Key Takeaways:
– Honor, a Huawei spinoff, plans to introduce smartphone sales in Indonesia in March 2024.
– Indonesia’s rule requires 40% of smartphone components to be domestically sourced, causing Apple’s sales ban.
– Honor will work with a local manufacturer, launching 10 products initially, with 30 planned by yearend.
– The company also aims to open at least ten of its own stores in 2024.
Honor Targets Indonesian Smartphone Market
Chinese smartphone manufacturer Honor, a Huawei spinoff, announced its plan to launch smartphone sales in Indonesia by the end of March this year. In doing so, it joins other Chinese brands entering this Southeast Asian market that has enforced a ban on Apple’s iPhone 16 over domestic production requirements.
The Indonesian Market’s Unique Requirements
A unique stipulation in the Indonesian market demands that 40% of the components of any smartphone sold within the country be domestically sourced. This ruling has hampered Apple’s sales activity, with the tech giant reportedly negotiating a $1 billion investment to overcome this hurdle.
Honor’s Expansion Strategy
Sensing an opportunity, Honor has established an office in Indonesia and partnered with a local manufacturing entity. According to Justin Li, Honor’s president of South Pacific operations, a folding phone will be amongst the first set of locally sold products – a range of 10 medium to high-end items. However, their plans don’t stop there. The company has an ambitious goal of launching approximately 30 products, from smartphones to tablets, by the end of this year in Indonesia.
A Rich Growth Perspective
Being the fourth most populated country globally, only tailing behind the United States, Indonesia’s potential for long-term growth is significant. A recent observation by Canalys analyst Chiew Le Xuan emphasized that even though 80% of the market is dominated by devices priced under $200, Indonesia, as Southeast Asia’s largest and fastest-growing economy, presents enormous potential for growth.
Indonesia boasts a rapidly developing economy. It features an increasingly prosperous middle class and is emerging as a crucial market in Southeast Asia, accounting for 35% of smartphone shipments in the region.
Competition within the Indonesian Market
Currently, Oppo, Xiaomi, and Transsion – all China-based – hold the top three positions in the Indonesian smartphone market tied to shipments as per data provided by Canalys. Oppo, based in Shenzhen, held its global launch for its flagship Find X8 phone in Indonesia, where it operates a factory. Samsung and Vivo, another Chinese brand, tie for fourth in the Indonesian market with a share of 16% each.
Independent Market Entry
When asked, Li asserted that Honor’s decision to enter Indonesia was independent of Apple’s current presence in the country. He exhibited confidence in Honor’s ability to compete within the market. He explained that Honor had been observing the Indonesian market for years, intensifying its expansion efforts in the past six months.
Strengthening Local Presence
While not sharing specifics on the current staff mix between Indonesian and Chinese employees, Li confirmed Honor’s commitment to hiring within the country. The company plans to house a predominantly local workforce in the future. It also aims to open a minimum of ten of its own stores in Indonesia this year, working with a local retailer for additional sales.
Conclusion
Honor’s sales, mainly outside of China, are primarily focused in Europe and parts of Southeast Asia. The company hit its first landmark when over half its sales came from overseas in December. The smartphone manufacturer, currently preparing for its public offering, initially spun off from Chinese telecommunications giant Huawei back in November 2020 following U.S sanctions on Huawei. Huawei currently does not hold any stakes in Honor or influence in its business decisions. Thus, Honor’s foray into the Indonesian market is a natural extension of its international expansion strategy.