Indonesian Kid s Wear

Transcription

1 Indonesian Kid s Wear 15 Ministry of Trade of The Republic of Indonesia

2 Commodity Profile 16

3 17

4 Introduction To introduce a number of Indonesia s potential products which are spread in over Indonesia region, TREDA has organized a series of effort to collect and analyze the relevant information related to the potentials and specific advantages of each of the products. With pride and joy, TREDA offers this booklet, entitled : Fashion for the Young, to readers who wish to know more about the relevant information. Indonesia is a country with rich cultural heritage and advance craftsmanship, but also a society with significantly young and modern population. This booklet presents an exploration of the history and characteristics of kidswear as well as its splendor and ingenuity. Indonesia, with a rich cultural heritage offers the world variety of stylish kidswear for the people to enjoy. The readers will find interesting background information around this attractive product. A better comprehension on its background will enhance the readers awareness and knowledge of these attractive Indonesian clothing products. We sincerely hope that readers would enjoy this booklet as much as we have in preparing for its publication. 18 Muchtar D Director General Trade Research and Development Agency (TREDA)

5 Minister of Trade Republic of Indonesia Message It is our great pleasure to share with you one special type of numerous product lines belonging to Indonesian creative industries, in this particular case, kids fashion wear. As a country situated at the cross-road between two oceans and two continents, Indonesian culture displays a unique mix shaped by long interaction between original indigenous customs and multiple foreign influences. The creativity of Indonesian people has given birth to numerous attractive art forms. Over the last five decades, Indonesian textile and textile products industry has grown from a small sector to a major contributor to Indonesia s total industrial output. The government has categorized textiles and clothing as a strategic industrial sector. In the past 20 years, along with the garment industry s successful market, Indonesian kid s fashion and wear have been growing very fast too. The government in collaboration with The Indonesian Textile Association (API) has been constantly providing support and assistance in developing and promoting the garment industry to serve global demands. As part of our national efforts at improving Indonesian share in the world market, this booklet present background information on Indonesian children fashion for the readers to appreciate. Enriched with vivid illustrations, this book is dedicated to those who are interested in exploring the richness and economic potentials of children fashion. Mari Elka Pangestu 19

6 20

7 C O N T E N T S 21

8 22

9 Adorable Clothing Indonesian costumes in the past were very much influenced by its nature, culture, religion and its tropical climate. Since earlier time, Indonesians had already had various kinds of designs for their costumes. To most Indonesians, kids or children are reflection of good luck and symbol of happiness. They are loved and protected, respectively decorated by beautiful and comfortable clothes; each country in the world has different way on how parents cover and wrap their babies and children. As their skins are soft, mothers gently try to keep their babies warm and comfortable with soft cloth as they can afford to get. In this naturally rich country, children and babies are decorated in different kind of clothing. Indonesia is furnished with vast rain forests, mountainous villages, exotic beaches and various cultural beauty of its people. The cities are spread around the isles picturing unique blend of east and western architecture. Modern and traditional ways of attire is one of the attractions found in different cities and villages. Indonesian costumes in the past were very much influenced by its nature, culture, religion and its tropical climate. During the ancient time, like many other nations, to protect their body from extreme weather and other features of the environment, people wore animal skin or light wooden skin. Eventually they started to wear rough cotton; however they were keen about their costumes especially for the religious purpose. Indonesian modern clothing for men and women are much influenced by the Dutch colonial occupation when the Indonesian women at that time were introduced to portable desk and footpedaled sewing machine. Since then, western style clothing began to spread firstly among the high class society but later after the Indonesian independence the style was adopted by urban people in big cities. Even though Batik wrapped skirt and kebaya (blouse) had become the traditional dress for women, since 1950 most of young women and kids have worn western dresses and starting from the 1960s almost all of Indonesian kids wear western style clothing in the cities as well as in villages. 1

10 In the garment world, Babies are meant from 0 to 18 months, and Kids are those from 18 months to 12 years. Babies wear is garment for babies whose ages are 0 to 12 or 18 months. Kid s wear is categorized as garment for children whose ages are from 18 months to 12 or in some cases 14. Internationally, the classification used for this group of ages in most countries does not distinguish between men s and boys clothes or between women s and girls clothes. However, Baby s clothes are given their own classification numbers which are Harmonized System 6111 and Over the last five decades, Indonesian textile and textile products industry has grown from a small sector to a major contributor to the country s total industrial revenue. The country s government has categorized textiles and clothing as a strategic industrial sector, playing an important role in the nation s economic development. The industries are absorbing a great number of workers and giving substantial contribution to the foreign exchange reserves. Textile industry in Indonesia has grown more than 40 years. It made the first move through home industry in 1960s, and grew to supply domestic market in the s. Later in 1990s the textile and textile industry began to enter export markets. The sector is still giving substantial contribution to the foreign exchange reserves. Along with the success of the textile industry, Indonesian Kid s wear which is part of the textile industrial products have been growing very fast too. A lot of international kid s wear manufacturers from developed countries source their product manufacturing through big Indonesian companies in some provinces like West, Central and East Java. These international branded garments produced by local factories are then exported to some other overseas countries. 2

