Sanyang Moves into Indonesia’s Fast Lane

As dusk settles, the ring roads of Jakarta become nearly indistinguishable from parking lots. Vehicles creep forward as drivers grit their teeth and sit through the hassle. Meanwhile motorcycle riders sporting brightly colored helmets weave through the snarled-up traffic as they head home from work.

Every day, tens of thousands of people commute between Jakarta’s suburbs and the city center. While even the sight of the traffic jams that result is enough to give one a headache, to motor­cycle manufacturers the roads appear paved with gold.

Sanyang Industry struck gold in 2012 by promoting high-priced two-wheelers. Pictured here is David Wu, head of Sanyang’s Indonesian subsidiary.

After successfully breaking into the Vietnamese market in the 1990s, in 2003 Sanyang turned its attention to Indonesia, the world’s third biggest bike market. Today, after years of effort, the company finds itself still mired in cultivating that market.

“Breaking into Indonesia has been harder than we ever imagined,” sighs David Wu, head of San­yang’s Indonesian subsidiary, who has been there since the beginning.

Having already conquered the Taiwanese scooter market, San­yang had thought it would be a simple matter to take on Indonesia. It was only after getting deep into the market that Wu found that “Made in Taiwan” didn’t have the cachet the company had imagined.

To make matters worse, the big three of Honda, Yamaha, and Suzuki had already been in Indonesia for 20–30 years, had acquired some 90% of the market, and had practically stitched up the sales channels.

Lacking name recognition in Indonesia, consumers there mistook San­yang’s SYM brand for a cheap mainland Chinese one.

Wu explains that the company first tried taking its lead from Honda and Yamaha, pricing their own motorcycles at the usual 1.2 million rupiah (approx. NT$36,000). Then they tried lowering those prices by 10–20%. However, they were still undercut by the cheap Chinese brands seen everywhere.

Even in terms of the vehicles themselves, San­yang had overlooked differences in consumer culture between Taiwan and Indonesia.

Wu explains that the company figured that the scooters that were so popular in Taiwan should sell well in Indonesia. But they soon found out that full-size motorcycles accounted for some 60% of the Indonesian market, and consumers had no interest in scooters.

And so the company had to change tack, bringing in motor­cycles and making a few cosmetic alterations—lengthening the shells, shrinking the bodies, and creating color schemes that would appeal locally. They also added larger wheels to handle the potholes that are so common on Indonesian roads.

Wu explains that Indonesia has a lackluster public transportation system, so commuters need to rely on vehicles of their own. But at NT$20–30,000, motorcycles are out of the reach of many. As a result, consumers are prepared to grit their teeth and agree to a whopping 20% interest rate to buy a bike on credit.

In the early days, to establish relationships with finance companies and broaden its sales channels, San­yang signed fairly lax agreements promising that should a borrower be unable to pay, San­yang would take on the bad debt and buy back the vehicle.

What they hadn’t bargained with was that borrowing money in Indonesia is not like in Taiwan. In Indonesia, a borrower can, without any kind of supporting evidence, simply refuse to pay back the money, leaving the creditor to take back the vehicle and take on the bad debt. At the worst point, this left San­yang buying back 20 to 30 bikes a month.

Having learned his lesson the hard way, Wu chose not to rush into anything or sign any similarly “unfair” agreements just to open up more sales channels.

Over many hard years, San­yang has continued to work on making inroads in Sumatra, Su­ra­baya, and Kota Medan, while relying on cutting back personnel to keep expenses down.

Then, in 2009, Wu smelled an opportunity in the high-end market and began looking at the feasibility of moving into that market segment.

In the middle of 2012, Sanyang started importing a small number of high-priced, high-capacity, boldly designed motor­cycles. In the next few months, the company at last discovered a receptive audience.

Despite making no big marketing push, Wu found himself fielding calls from customers who would place orders for bikes between Rp35 million and Rp150 million (NT$100–300,000).

Where in the past San­yang had faced problems establishing cooperation with local finance companies, now they were safely avoiding the risk of bad credit thanks to the tendency of these better-off customers to pay cash.

Seeing how the high-end vehicle market was growing, Wu decided to continue using it to distinguish San­yang’s bikes and to go after the top level of customers.

Two years ago, Sanyang began working with the Taiwan Trade Center Jakarta to boost promotion of Taiwanese luxury goods. At the same time, San­yang started setting up display spaces in department stores and reaching out to motorcycle clubs to build word of mouth.

“Once we had become a fixture in the high-end market, we could start using that to prove to Indonesian consumers that San­yang really is a world-class company,” says Wu.

After ten years of hard slog, in 2013 Sanyang Industry finally found a ray of hope. Now the company sells almost 100 high-end vehicles a month in Indonesia and is moving into the black. In 2014 they expect to sell a total of 5,000 bikes.

Standing in the company’s massive plant, David Wu looks out over the operations and remarks optimistically on how the place is about to get much busier. “Building the SYM brand in Indonesia has been like raising a child. In those first three years, we were more concerned with making sure it was healthy and secure. But now it’s time to start growing up.”