­tic reg­u­la­tions hit the US tech gi­ant’s ef­forts to com­pete in the boom­ing emerg­ing mar­ket against Sam­sung and other ri­vals.

The iPhone 6S and 7 are yet to be re­leased in South­east Asia’s top econ­omy as Ap­ple strug­gles to ful­fil re­quire­ments that phone mak­ers must have 20 per­cent “lo­cal con­tent” for 4G hand­sets sold there.

Sam­sung has been able to meet the de­mands and gain a share of the mar­ket in In­done­sia – a coun­try of 255 mil­lion peo­ple, with an army of young con­sumers – more than 25 times big­ger than Ap­ple.

Of­fi­cials say the reg­u­la­tions that came into force this year are aimed at sup­port­ing the growth of the lo­cal man­u­fac­tur­ing in­dus­try, which lags be­hind its Asian peers, and plan to raise the lo­cal con­tent re­quire­ment to 30pc at the start of next year.

But to crit­ics, it is just the lat­est ex­am­ple of mis­guided na­tion­al­is­tic rules that ham­per rather than help busi­ness in In­done­sia, which is ranked 109th on the World Bank’s ease of do­ing busi­ness in­dex.

The new rules “force com­pa­nies to re­think the en­tire sup­ply chain and that is ex­pen­sive for them to do”, Sudev Ban­gah of In­ter­na­tional Data Cor­po­ra­tion (IDC), a con­sumer tech­nol­ogy mar­ket re­search firm, told AFP.

Ap­ple has en­coun­tered prob­lems in other emerg­ing mar­kets, no­tably In­dia where the Sil­i­con Val­ley gi­ant is fac­ing road­blocks in its quest to open stores in­stead of sell­ing prod­ucts through third-party re­tail­ers.

The In­dian gov­ern­ment re­port­edly re­fused in May to ex­empt Ap­ple from rules stat­ing for­eign sin­gle-brand re­tail­ers must buy at least 30pc of their parts lo­cally to open their own out­lets.

In In­done­sia meet­ing the lo­cal con­tent rules has been eas­ier for Sam­sung, as it al­ready had fac­to­ries in the coun­try, and has added as­sem­bly lines to the plants to carry out the fi­nal stages of pro­duc­tion.

Other com­peti­tors, in­clud­ing Asus, Len­ovo, Oppo and Black­berry – which used to dom­i­nate in In­done­sia but has seen its mar­ket share oblit­er­ated – have also taken steps to ful­fil the de­mands. –

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