11 The Colors of Fashion Fashion Design Indonesian designers have rich cultural gifts inherited by artists of ancient time. Their creativities are inspired by hundreds of traditional ethnic apparel spread in almost 17,000 islands of Indonesian archipelago. In the last few decades they have produced modern designs in textile as well as garment production to meet the demands of local buyers. New designs from the western world have also enriched their creativities in catching up with International designs and fashion. The creativity of Indonesian designers are very much influenced and supported by economic and technology development progress such as the local textile production, fast developed media and communications (like televisions and cable TV, printed materials, computers and the internet), fashion show, trade exhibitions, education, trade missions, tourists industry, etc. Fashion houses and their associated fashion designers, as well as high-status consumers (including celebrities) appear to have some role in determining the rates and directions of fashion change. Age, Sizes and Grading Kid s wear have very short life cycle as kids grow fast within months, so good and comfortable sizing system are important. As discussed earlier kids are defined as children up to the age of 12 or 14. Babies are new born up to 18 months. The most sizing system are based on how tall a child is, or in some European countries is called Centilong. The sizes start from 56 cm and go to 171 cm. But babies wear are often sized by age, i.e. months, instead of by Centilong. Some designers and manufacturers often have conversion tables which show the size which corresponds with the age of average children. Since European and American children tend to be bigger than Indonesian children, most often the Indonesian manufacturers and exporter adjust the size to the buyers sizing system and specifications. Trend and Climate As summer, or rather, dry season in Indonesia lasts throughout the year; the climate does not very much affect the styles, materials and designs. Clothes designed for local consumption are light and mostly made of cotton. Garment to be exported to countries like USA, Europe and Australia are customized to the buyers requirements and specifications, which suitable for the cold and wet season, they are usually heavy garment, such as jacket and winter coats. 3

12 Colors Parents always want to decorate their kids since they were babies. Even before they were born to the world, parents, especially the mothers, have already bought various things and accessories for the coming babies. Designers know well about parents desire to decorate babies, toddlers and older kids by facilitating good and cute designs with suitable soft colors. Selection of colors is important for the babies and Kid s, soft and cool colors are dominating the kid s fashion designs. Important issues in children s or kid s fashion may include types of materials, comfort, designs, color, size and trends. Kid s fashion can be categorized into girls and boys and age group, sport and casual, pants and skirts, blouse, jackets, dress and school dress. Types of Kid s Fashion Garment Haute Couture Haute couture or high quality and exclusive custom-made clothes in Indonesia is rather applicable for adult of high class society than for children. But good and qualified dressmakers and tailors for kids are available in big cities; they can give advice and help make dresses for anybody with individual designs and reasonable costs. It is a common practice for Indonesian middle class society to have custom-made clothes, even it is not categorized as haute couture art work like in the modern world, where sense of luxury is more emphasized, but here, it is more as a craftsmanship of local experts with individual taste. Recently, several Indonesian top designers are starting to specialize themselves as Kid s fashion designers who design custom made dresses or suits for kids. Department Stores and Fashion Boutiques are beginning to hire fashion designers for special market segments that tend to consume high quality dresses or suits for kids. They believe customers who have special attitude towards fashion and life style tend to buy higher priced fashion clothes. 4 Ready-to-Wear Massed garment production or confection collection of kid s garment is more commonly seen all over the places in Indonesia. Factories in big cities like Jakarta, Bandung, Semarang, Surabaya and Denpasar are known as Kid s ready-to-wear products centers. Nowadays a lot of

13 Kid s ready-to-wear garment are exclusive branded products which carefully designed by local or international designers. Some brands are produced by foreign companies that source the production through Indonesian garment factories such as Gap, Levies, Body & Soul, Talbots, Havengirl, etc. and some other comes genuinely from domestic companies with either local or foreign designers such as Kutakidz, Koopu Kidz, Indigo, Mama & Leon, Le Monde, Suzane, Yuspoti, Yenyen, Venice, and many other. Product characteristics of Babies garment include jackets, coats one or two pieces suits, trouser, dresses, pullover, blouses, T-shirts, caps, sets, gloves and socks. Girls and Boys Apparently garment designers and factories produce both girl s and boy s clothes, even in reality there are more girls fashion dresses easily available everywhere. It shows that girls fashion is a little bit ahead compared to boys, since boys fashion stay longer than girls. Sport and Casual Most commonly kids clothes are designed as casual or sport styles outfits. This is because kids spend most of their time playing and they are extremely mobile. For both girls and boys, there has been a switch over the past several years towards purchasing sport and sport leisure type wear as casual clothing, with the majority of children s wear classed as casual. Dress and School Dress Children fashion usually consists of dress and party dress for girls or formal outfits for boys. There are dresses suitable for schooling too, however most of the schools in the country oblige kids to wear school uniforms which is usually massed produced as confection. 5

