While Apple grapples with an Indonesian sales ban related to domestic production requirements, Huawei spinoff Honor has announced its plans to launch smartphone sales in the country by the end of March.
This move marks the latest expansion by a Chinese company into a market that has become increasingly competitive and has presented challenges for Apple’s newest iPhone 16.
Domestic production requirements keep Apple out
Indonesia has mandated that 40% of smartphone components sold in the country must be domestically sourced.
This requirement has thus far prevented Apple from selling its latest iPhone in the market. Meanwhile, Apple is reportedly in negotiations for a $1 billion investment, highlighting the significance of the Indonesian market to the tech giant.
Honor enters with a range of devices
Honor, having already established a local presence with an office in Indonesia, has partnered with a local manufacturer.
The company’s president of South Pacific operations, Justin Li, told reporters last week that a folding phone will be among Honor’s initial offerings, with a total of 10 products in the mid- to high-end segment.
Honor aims to expand its product portfolio to approximately 30 devices, including phones and tablets, in Indonesia by the end of the year.
A promising market driven by economic growth
“Although 80% of the market is dominated by devices priced under $200, as Southeast Asia’s largest and fastest-growing economy, Indonesia presents immense potential for long-term growth,” stated Canalys analyst Chiew Le Xuan, in an email to CNBC.
Chiew also highlighted the country’s importance as a strategic regional hub, noting that Indonesia accounts for 35% of smartphone shipments in Southeast Asia.
Indonesia’s rapidly growing middle class and accelerating economic growth make it an attractive market for smartphone manufacturers.
Chinese brands dominate Indonesia’s smartphone market
As of November, Oppo, Xiaomi, and Transsion, all based in China, held the top three positions in Indonesia by smartphone shipments, according to Canalys.
Oppo recently held the global launch for its flagship Find X8 phone in Indonesia, where the company also has a factory, emphasizing the strategic importance of the market.
Samsung ranked fourth in Indonesia with a 16% market share, tying with Vivo, another Chinese brand.
In contrast, just under 8% of Apple’s sales come from the Asia-Pacific region, excluding China and Japan.
Honor confident in its competitive edge
Li stated that Honor’s decision to enter Indonesia was independent of Apple’s situation, emphasizing the company’s confidence in its ability to compete.
He also mentioned that Honor had been observing the Indonesian market for several years before doubling down on expansion efforts in the last half year.
Li declined to share a current breakdown of Indonesian to Chinese staff, but did say that Honor is still hiring in the country and aims for a predominately local staff in the future.
Honor plans to open at least 10 of its own stores in Indonesia this year, in addition to selling through a local retailer.
Honor’s global strategy and independence
Outside of China, Honor’s primary markets are in Europe and parts of Southeast Asia, and its phones are not directly sold in the US.
The company claimed that more than half of its sales came from outside China for the first time in December.
Honor, which is planning to go public, was spun off from Chinese telecommunications giant Huawei in November 2020, following sanctions on the parent company in the US.
Huawei has stated that it does not hold any shares in Honor or have any involvement in its business decisions.
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