May 28, 2015

Topre's Indonesian jvc kicks off production of cold containers

Automotive part/refrigerated vehicle manufacturing giant Topre Corp. (led by its president, Shinichiro Uchigasaki) has recently established a joint venture company (jvc) in Jakarta, Indonesia for the purpose of manufacturing and selling refrigeration equipment and refrigerated containers. The new company, which represents the first foreign-funded frozen/refrigerated vehicle manufacturer's foray into Indonesia, entered full-fledged production this month. Demand for temperature-controlled logistics services for food products and other goods in Indonesia is growing owing to such factors as the rise in the country's income levels and the subsequent changes in diet among its people. Now by releasing Japan-quality temperature-controlled vehicles to the market while providing consulting services to logistics firms and other entities on such matters as boosting loading ratio, Topre aims to support the creation of a cold chain in Indonesia.

The new company PT. Topre Refrigerator Indonesia has its headquarters and factory in Tangerang, located west of Jakarta. It has a capital of $500,000, 60% of which will be put in by Topre and 40% by PT. Mitra Toyotaka Indonesia, the Indonesian subsidiary of Toyotaka Sangyo Co. that is engaged in the production of pallets for automotive parts and truck loading platforms. Masato Inaba, who used to be the head of overseas business development under Topre's refrigerated equipment division, has assumed the role of president of the jvc.

Japanese-affiliated specialized vehicle manufacturers have been making a foray into and manufacturing frozen/refrigerated vehicles and other specialized vehicles in Thailand and other countries in Southeast Asia. However, they generally manufacture the body parts only, as many of them procure the refrigeration units from external sources.

In an interview with Inaba, he talked to Daily Cargo about the target of the establishment of the new company, saying that, "The market for controlled-temperature logistics in Southeast Asia is steadily growing. The patron base in Indonesia has not grown as much as that of Thailand, but its future growth is the most anticipated in the ASEAN region, including its population. Being the first foreign investment (temperature-controlled vehicle manufacturer) to make a foray into Indonesia, we will reap the first-mover advantage," and "It is our work to deliver 'temperature' to customers and for that end, we needed to consistently provide both (refrigeration equipment and refrigerated containers) in the same way as we do in Japan." Topre established an office in Taiwan in 2012 and engaged in the export sale of refrigeration units, but the Indonesian subsidiary will mark the first time it has created a coherent production/sales system for refrigeration units/refrigerated containers.

The new company leased space inside the factory of the local subsidiary of Toyotaka and began production there. The first vehicle has already been completed in March and the truck manufacturer has kicked off the promotion of the said vehicle. The company will have an annual production capacity of about 1,000 units of the 2-ton trucks. It is projected to produce 200 units in its first fiscal year.
The jvc will target truck manufacturers and logistics firms. Indonesia's automobile market is dominated by Japanese-affiliated makers with a share of 90% of the total market, and Topre will partner with three Japanese-affiliated truck manufacturers, who have moved to the local site and with whom it has deep relations in Japan, in the area of sales/marketing.

Further, there are numerous regulations on foreign investments in the Indonesia's logistics segment, so only a few companies get to venture into controlled-temperature logistics there even among Japanese-affiliated entities. With regard to shippers, local conglomerates that hold solid business foundations generally rely on their own logistics companies. With Topre, it aims to approach a wide array of logistics enterprises regardless of Japanese or foreign capitalization and local shipper affiliation.

Inaba discussed Topre's sales strategy, claiming that, "There is still a low level of awareness about cold chain in the country, so we need to mount an awareness campaign. Even if we talked about simply providing high-quality automobiles, we will not win in the competition with low-cost local enterprises. We will offer customers with proposals on logistics rationalization through the enhancement of loading ratio and modification of delivery routes, and at the same time, sell them the appropriate temperature-controlled vehicles."

The sale of automobiles in Indonesia is also affected by the plummeting prices of resources, with automobile sales in the country for the whole of 2015 projected to contract by 10% from the previous year to around 1.1 million units. Meanwhile, the volume of refrigerated vehicles being sold in the country is steadily rising, so truck manufacturers are also exerting effort toward sales. Inaba projects that, "At the very least, the market will steadily grow until 2018, when the Asian Games will be held in Jakarta."

Topre is thinking of transforming its Indonesian base into its hub factory in the ASEAN in anticipation of the AEC at the end of this year. While the demand for temperature-controlled logistics is expanding among Southeast Asian countries in the same way as Indonesia, they are gripped by the difficulty in securing the appropriate vehicles. Topre has launched into the development of its distributor network in the region. With the expectation that the demand will be strong in Thailand, Malaysia, Vietnam and other countries where Japanese-affiliated companies continue to make a foray into the fields of food production, dining and distribution, Topre hopes to shift its expansion in the ASEAN region to high gear after sales in Indonesia gets on track.

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