14 Pants, Skirts, Blouse and Jacket In the early stage of Kid s fashion in Indonesia people tended to produce more formal dress for girls, but now girls wear pants, skirts, blouse and jacket most of the time, just similar with the trend in the western countries, where children purchase mostly casual garment. As the textile and garment companies produce large quantity of cotton including jeans, the garment companies consume a lot of cotton materials, especially jeans for casual pants which are popular among the kids. The popularity of casual kid s wears has also increased the demands for knitted products like T-Shirt, sweaters, jumpers, cardigans, etc. Materials Producing Kid s Wear needs special attention on the material selection. Designers would know what kind of materials suitable for kid s wear so that it would be comfortable for kids to move during their mobile activities. Materials commonly used by Indonesian manufacturers are: wool, cotton, knitted crocheted, knitted cotton, rayon, corduroy, drill, denim, microfiber, talon, satin, silk, linen, synthetic fibers and velvet. Indonesia is a textile producing country; raw materials supplies for garments manufacture, such as textile and clothing accessories for the production are available locally. There are many yarns, fibers, fabric, weaving, knitting factories that can supply raw materials for garment industry. Numbers of companies that produce polyester filament yarn are mostly in West java and Banten; among others are Indo Barat Rayon in Purwakarta, Polysindo Eka Perkasa in Semarang, Kahatex, Bintang Agung and Argo Pantes in Bandung. Their capacities are between 40,000 76,000 tons per year. 6 The materials for Kid s wear have to be safe to wear and play, especially for children up to 3 years and for older ones. Some countries have specific standards for example cords, must be stitched to garment so a child can not harm itself playing with a loose cord. That is why the selection of materials is really important.

15 Processing The initial preparation done by major garment manufactures prior to the production process would include important management tasks concerning: raw materials, design analysis, cutting production analysis, sewing production equipment, packaging and warehousing, production and quality control, purchasing and inventory control, marketing, etc. Below are the basic stages of the fashion garment production process: 1. Garment design and selection by the designer and buyer 2. Fabrics and trimmings selection by cloth buyer 3. Patterns designed and cut by pattern designer 4. Lay plan created by pattern designer 5. Fabric cut by cutter 6. Garment assembly by garment machinists and operatives 7. Garment finishing by finishing operatives In garment production, especially in major manufacturers, there are a couple of basic production steps. Initially, the designer and buyer would select garment designs. Then the cloth buyer would select the fabrics and trimmings. After that the patterns designer would make the design and do the cut and create the lay plan. The cutters finally cut the fabric which is then assembled by the garment machinists and operators. Finally the finishing touch would be done by finishing operators. In terms of machines, there are number of large and modern Indonesian garment factories are now using sophisticated machineries well equipped with advanced computer system. Even some of the smaller companies are curious to catch up with development. A lot of young Indonesian graduated from overseas universities have been employed by the textile and garment companies as garment designers and experts. In Indonesia itself there are numbers of Universities having departments for textile designs and studies. The most popular one is The Bandung Institute of Technology, a prestigious state own university. 7

16 8

17 The Industry Big orders usually come in the first week of the month approaching Idul Fitri, Christmas and China New Year. Factor Effecting Kid s Wear Industry Early Education Pre-school playgroup and modern kindergarten are booming in several big cities, hundreds of new pre-schools have been established and become new industry. While parents want to decorate their children to go to the kindergartens, there is a reasonable excuse for them to buy new clothes and some other accessories like vest, under wear, hair accessories and bags for their children whose ages are between 3 to 5 years. Pester Power Pester power or children s act to force their parents to buy things, is assumed to be one of the factors effecting parents to buy clothes and its accessories, CDs, mobile phones and computer games for their children (age 6-11). There have been increasing demands for children s consumptions of clothing as most children want to look like their favorite pop star or footballer (Christopher Pole 2005). If Pester power does exist in Indonesia, it would be found in big cities only. However, the kid s clothing industries are geared to produce design and fashion products that favored by the children. Media and Entertainment Entertainment business including television programs like song festivals and competition, movie, series, infotainment and even advertisement program have been used to promote Kid s fashion through the artists. In addition to that, printed media such as fashion journals, women magazine and parenting magazines have also made important contribution to Kid s fashion as well as kid s wear. New fashions are exposed in these media of communication to the majority of the audiences which are mostly mothers, who make buying decision for kid s clothing. Celebrities have become perfect trend setters in the development of kid s wear fashion in Indonesia. 9

18 Demography and Age Segmentation The population growth rate has lessened in the past few years, much because of the government successful campaign Two Kids Are Enough. As the younger population is reducing, in contrast the family prosperity is increasing and parents spend more for their kids. Universally, parents would make efforts to dress their kids as beautiful as they could afford. Inspired by the culture and its beautiful nature blended with modern fashion from the west, Indonesian people are concerned about their fashion performance, not only for adult, but also for kids and young generation. Indonesian garment companies are very keen to see the prospects in Kid s garment business sector because children population is viewed as huge profitable market. The size and age structure of the population is one of the basic determinations of how much will be spent on clothing. The projection of Indonesian children population 0-14 years old has shown a slightly increase. Indonesian Children Population Projection by Age (in 000) Age , , , , , , , , , , , ,396.1 Total 62, , , , Source: Central Bureau of Statistics Overseas Consumers As local production of children and babies garments are becoming more matured, Indonesian exporters are targeting to sell more products to overseas market, especially to the United States where children of 0 19 years old are projected to increase from 80,5 million in 2000 to 83,2 million in 2010 (US Census Bureau 2004; Projection of ). Even the European Union consumer size is projected to get smaller because children population of 0 14 years was decreasing from 81.0 million in 2002 to 77.0 in 2010 (CBI Market Survey 2007), Indonesian exporter and manufacturers are still optimistic to see EU and USA as opportunity especially Indonesia has been trusted by both US and EU importers through the past long experience. The facts show the potentiality of overseas market size for Indonesian kid s wear. Indonesia has many years of experiences exporting to major destination of garment exports to USA, which contributed 26 %, EU 12 %, ASEAN 5% and Japan 3% (SENADA, Jakarta Post Dec 15, 2008). In spite of current global crisis, the Indonesian garments are exported to some former

