Bali VS Jakarta: Know Your Market

Indonesia, having more than a population of 250 million people, is a vast market. Although the archipelago spreads over 17 thousands of islands, the majority of the economic activities are made in Bali and Java. Running a successful business on one or the other island means being aware of the important distinctions between the two islands.

Bali and Jakarta – Two Different Worlds

Jakarta or Bali is what most of the companies and individuals chose to head after they have decided on entering the Indonesian market.

Jakarta, the capital city, is located in the western part of Java, and it is where authorities, government offices are housed in. Therefore, it is a natural headquarter for various international companies.

On the contrary, the island of Bali is a paradise of holidaymakers’ and everything revolves around tourism. The big international companies are present here too, but, besides that, Bali has recently become a significant incubator for startups.

Although it might be tricky to compare the world’s most populous island, it is home to over 140 million consumers. With its relatively tiny neighbour, we will try to discover pros and cons of both places.

Domestic Consumers (Bali VS Jakarta: Know Your Market - Greenhouse)

Domestic Consumers

Getting familiar with the domestic market is what everyone needs to do when targeting potential buyers in Java. The island consists of mostly Moslems, and to some extent, conservative population differs greatly from the market preferences of the western. For example, acquiring halal certification is vital for many businesses in order to become competitive in some food processing industry areas.

In addition to that, all new businesses should consider the aspects of the socio-demographic as well. Due to a significant disparity in income levels between regions of Indonesia, the offer must reflect the targeted groups’ purchasing power.

As per 2016, a relatively young population with a median age of 28 years old, also requires applying slightly different marketing strategy than in older consumer groups of many western countries. In order to overcome all of the pitfalls, having a quality market analysis at your disposal is crucial before a strategic decision is taken.

Foreign Consumers (Bali VS Jakarta: Know Your Market - Greenhouse)

Foreign Consumers

On the other hand, both locals and foreigners created the demand in Bali as they are more promising in terms of its economic power. However, the expatriates and tourists form two entirely different sub-categories when it comes to their motivation and needs.

The industry of tourism has been around for a couple of decades now. Businesses that tried to get their share of it found themselves in a highly competitive environment. Therefore, it might be tough to set up a brand new company. Again, a collaboration with local partners and distributors is what many entrepreneurs chose instead. Despite the obligation to secure registration of the product in several industries, penetrating the market is easier that way.

Large Companies (Bali VS Jakarta: Know Your Market - Greenhouse)

Large Companies

Jakarta, the commercial and financial centre of Java, is the ground for big players. Any well-established companies coming into the country will most likely set up in the capital city for its main branch for a range of reasons.

It is a fast developing city with a market that is huge, every day, new opportunities arise. Services such as project management, auditing, accounting,  payroll processing and HR in general, could be easily outsourced. Indispensable in the fast-changing and complex Indonesian bureaucratic and regulatory environment is also widely available.

Small Businesses and Sole Entrepreneurs (Bali VS Jakarta: Know Your Market - Greenhouse)

Small Businesses and Sole Entrepreneurs

The densely populated island of Java with the mentioned pros of doing business in the Jakarta megapolis do not work for everyone though. Prices and rents tend to be high, and high, medium and small-size companies without a turnover that’s sufficient could hardly benefit from the consumers’ large base.

A safer choice in terms of funding for sole entrepreneurs and small firms without a well-established product or those who came to the country with a brand new idea would be Bali.

Bali and Java, even though they are located in the same country, have a remarkably different environment of businesses. Therefore, businesses should target it differently.

 

Also Read: The Good, the Bad and the Ugly of Running Startups in Indonesia

 

The original article was published on Cekindos blog that is available here.