Growth of new technology offsets the decline in old technology
The growth of the Indonesian economy continued to be weaker in 2015, which consequently affected consumer spending. Nonetheless, spending on consumer electronics improved compared to 2014 albeit with a slower decline in volume growth. The sharp decline in sales of old technologies such as feature phones, fixed lens cameras, portable media players, e-readers, and analogue TVs were mitigated by the growth of the newer technologies such as smartphones, compact system cameras, tablets, and digital TVs.
Changes in lifestyle boost demand for consumer electronics
Consumers in Indonesia are tech-savvy. This is particularly true of the younger generation aged 40 and below. The adoption of several technologies was facilitated by changing lifestyle choices such as the use of social media and Instant Messaging, which boosted the demand for smartphones.
Chinese players enter Indonesian market
In the past, most Chinese mobile phones were local brands (because many local manufacturers sourced the mobile phones from Chinese manufacturers and relabelled them). However, during the review period, an increasing number of Chinese brands were introduced directly into the market. Towards the end of 2014, Xiaomi (Xiaomi Inc) entered the Indonesian market using collaboration with both online retailers and electronic specialist retailers to sell its products. In early 2015, another Chinese brand, Infinix (by Infinix Mobility Limited) was also launched in Indonesia with three product types available. In the second half of 2015, Meizu (by Meizu Technology Co Ltd) was introduced through the launch of its M2 Note. After its successful partnership with local company Hisense Co Ltd, it also entered Indonesia directly in 2015 with its Pureshot 4G LTE smartphone.
Consumer electronics has good prospects
Given that Indonesia is the fourth most populated country in the world with a dominant share of young people, it can provide long-term growth prospects to both local and international manufacturers of consumer electronics. This is the reason for the large number of multinational companies that entered the Indonesian market in recent years. Consumer electronics will remain relevant as technology continues to evolve. People will therefore continue using the products and spending will likewise continue. Despite the convergence of technologies, which is expected to limit volume growth, tech-savvy Indonesian consumers will ensure increasing penetration in the forecast period in tandem with the growing economy. The expectation of an improved economy in the forecast period will also accelerate the growth of consumer electronics.