19 Soviet Union and Middle East countries, even the market still act as buffer markets. Potential Garment Production Development Indonesia is one of the biggest countries with huge human resources; it is a big advantage for investors to start business anytime without having difficulties in finding laborers. With specific training the laborers will become important asset to the company in producing marketable products such as garment. The garment industry is categorized as one of the sectors absorbing enormous labor force, providing big contribution to the country s economy. In 2007 the total number of major companies was 2,300 units, producing 410 thousand tons of garments of which 385 thousand tons are exported, mostly to the United States of America and European Union. According to the statistical source of the Ministry of Industry, there are 2300 units of small scale garment industries producing 238 thousand tons of clothing last year, which were mostly absorbed by domestic market. In today s global market, foreign manufacturers mostly source their products through the factories of the supplier s country; among them are well-known international brand from department store, supermarket, outlet discount store and mail order. Some of those buyers are purchasing directly to domestic Indonesian company by using the local representative office, or purchasing through the buying office in Hong Kong (as one of the connection center for world garment trade). Many local garment producers are producing based on the cut-make-trim (CMT) system. Companies which operation are based on CMT are using fabric which supplied by the buyer. Major manufacturers or major players in the business for example are: Busana Perkasa Garment, Mitra Abadi, Ungaran Sari Garment, Busana Star Garment, Trilondo Adi Busana, Sritex, etc. which are domiciled in Bandung, Solo, Surabaya, Jakarta, Bogor, Tangerang and Semarang. However, major players are still dominated by foreign investors who own world class brand names. Besides local brand names such Mama & Leon, Le Monde, Koopu Kids and Kuta Kids, etc.; there are many international brands produced by these major players for 11

20 United States Market such as: Ann Taylor, CK Jeans, DKNY Jeans, Enyce, Express, J. Jill, Jones Apparel Group, Liz Claiborne, Lulu Lemon Athletica, Macy s, Nike, Nygard, Perry Ellis Menswear, Phillips Van Heusen, Polo Ralph Lauren, Spyder, Talbot, VF Corp., Warnaco, etc. For United Kingdom market there are: Esprit, Marks & Spence, Mexx, O Neill, Quiksilver etc. Busana Perkasa Garment (Busana Apparel Group) for an example is a Jakarta based company with 25 years experience, categorized as one of the largest garment manufacturers and exporters in South East Asia with 14 modern, manufacturing facilities located in Indonesia and more coming up in India and Egypt. Its operation has already used infusion of technology such as Laser Cutting, Bonding, Seam Sealing, I-pod control and other technological features at all categories of garments manufacturing. Its total capacity to produce and export over is 2.5 million garments in a month. Its labor force is of 16,000 employees which include in-house design team that create and develop the company s collections each season. Production Centers The Indonesian Textile and Textile Products (TTP), which has been developing since 1960, is an important industry, contributing revenue to the country s economy. This sector has great production capacity and plays an important role in reducing unemployment. The world s garment trade is increasing up to 12% annually and the trend of US garment import is increasing up to 8%. Textile and textile products including garment (babies wear, kid s wear, garment for women and men) are produced mainly in West Java, Jakarta Special Region, Banten, Central Java, East Java, Bali, Sumatra and Yogyakarta. Distribution of textile industry is dominated by West Java : 1% West Java 57% 2% Jabodetabek (Jakarta, Bogor, Depok, Tangerang and Bekasi) 17% Central Java 14% 14% 6% 3% 57% East Java 6% 12 Bali 3% Sumatra 2% Yogyakarta 1% Source : SENADA 17%

21 In terms of labor force shares, the textile and garment factories have absorbed around 15.8% of the Industry and Manufacture labor share in 2006 or 1,190,736 in total. Indonesian Labor Force Shares in 2006 (94.95 million) Retail, hotel and restaurants 20% Mining 1% Construction 5% Agriculture 44% Industry and Manufacture 12% (Textile and Textile Product are 15%) The total production of the Indonesian garments in 2003 is USD 6,353 million, while in 2007 it is USD 6,355 million. The garment industry is mostly oriented toward export markets, and the table below shows the figures of garment production and export from 2003 to The export of garment is 88% of total production. The main export destinations are the United States and European Union. The materials used are mainly locally-made materials, except for garment with special quality. Indonesian Clothing highlight DESCRIPTION Num. of Company (unit) Cap. Investment (Rp. Bill) 2,958 2,991 2,984 3,318 3,740 Num. of Machine 290, , , , ,520 Men Power (People) 352, , , , ,800 Prod. Capacity (000 ton) Production US$ mill 6,353 6,209 5,546 5,995 6, ton Export US$ mill 3,926 4,289 4,899 5,570 5, ton Import US$ mill ton Source : Ministry of Industry, Ministry of Trade and Central Bureau of Statistics compiled In Indonesia Kid s wear are not only produced by small companies but also produced by big scale industries, either as a component of the whole product range, or as a primary product. Facing the globalization era, many factories produce not only the brand name of their own, but also they receive orders with international brands. 13

