The sports goods industry in Indonesia has seen an increase in export sales and foreign investment in recent years. The relatively stable global demand, especially in developed countries, has helped fuel the growth of the industry as the majority of sportswear products manufactured in Indonesia are exported overseas.
The market includes equipment for ball sports, adventure sports, fitness, racket sports, winter sports, and many other sports and activities.
Indonesia sports goods exports
According to data from the Ministry of Industry, the value of the country’s sports goods exports in 2016 was up 9.7% to $4.5 billion USD. This helped Indonesia climb to 6th position among top global sports goods exporters after China, Italy, Vietnam, Germany and Belgium, with a market share of 3%.
There are six major export destination countries for Indonesia’s sports goods products namely the United States, Belgium, Germany, United Kingdom, Japan, and China. The US accounts for 28.2% of Indonesia’s sports goods exports, while exports to China had doubled to 7% in 2016 due to increased demand following a 50% reduction in import tariffs.
Indonesia has been able to maintain its position as one of the leading sports goods manufacturers in Asia despite fierce competition from China and Vietnam. Most of the sports goods products manufactured in the country are for export markets. These products are typically outsourced by foreign companies that own brands such as Adidas, Nike and much more which are destined to be sold in various global markets.
Competitive advantages
- The sports goods industry have been made a priority sector by the Indonesian government as they employ nearly 3.5 million people and accounted for almost 15% of the total workforce in the manufacturing sector.
- The government through the Ministry of Industry provides incentives to companies so as to encourage the restructuring of machinery and equipment exceeding 20 years of age in order to improve the competitiveness of the sports goods industries, allowing them to invest in modern production methods.
- To further improve the Indonesian sports goods industry’s competitiveness, the government also provides an income tax facility in addition to other incentives such as expediting the licensing process of investments in the industrial zones, slashing import fees for capital goods, an interest rate cut for exporters, and introducing a fixed formula for annual wage increases.
Industry composition
- Indonesian sports goods industry is concentrated, served by more than 5,000 companies, with five leading players generating 23% of turnover.
- Foreign investors, especially from China, South Korea, and Taiwan are still interested in investing in the Indonesian sports goods industry. They generally manufacture sports apparel and footwear for global brands such as Nike and Adidas.
- Decathlon, a giant sporting goods and apparel retailer from France that has more than 1,000 stores worldwide, plans to invest $500 million USD in 2017. The company will open a sports department store which will also serve as a production base for its overseas stores.
