Elevator market history in Indonesia

The first Elevator Brand entered Indonesian market is the first built elevator in the world--OTIS. It entered the Indonesian market in about 60’s for the development of the high rise government building was started in Jakarta, the capital city.

In early 70s, the Japanese brands started to penetrate Indonesian Market. Mitsubishi, Hitachi and Toshiba start to be installed in some government buildings in Jakarta.

As the country’s rapid growth of economics, the need of elevator and escalator came from the commercial sectors. The Korean brands then started to penetrate the market in 80’s and ruined the domination of the Japanese. 

The Korean brands was led by Goldstar (then change into LG, LG-Otis and eventually Sigma in the future) and Hyundai. Their price is lower than the Japanese. It made them to be the ruler in the commercial buildings (malls, supermarket, and department stores). Their escalators price was even much lower than the Japanese made it almost impossible for the Japanese to secure the project when they met these Korean brands in the tender.

The European Brands also tried to get the share in Indonesian Market.  Among them are Schindler, Thyssen and Koppel. They entered the market around 90’s. Schindler was the strongest European brand in the market since they supplied almost the entire moving walk for Carrefour hypermarket of which the leader in the retail industry.

The private high rise building projects in around 90’s was then become the competition among Mitsubishi,  Hitachi, Fujitec, Schindler and OTIS. They can enjoy each project they secured with the good profit margin.

In 1997 the monetary crisis hit the country which in turn led to the political crisis and forced Soeharto to put down his position as the president in 1998.  This crisis hit the infrastructure and property projects very badly.  There even some elevator contractor had to lose their money because of abandoned project. This crisis had ended the “golden age” for the Japanese, Korean and European brand. They couldn’t enjoy the good margin profit anymore due to the rapid decrease of the buying power of the Indonesian customers.

When the crisis ceased, the infrastructure and property projects started again and the demand for elevator and escalator started to rise.  Nevertheless, the buying power of the customers seemed couldn’t be as higher as before. This condition forced the existed brands to change their factory source from the original country to their China factory in order to be able to re-penetrate the market.

Sigma Elevator (Previously Goldstar and LG) which was previously supplied from Korea had to supplied from China, ThyssenKrupp (Previously Thyssen A.G.) change its source to China, Hyundai also changed from Korea to China factory, Schindler switched to China factory, whereas Mitsubishi switched to Thailand factory, Toshiba switched to Malaysia and Fujitec switched to Singapore factory. Awkwardly for Mitsubishi, there was another local contractor that supplied Mitsubishi from Shanghai. So, there were two contractors supplying Mitsubishi in Indonesian market. One contractor (the bigger and older one) supplied from Japan and Thailand and the other supplied from Shanghai.

In the period after the crisis, the market was flooded by the china made products. The contractors competed merely in term of price in order to secure the projects. The quality and even the safety sometimes had to be sacrificed. This unhealthy competition led into the malfunctions and even incidents later.

Besides the built up China made products, there were also some China OEM company penetrated the Indonesian by selling elevator parts to the local company. This condition resulted the born of some local assembled elevators. Among them are Louser, Pillar, Line (previously indolift) and Koppelindo.

In the government projects, the most stable and strongest organization is Mitsubishi. The effect of the crisis seemed didn’t hit their share too much. The join cooperation between Mitsubishi Corp. and local half government owned contractor made this happened.

The year 2000-2006 was the booming of commercial and property projects such as integrated malls, apartment and office projects. Hyundai, Schindler and Sigma dominated this sector and enjoyed the huge volume of order. The booming of commercial projects lasted until around 2008 when the US financial crisis affected the Indonesian economics. The commercial projects at the same time were oversupplied.

After 2008, the demand of elevator and escalator declined significantly. There wasn’t big commercial project as in 2000’s. The big project was only of high rice office building which was secured by Mitsubishi and Schindler. In mid 2007 the government led by Susilo bambang Yudhoyono as the president announced the plan to build 1000 towers of low cost apartment. The only elevator brand that can penetrate this market is the local ones. Louser and Line elevator shared the projects in this sector. However, this program seemed not as succeeded as planned. There were only 98 towers built until 2010 from 1000 towers targeted to be built in 2011.

The elevator market that was not affected too much by the government policy and the world economics was the private residence projects and cargo lift projects. For the cargo lifts projects eventhough they are of small quantity but often high in price and can yield good margin profit for the contractor. This because the customer of this sector (mainly factories) often requests special customized cargo lift to suit they need. Mitsubishi can enjoy this project especially from the Japanese based customers but for the other customers, local made cargo lifts often be their choice.

 For the private residence project, Mitsubishi, Schindler and Kone can gain the projects for the standard finishing ones, but for customized car finish such as full glass finished the local made suppliers often be the customers’ choice due to their reasonable price and design flexibility. One of the players in this sector is Koppelindo.

According to my knowledge, the market shares in the various sectors are as follow:

  

• Government projects (office buildings) : Mitsubishi, Toshiba, Schindler
•  Commercial projects (malls, hypermarket) : Hyundai, Sigma, Schindler
•  Hotels : Mitsubishi,  Kone, Sigma
•  High Rise Private Office Building : Mitsubishi, Schindler
•  Low-Mid rise Private Office Building : Sigma, Brilliant,Hyundai
•  High rise apartment : Thyssenkrupp, Hyundai
•  Low cost apartments : Louser, Line, Hyundai
•  Hospital projects (Bed lift) : Mitsubishi, Fujitec, Hyundai, Local brands
•  Private residence : Mitsubishi, Schindler, Kone, Otis, Koppelindo
•  Cargo lift : Mitsubishi, Louser, Koppelindo

Note : This article is based mainly on the writer’s knowledge of 5 years experience in the elevator market in Indonesia and has to be cross checked with other sources to test its accuracy.