22 Small garment industry are 100 percents oriented to domestic markets, except those small scale garment manufacturers in Bali, which are oriented to export markets. The sector is mostly fall under home industry category, clustering in a small industrial estate. Indonesian Clothing SME Highlight DESCRIPTION Num. of Company (unit) 4,873 5,569 2,840 3,550 2,300 Men power (People) 584, , , , ,000 Production US$ mill 2,177 2,405 1,410 1,835 1, ton Source : Ministry of Industry, Ministry of Trade and Central Bureau of Statistics compiled Indonesia is ranked as the ninth on the world s list of garment exporting countries, while the European Union is the biggest followed by China. The trend of garment product and value are constantly increasing, even the production has been greater than the demands resulting the decreased of its unit price. This situation also caused a steep competition in the global market. Indonesian garment is still dominant in its home market and tend to be protecting the market from the invasion of garments imported (legally and illegally) from other countries. 14 The production of kid s wear in 2007 was estimated around 30 percent of total production, so it was about 309,900 tons. This would include those manufactured by major manufacturers as well as small scale industries, exported and locally consumed. To meet the demands of the young consumers, Indonesia also import international branded kid s wear from other countries such as Hong Kong, United States and some of the European countries.

23 Jakarta Special Region (DKI) The kid s wear manufacturers operating in Jakarta and its surrounding cities (the Jabodetabek region) are great in numbers, mostly big companies which products are exported overseas, either with own local brand names or international brands as licensed to them. Many factories receive order or from international brands like Guess Jeans, Gap, Talbots, Levis jeans, Liz Claiborne etc. for products to be exported to other countries. Medium and small companies supply their products either to local market in several provinces or to Tanah Abang traditional textile and garment market in Jakarta. Most of these products are categorized as middle and lower quality. Retailers from different part of Indonesia are supplied mostly through the Tanah Abang Textile and Garment Market. There are thousands of small and big size traders occupying the fourth level of the modern building. Not only from Indonesian regions, but people also come from other countries like Malaysia, Brunei, Ghana and other African countries to buy kid s wear and resell them in their countries. The Tanah Abang market is considered as an interesting tourist spot for garments and textiles. The same garment market activities occur in other trade centers like ITC Mangga Dua and ITC Cempaka Mas in Jakarta. While for high quality garment and clothing products are marketed in special outlets and boutiques in several malls in big cities of Indonesia. In terms of Baby s garment, one of the successful companies producing fine international standardized baby s wear in Jakarta is Lembanindo Tirta Anugrah which was established in

24 initially with only a few numbers of employees, and now they have employed more than 1000 workers. In 1982, the company using le monde as its brand name, started to produce its baby s products and successfully became a popular brand in local market. This company produces baby s products using fine material with careful quality control that enables to catch middle upper level market segment. After establishing its first outlet for baby and mother in Jakarta, the company expanded its distribution to most leading department stores all over Indonesia, and now it has 10 specialty outlets within the country, two of them are owned through a franchise agreement. Their first export markets in 1986 were Australia, Kuwait, Bahrain, Saudi Arabia, and Singapore. The products consist of apparel, bedding, bath, travel and other baby s clothing accessories. The raw materials used are mainly 100 % combed cotton fabric with safe comfortable supporting materials. This company has started to sell their franchise business in order to have wider distribution of their products locally and globally. The success of this company has inspired others to produce Baby s garment in the region as well as other provinces. 16 Bandung, West Java Being the capital city of West Java, Bandung plays an important role in the textile and garment industry, which are operated in several cities within the region like Cikampek, Indramayu, Cirebon, Sukabumi, Cianjur, Tasikmalaya and Garut. As discussed earlier, West Java is dominating 57% of garment industry in Indonesia. In the last two decades Bandung city has become the showcase or displays of the regions garment products including Kid s Wear. Many factories send their fashion garment and Kid s Wear products to big and small outlets and department stores in

25 the city of Bandung. However, the garments manufactured in West Java are distributed through Jakarta, either for national distribution or for export. The regional governor of West Java has had a plan of building more infrastructure such as bridges, road system and international airport to facilitate export business. He believes the exporters will be able to cut the distribution channels and transportation costs. Besides economic efficiency, better distribution system would make West Java exports more succesful in the global market, especially to catch up with China, Bangladesh and Vietnam. The garment factories in West Java fall into two categories: 1. Small and Medium Enterprises and 2. Large Industries The large industries are usually managed under local or foreign investments. Surabaya, East Java Besides encouraging and supporting its domestic investors, Indonesia is open to foreign investment, there are a lot of garment industries operated by foreign investors, and for example one of them is Eratex, a garment company managed by Asian foreign investor located in Surabaya. The company was established in 1980, initially as a textile factory, but garment operations was added in as its company s line of business and since then, the division has expanded rapidly to become one of the leading garment manufacturer in Indonesia. The factory has been continuously improved to be a modern high-tech factory. Its operation is computerized and supported by a fully integrated industrial engineering system. The garments products which include Kid s Wear are ranging from five pocket jeans to casual dress and pants. In recent years, to fulfill the markets they also produce jacket and woven shirt. The materials used are mostly denim and chino. For embroidery and printing application they contracted out to nearby subcontractors. The production facility comprises of 36 sewing lines of pants, 10 lines of shirts and 2 lines jackets, with over 2,000 sewing machines in their 2 garment factories. Monthly combined capacity is approximately 860,000 pieces of 5 pocket jeans. This represents an increase of 200% over the last 30 months. The major customers of this particular company are based in USA, EU and Canada. The brand names are among others: Ann Tylor, Banana Republic, Perry Elis, Levi s, Gap, Sears, Uniqlo, 17

