Innovation at the Frontier

As Indonesian footwear industry has been struggling in the last decade to cope with low prices competition in sport shoes global market, this time around we have plenty of time to reflect our past vision and mission in order to chart a smart strategy in the near future.

This US$ 1.6 billion industry with an average of 9% growth annually in the last five years, in fact, has somehow changed its attitude through Association last general session. In which in the last general session, Association has drafted a new strategy to prioritize development in non-sport shoes and SME divisions.

The new strategy is exactly right, not only considering sport shoes competition tend to be more cost oriented, where big buyers can easily move sourcing to a new location with lower production cost, further this is in line with Indonesian labors’ most versatile weapon. That is their artistic touches within their fingers what we called the art of craftsmanship.

Indonesian people are long-well known for their sophisticated art of craftsmanship. Batik patterns in garment industry and Jepara crafts in furniture industry are a few examples of such an art.

Footwear industry too can benefit from such an art. Non-sport shoe made of genuine leather is the best case for such an art to be applied in. After many sport shoe factories went bankrupt with Dong Joe and Tong Yang as the last major cases, Indonesian leather footwear industry has shown its resilience in the global competition against China and Vietnam. Not only most of them still survive, a few of them even grow very fast in the last few years.

One leather shoe company for an example, after doubling its capacity still fails to fulfill market orders, is looking for another location with 6 times wider than their current factory. European buyers flock to the factory both new and previous buyers who moved sourcing to China and Vietnam several years ago.

Surprisingly, this factory located in Tangerang which has the highest minimum wage in Indonesia, since this is part of Greater Jakarta area. It just tells us price dos not matter for many buyers, but quality does!

What they do is simple, after 3 generations, current owner and management always utilize its long experience in craftsmanship to produce high-quality for even the most difficult designs from buyers. On-time delivery is another promise they never violated with buyers. Besides regular training for current labors, factory also holds training for newcomers to guarantee their quality standard keep up with current labors.

One other leather footwear company located in West Java successfully penetrated European market through generations with sophisticated art of craftsmanship in producing good year-welted shoes; their 60 Euro shoes are still saleable at around 600 Euro in European retail markets. Meanwhile another leather footwear producer in East Java keeps growing at an average of around 20% each year.

These examples are just a few, what we can get lessons from here is self confidence in facing tough global footwear competition comes from what we can utilize from long experience in traditional leather shoe making. Ideas for innovation such as developing new designs will come up as a result of persistent work in craftsmanship in which it involves concentrated use of eyes, hand and in-depth intuition.

The reason behind this is clear, historically, Indonesian people involved with difficult designs in garment and footwear much longer than Chinese and Vietnam 30 years ago when Indonesian people already produced fancy lady shoes, Chinese were still producing not more than ‘big boss’. At the same time Indonesian already produced lady’s evening dress, Chinese were still producing ‘pajamas’ and Vietnamese were still producing ‘khaki’ a uniform worn by Vietcong and villagers.

This longer experience curve in producing fashion garment and footwear is very valuable assets proven by the trust given back to Indonesia by foreign buyers, hence all the resources upstream-downstream in the value chain must be mobilized to utilize this asset and transform it into competitive advantage shown by several companies mentioned above. Government, Association and other supporting institutions involved must develop a program in such a way that industry finally can capitalize on the art of Indonesian people craftsmanship.

Do not forget besides the first class leather footwear companies mentioned above, Indonesia has several home industry areas with full of traditional leather shoemakers such as one in Bandung (Cibaduyut) and another one in Mojokerto (East Java). If all the stakeholders pay careful attention in developing these home industry through quality and design upgrading programs followed by opening foreign market access for them, this is not impossible to have some or many of them, in the future, join the group of first class leather footwear producers and contribute to the national economic development through job creation and export growth.

Written by: Hery Kameswara

Grant Technical Advisor at SENADA Indonesia Competitiveness Program. This is personal opinion.