Indonesia is considered a market where it is not easy for Korean corporations to enter. As 87% of the population is Muslim, products must obtain halal certification, and when a particular product gains popularity, a flood of lower-priced imitations follows. Still, with a population of 280 million, an average age of 29.9, and many consumers who like Korean culture, it is a market too good to miss.
What strategies should Korean agricultural and food corporations adopt to succeed in Indonesia? ChosunBiz spoke with local fresh and food buyers and distributors, the Korea Agro-Fisheries & Food Trade Corporation (aT), and Korea Trade-Investment Promotion Agency (KOTRA) officials to hear their answers.
① "Halal certification is a must"
Indonesia is the largest Muslim-majority country as a single nation. There is also a pronounced tendency to prefer "halal" products permitted under Islamic law. Product categories subject to halal certification are varied, including food and beverages, cosmetics, traditional medicines, pharmaceuticals, and health supplements.
On top of that, starting in October next year, the Indonesian government plans to tighten its halal certification system for imported foods. Currently, non-halal products that do not contain pork or alcohol are on the same shelves as halal products, but going forward, the shelves will be completely separated. Exports are possible even without certification, but points of contact with consumers will decrease.
Lee Kyung-su, Director General at "Mugunghwa Distribution," a Korean mart in Indonesia, said, "What Indonesian consumers value most is whether it is a 'halal product,'" adding, "Among Muslims, there are even people who are reluctant to pass by shelves with products that lack halal certification.
② "Maintain top-tier quality"
Korean fruit is seen as "premium" because it is high in sugar content and superior in quality compared with fruit from other countries. Prices are also higher. At a food mart in Plaza Indonesia, the price of Korean pears (3,600 won) was three times that of Chinese pears, and Korean grapes (26,000 won) were sold at twice the price of Chinese grapes.
Ridwan Ngasinur, head of "PT Buah Lestari," an Indonesian fresh food importer, said, "It is important for Korean fruit and foods to stick to a premium strategy," adding, "If products that are not top-tier are distributed, they will not show a big difference from Chinese products and could damage the 'Korean premium' image."
③ "Put more effort into packaging"
They also viewed it as important for Korean products to have premium packaging. At a local mart, a box of five Korean peaches priced at 100,000 won came in a plain box, while Chinese peaches, even at a lower price, had premium packaging with flower and bird illustrations.
Ridwan Ngasinur said, "Packaging for Korean fruit is ordinary and fails to catch the eye," adding, "China changes packaging within a week upon request for replacement, but Korea does not change it even after seven years of pointing it out."
④ "Make it clear that it is a Korean product"
Buyers agreed, saying, "It must be made clear that it is Korean-made." This is because local consumers perceive Korean products as better than domestic or Chinese products. GNF head Lim Jun-hwan said, "It should be avoided to bring in packaging in the local language or products intended for exports to the Chinese-speaking market as is," and added, "Consumers who have experienced Korea or are familiar with Korean foods prefer Korean flavors." KOTRA Deputy Director Yoon Byung-woo also noted, "There are even cases where local corporations include Hangul to make products look 'Korean-made.' Korean products should emphasize their original status."
☞ Joint project: Ministry of Agriculture, Food and Rural Affairs, Korea Rural Economic Institute (KREI), ChosunBiz