26 Rebook, Greg Norman, Sears, Target, NYCO, Limited, Christopher and Banks, Esprit, C & A, and FedEx. Abasson Baby Garment is one of the companies specializing in the production of Baby s garment operated in East Java. The products have been exported to several targeted countries. Denpasar, Bali Bali is not the biggest garment production center; however, there is an interesting phenomenon of how Kid s Wear business has been developed in a place known as an international tourist spot and a paradise for western people to spend their holidays. Bali s manufacturers are concentrating their strategy to export market as compared with kid s wear producers from other regions. It seemed that in the first place, some small scale companies tried to attract tourists to buy their products while they are spending times in Bali, and in later development these companies were aware about the potential of making their business bigger by offering tourist customers to become their export agent. This unique situation has given quite good value added to the products originality Quality Kid s wear made in Bali. Tourists are happy to buy quality garments with relatively low price from a place called paradise. Buyers in the export destination countries might be interested in the imported products manufactured in Bali, an island which is known as world class tourist spot. Indonesian garment production like Kidswear use modern tecnology with high capacity production. One of the oldest children garment manufactures in Bali is Kuta Kidz, which was established in Then Koopu Kids was founded not long after the Kuta Kidz. Today there are more factories for kid s wear, such as Request, Indigo, Tirta Batu Bulan and others, which mostly located 18

27 19

28 in Denpasar city. It is a common phenomena that the children garment companies started as family business, and now some of them have been making quite good progress and have exported their products to Europe, Australia, New Zealand, U.S.A., Malaysia, Singapore, Guam, New Caledonia and Spain. The Kid s garments produced by Bali factories are designed with western styles, so that all of the products meet with the tastes of the customers, mostly tourists visiting Bali, who buy and bring the products as gifts from Bali. The designs are mostly for summer, but they accept order for fall and winter. The companies fall under the small and medium enterprise category with employees between 25 to 100 work- ers. The materials are customized to the buyers specifications such as pure cotton, lycra, denim and knitted cotton. They adopt international standards sizes for kids of 0 to 12 years old. Many of Bali Kid s wear manufacturers make use of the Indonesian cultural attraction like 20 Batik designs as one of the comparative advantage in marketing their products for tourists and foreign buyers. Some of the factories produce special kid s wear using hand-made batik materials with modern motifs and color suitable for European kids. It is becoming a trend in Bali that kid s wear companies produce clothing collection with hand touch ornaments such as embroidery or beads application. The hand-made ornaments have made Bali kid s wear known in western markets like

29 USA, Australia and Europe. No wonder that some of the international brand product companies have awarded the local manufacturers with license in producing their new collection, which are mostly designed with embroidery and beads application. The Tirta Batu Bulan in Bali was founded in 2006 and it produces kid s wear with International brands namely Havengirl, an American brand for children clothing. The company produces high quality garment fashion for kids using 100% local materials and all of the products are sent to the Unites States of America. It is a common scene in Bali that the owners of the garment factories are mostly mixed marriage families, either the wives or the husbands are Westerners, that is one of reasons why the designs of Bali garments could comply with the tastes of the western buyers (for non-license products). After the withdrawal of the quota system for garments by the government of Indonesia, they found that there have been no difficulties in exporting garments to foreign countries. The company said that they should be fully aware about Vietnam, which now has become a serious competitor. As other exporting garments companies, this company falls under the category of small scale factory with 100 skilled labors producing about 5000 pieces of kid s wear per month. For the embroidery and patchwork or beads application they contract it out to local Balinese neighborhood. Tirta Batu Bulan manufactures kid s clothing for four sub-tropical seasons in accordance with the buyers order along with the color, size and design which have already been patterned. Kid s wear produced are adjusted to the American sizes for baby girls and girls of 1 to 14 years old (size number are 2, 4, 6, 8 etc.). It is a comparative advantage of the products that they are all hand- made, which make the products could enter the upper middle class market. Materials used are locally made (in Bandung and Surabaya) such as knitted cotton, Spandex rayon, etc. Distribution Indonesian exporters and manufacturers have long experience of receiving orders from foreign importers which usually at least one year ahead, twice a year for winter and summer fashion sales. In the buying countries Indonesian garments are sold in many different types of shops and also mail-order. There are also some multi chain stores which sells children garment using their own brand names. Kid s wear are also sold in department store and hypermarket. Generally, Indonesian manufacturer/exporters would prefer to export directly through the importing retailers, which then re-distribute the product to other parties such as the department stores, clothing multiples, home shopping companies, selling and buying organizations and other retailers. Some other exporters would prefer to do it through an agent as it is considered practical. 21

