Editor's Note:

Sino-Indonesian trade goes back centuries, but is the current relationship between the two balanced? How does it affect popular feelings on both sides?  Scholars discussed these questions at a recent seminar jointly held by the Indonesian embassy in Beijing and Antara News Agency.

Breaking up Chinese markets

Eddy Prabowo Witanto, a scholar on Chinese Indonesian affairs at School of Asian and African Studies, Beijing Foreign Studies University

Since 1990 when bilateral relations were normalized, and especially after the implementation of the China-ASEAN Free Trade Area in 2010, trade relations between China and Indonesia has maintained the momentum of growth.

Indonesia mainly exports raw materials, primarily natural resource products, and China exports manufactures and consumer goods. This pattern has already become a fixed, long-lasting one.

As the most populous country in the world, China is attracting a lot of foreign manufacturers competing to enter the market.

Especially after 2000 when the growth of the middle class in large cities increased rapidly, China has been the center of world attention. With a population of 1.3 billion people, even 1 percent of the consumption would be very profitable to Indonesia.

Up at this stage, actual trade has grown at a very stable and mutually beneficial rate. But besides basic materials, what actual needs of the Chinese population can be met by Indonesia?

When Indonesia tried to seek new opportunities in the retail sector to penetrate the Chinese market, problems began to arise.

Despite having a very large population, it is actually not easy to penetrate the Chinese market in terms of retail trade, given that China is not a single market or a solid one. Usually Chinese entrepreneurs map the population into several major sections based on territoriality.

Geographic characteristics, combined with elements including culture, customs and social level, make up the difference from one area to another. Dividing up the areas might be really easy, but understanding all the characteristics and changes extremely difficult, especially when we want to understand what exactly Chinese consumers want.

I arrived in Beijing in 2005, and still live here. My first encounter with Indonesian products occurred at the Xiamen airport in my first year in China. The second encounter came around 2006 and the third encounter was between 2006 and 2008.

However, Indonesia products have never arrived in China massively and systematically.

Market penetration from one country to another can be measured by their acceptability among the local residents, and the level of acceptability can be evidenced by the presence and availability of the product in the local market. But the current reality is that Chinese people know little about Indonesian brands and Indonesian retail goods are rare.

The total trade volume is not low between China and Indonesia. However, we cannot judge the trade relationship between the two merely by the overall numbers. China seems to have exported all kinds of made-in-China products to Indonesia, while Indonesia is still focusing on exporting natural items such as bananas.

This calls for attention from both sides, or it will undermine the bilateral relationship in the long run.

I believe that if we precisely learn the actual demand of Chinese people, China's huge market will eventually open its door to Indonesia. However, to achieve this goal, we have also to adjust ourselves and try to learn better about Chinese behavioral characteristics. Our government is expected to play a role in this process.

Localization key

Hu Shaojing, director of public affairs, PT ZTE Indonesia

As the largest economy in ASEAN, Indonesia, which has a population of 250 million, has an eye-catching appeal for Chinese enterprises.

The emerging market of Indonesia has drawn tremendous funds from the Chinese government and Chinese banks. Since both China and Indonesia are gaining momentum, there is no reason for Chinese enterprises not to have confidence in Indonesian market.

Besides, more than 7 million ethnic Chinese live in Indonesia, lending the country a strong cultural inclusiveness. This will help Chinese enterprises to take roots in their communities.

However, these promising prospects do not eliminate the existing problems between China and Indonesia. The economic disparity between the two countries gives China a dominant position in Sino-Indonesian economic exchange.

Chinese enterprises are going through a surge of industrialization. By taking advantage of capital and manpower, China's production is second to none.

The prevalence of Chinese-made products is not that surprising, as they are common in other countries too. However, there is a growing discontent in Indonesia that made-in-China products can be seen everywhere in Indonesia, but Indonesian goods are rarely seen in China.

The imbalance leaves both Chinese and Indonesian enterprises space to reconsider their development strategies.

As for Chinese enterprises who have been setting profits as their sole priority, it is high time that they acquire a sense of belonging to Indonesia.

It is important that Chinese enterprises should realize the need to localize their companies by putting more efforts in optimizing brand and quality, cultivating local talents, conserving local environment, and providing more employments.

A sustainable pattern will produce long-term dividends, benefiting both Chinese enterprises and Indonesian society. Localized business should be prioritized so that they can realize a sustainable development by taking into account both corporate interests and social recognition.

On the other hand, it is necessary for Indonesian enterprises to recognize their position in economic exchanges with China.

For them, striving to transform their production from low end to high end is what really matters.

In fact, just like the phase that China went through decades ago, Indonesia is in dire need of capital and technology, which can only be acquired by trading raw materials. This is a critical stage for Indonesian enterprises to make the most of this opportunity, raise capital and develop their intellectual resources.

In order to build and keep a reciprocal relationship between China and Indonesia, both sides should face the unbalance and commit themselves to future progress and cooperation.

As developing countries, both of them are supposed to establish their core competitiveness in trade.

It is believed that within the Sino-Indonesian strategic partnership, the only one so far China has signed with a specific Southeast Asian country, both parties can build a bright future together.