30 Government Support Special industrial zones for major companies with export orientation have been established by the government in provincial capital cities like Jakarta, Surabaya, Semarang, Bandung, Denpasar, Medan, Makasar and others. For small scale industries, the government of Indonesia provides low-priced industrial villages in various locations. A lot of small industries from this small business compound have developed to become bigger companies. The financial systems developed by banking sectors with government support are able to provide low-interest loans to help textile producers purchase new machinery, to make them more efficient and allow the producers to diversify their product. The Government ministries are constantly providing training on product development, quality control, etc. in order that the producers can compete in global markets. Ministry of Trade and Ministry of Industry make a lot of efforts in promoting garment products by involving the producers in local and overseas trade exhibitions and missions. The Indonesian Government is highly supportive of Indonesian garment industry. The central government for example, organizes annual trade exhibitions showcasing Indonesian garment, fashion and other products. National Agency for Export Development (NAFED), a unit of Ministry of Trade, is the organizer of Trade Expo Indonesia in Jakarta, the largest export-oriented exhibition in Indonesia. In addition, NAFED and other government agencies regularly lead trade missions overseas, bringing many entrepreneurs and industrialists to attend world class exhibitions, and also directs visiting dignitaries and foreign businessmen to qualified Indonesian companies. Online exhibition of Indonesian producers is available at NAFED s virtual exhibition website at http// Industry groups and associations work together with the Government in those activities. They provide professional services and expertise in areas like training, market analysis, etc. One of the most important associations is the Indonesian Textiles Association (API). 22 The government of Indonesia had been very supportive to assist the exporters and manufacturers when the textile and garment quota system was abolished in January 1, 2005; these phenomena would push the producers to race entering the countries which used to apply quota

31 such as United States, European Union and Canada. It was expected that it could make the world market grow. On other side, without quota the competition would increase among the producers of the exporting countries. The garment industry potential is supported by the annual growth of the world s garment trade. Restriction of garment exports by certain countries to the United States and European countries have also given good opportunities to Indonesia. Skilled workforce, efficiency in manufacturing and Indonesian experience in exporting quality garments to American and European countries have positioned Indonesia as an important garment producer in the global market. Although several textile companies have had to lay off workers during the current economic crisis, garment makers have been doing well and have absorbed another 50 thousand workers this year, now there are more than 1 million workers in garment industry. In term of investment, domestic conditions have had resulted the flow of prominent investors into Indonesian TPT industry. Foreign investors which are mostly from United States, United 23

32 Kingdom, Taiwan, Korea, Japan and Hong Kong, have brought Indonesia up to the world class children s wear. Indonesian garment quality which complies with the international standards has been trusted by the buyers from overseas markets. It has been reported that the investment this year reached IDR 4 trillion (USD 363 million) which is the highest investment in this industry for the past five years (SENADA/Jakarta post Dec ). It has been admitted that there is a lot of advantages of operating the business in Indonesia because of the following factors : In Indonesian, investors can produce international standardized quality garments as all human resource and industrial facilities are available and supported. Availability of Indonesian experienced garment experts and operators. Operational costs are efficient. Availability of advanced technology and its facilities. Availability of qualified experts to produce hand-made and good needlework such as embroideries. Provision of good international banking system and good infrastructures facilities (road, air and sea transportation with international standards). Other condition which has attracted the investors that is the integrated industrial upstream chain where it has its own fiber manufacturer, yarn manufacturer, fabrics manufacturers and garment manufacturer. Trade promotion and trade information provision by the government is still needed to help Indonesian play more important role in Kid s wear market globally. Stronger efforts are needed on the complying with good industrial practice such as meeting requirements for safety and working conditions, as this will strengthen the country global position as an important garment industry player and boost Indonesian kid s wear products (Indonesia s garment account is about 3 to 4 percent of the world s total). 24 Children shopping needs such as clothing and accessories become a special segment which has a lot of potential, with big profit reaching up to 200 percent profit margin. For example a pop star Britney Spears had entered this business line by introducing her own label for kids. As it was reported she was inspired by her own son to launch her children s wear label named after her three-year- old son. This was followed by other celebrities who started their business in Kid s Wear.

33 In Indonesia s case more outlets and boutiques specializing in kid s wear are believed to have positive impact in enhancing Indonesian kid s wear industry. There are attempts by several top Indonesian designers to tap this potential Kid s Wear business, for instance Sofie, Herman Naury, Iva Latifah and Anita, who are the designer of Allure brand. These designers are members of the Indonesian Fashion Designers Association, and particularly Sofie has been actively introducing more fashion for children that are expected to catch on in both local and overseas markets. More collaboration between fashion designers and garment industry would definitely increase more sale of Indonesian kid s wear. In Indonesia s case more outlets and boutiques specializing in kid s wear are believed to have positive impact in enhancing Indonesian kid s wear industry. There are attempts by several top Indonesian designers to tap this potential Kid s Wear business, for instance Sofie, Herman Naury, Iva Latifah and Anita, who are the designer of Allure brand. These designers are members of the Indonesian Fashion Designers Association, and particularly Sofie has been actively introducing more fashion for children. In January 2008 Sofie had joined forces with textile and garment manufacturer Argo One in producing kid s fashion with her own brand name 1.2.b. for children aged 4 to 12. The collection names which have been launched are Humble Art, Haphazard and Revival. Besides local market, Sofie plans to enter the markets in Hong Kong, Singapore, Japan, Taiwan and Malaysia for the Asian market; the U.K. and Germany for Europe; and the United States, and countries in the Middle East. 25

34 Map of the Production Centers Batam 26 Semarang Bandung Surabaya Bali, Denpasar Jakarta

35 27

36 28

37 Sales of Kid s Wear Export The demands of Kid s and Baby s wear worldwide tend to increase, especially in the US market. For example, the Indonesian export of Baby s wear to USA which falls under category HS (Other Babies Garments and Clothing Accessories of Cotton) increased from USD 10.4 million in 2003 to USD 21.1 million in In addition to that, the Indonesian export of Other Baby s Garment which fall under category HS to USA was positively increased from USD 333,157 in 2003 to 4.498,372 in Middle East market is beginning to absorb Indonesian Babies wear, for example in 2007 Indonesian export of Other Babies Garment and Clothing Accessories of Cotton (HS ) to United Arab Emirates was amounting to USD 2,993,775 and to Saudi Arabia reached the amount of USD 345,320. In 2007 imports of Indonesian babies garment under category Other Babies Garment Knitted or Crocheted (HS 6111) by 11 countries are as follow: 1. USA 32 % 2. Other countries 19 % UK Other countries Hong Kong 8% 19% 12% 3. Hong Kong 12 % 4. UK 8 % 5. France 8 % 6. Germany 5 % 7. Italy 5 % 8. Spain 3 % 9. Japan 3 % 10. Belgium 2 % USA 11. Canada 2 % 33% Canada 2% France 8% Germany 5% Italy 5% Spain 3% Japan 3% Belgium 2% The increase has been driven by the fact that parents are more concerned about the up to date fashion for their babies and children especially in developed countries where people tend to buy more different clothes for different activities and occasions. International leading department stores and trading companies are anticipating this condition. Most of the orders made by importers are usually done one year prior to holiday seasons in western countries. As it is known, few months before December, parents make preparation and 29

38 purchase Kid s and Babies wear to decorate their children for Christmas and New Years Eve. The other reason that people buy more kid s and baby s wear during the end of the year is the tradition of sending Christmas gifts to friends and members of the family or to relatives. The fashion is customized to market requirements for instance for winter clothing the fabrics used are usually wool velvet or knitted or crocheted of cotton. While light kid s and Baby s wear are exported few months before summer time. The table below shows Indonesian exports of selected garment products in under the category of Women s and Girls as well as Men s and Boys garments. The biggest exports in 2007 are HS and HS Major sources for the exports are the provinces of West Java, Jakarta, Central Java, East Java, Bali, North Sumatra, West Sumatra, Riau, Jambi, Lampung, and East Nusa Tenggara SELECTED GARMENT PRODUCTS EXPORTED IN (KID S WEAR) NO HS Code TITLE MEN S OR BOY S SHIRTS OF COTTON NOT KNITTED OR CROSCHATED 226,075, ,801, ,688, ,164, ,012, WOMEN S OR GIRL S BLOUSES, SHIRTS OF COTTON 43,275, ,569, ,259, ,411, ,518, MEN S OR BOY S SHIRTS OF COTTON KNITTED OR CROSCHATED 85,186, ,687, ,239, ,226, ,792, WOMEN S OR GIRL S BLOUSES, SHIRTS OF OTHER FIBRES 4,011, ,001, ,446, ,483, ,422, MEN S OR BOY S SHIRTS OF WOOL OR FINE ANIMAL HAIR 7,519, ,514, ,286, ,454, ,731, WOMEN S OR GIRL S BLOUSES, KNITTED OR CROCHETED OF MAN-MADE FIBRES 45,322, ,007, ,697, ,739, ,605, MEN S OR BOY S SHIRTS OF SYNTHETIC FIBRE 63,686, ,671, ,700, ,780, ,537, MEN S OR BOY S TROUSER,BIB&BRACE OVERALL BREECHES & SHORTS OF OTH.TEX.MAT. 8,405, ,184, ,628, ,212, ,870, MEN S OR BOY S OVERCOATS,KNITTED OR CROCHETED OF WOOL/ FINE ANIMAL HAIR 4,703, ,484, , , ,042, MEN S OR BOY S OVERCOATS,CAR-COATS,CAPES,ETC. OF MAN MADE FIBRES 1,994, ,977, ,449, ,291, ,620, MEN S OR BOY S SHIRTS OF OTHER TEXTILE MATERIALS 17,719, ,701, ,916, ,893, ,879, MEN S OR BOY S SHIRTS, KNITTED OR CROCHETED OF MAN-MADE FIBRES 21,591, ,409, ,636, ,588, ,211, WOMEN S OR GIRL S TROUSER,BIB & BRACE OVER BREEC,SHORT OF WOOL/FINE ANIMALHAIR 9,605, ,858, ,972, ,819, ,111, WOMEN S OR GIRL S BLOUSES, ETC. OF WOOL OR FINE ANIMAL HAIR 10,243, ,897, ,311, ,826, ,698, OTHER MEN S OR BOY S GARMENT OF OF OTHER FIBRES 4,663, ,124, ,823, ,604, ,823, Indonesia in World Market 30 Share of Indonesia in the US market for export of Babies garment Knitted and Crocheted (HS 6111) in 2006 was about 2 percent of the total US import. China took the biggest share in the US market up to 66 percent. For the same product Indonesian share in the Hong Kong market was 3 percent. In 2006 Indonesian market shares in the US import of Babies Garment and Clothing Accessories (HS 6209) was 5 percent one step higher than India which had 4 percent.