by Ardian Wibisono
The COVID-19 pandemic created some anomalies in the economy. As manufacturing, in general, plunged as demand lag, chief economist at Bank Mandiri Andry Asmoro found interesting data showing hobby related spending increased a lot. Andry says higher-income people were spending on bicycles, plants, and toys, although the demand flattened again in September. One of the bicycle producers that enjoyed the spike in demand is PT Roda Maju Bahagia (RMB), which is known mostly for its Element folding bike brand. Hendra (39), owner and founder of RMB, says sales in 2020 were just shy of Rp 1 trillion, a four-fold increase compared to the previous year. However, Hendra's success is not merely an overnight windfall. For the past several years, he's been building up speed to catch up with other domestic top manufacturers like Polygon and United with catchy designs and out-of-the-box marketing strategies.
"Back then, when people went to a bicycle store, they would look for the already established brand. But now, they come looking for Element," says Hendra. The bicycle business has been in Hendra's family for a long time. His grandfather owns a bike spare part shop in Medan, and his father owns a bicycle retail shop in Jakarta. Yet, Hendra's entrepreneurial journey started with buying and selling used cars when he was studying at Tarumanegara University in 2000. Thinking already making good money, he even dropped out of his study. But business has its ups and downs. When the car business dimmed, Hendra got an idea to import ride-on kids' toys and tricycle. His father gave Rp 2.5 billion for him to start with - the Rp 1.5 billion was obtained from a loan using his father's store as collateral. Only in 2008, he began importing bicycles from China and branded them with his own brand: Element.
"I thought a western brand name is more selling, but it was hard when I started," he says. "The first batch was 300 units, and it took three months before it sold out. I asked my friends to help sell my bikes in their stores, and they could pay me after they sold the bikes."
A year later, Hendra saw an exciting trend of growing folding bike demand in China. Thinking the same direction will follow in Indonesia, he bought 500 units of folding bikes to sell. He made the right decision, and the bikes sold out within an hour. As demand grew, in 2013, he started importing parts and doing his own assembling in a factory in Tangerang before manufacturing from a new factory in Kendal, Central Java, in 2018.
"We had a problem with the landlord in Tangerang. I also thought it would be cost-efficient to set up a factory in Kendal because of the lower minimum wage," he says.
Back then, Hendra bought 2.5 hectares of land, and on top of it he built a 10,000 sqm two-story factory plus a 5,000 sqm warehouse. The top floor is used for bicycle manufacturing and the ground floor is used for his other business, making wheelbarrow for the plantation and construction sector. The factory now produces about 28,000 bikes monthly, that's almost half the capacity of PT Insera Sena that produces Polygon. However, he admits the first year for business was challenging as well, and it turns out most of his customers are in Jakarta, so logistic cost compensates the savings on wages. In mid-2019, Hendra saw history repeats as the folding bike's demand trend is back in China. So, he geared up to strengthen his branding with good product design and collaboration with celebrities and other consumer brands. Unlike road bikes, mountain bikes, or even other folding bikes like Brompton, Hendra says his Ecosmo series has a wide frame that can be used as a media for branding and catchy design.
"The idea to do collaborations started with the Bike to Work community. Polygon had done it as well, but not maintained. We tried, and it went very well. Then I accidentally bumped in with Chico Jericho (owner of Kedai Filosofi Kopi café and the actor that played in the movie with the same title), and we talked. He was amused, asking why a bicycle brand wanted to be related to coffee, but the demand exploded. So, I did more collaboration with other celebrities. I want to make an impression that this is a celebrity bike brand," Hendra says.
The Brompton bike's growing popularity also inspired Hendra to create an imitation that costs a fraction of the price. The model is called the Pikes series. Hendra says it took him and his team six months to study a Brompton they bought before launching the bike's first generation. It too got a good reception from the market. Now, RMB has launched its second-generation of Pikes, which Hendra says is more fine-tuned. Hendra says the second-generation Pikes development involved bicycle communities in giving inputs on things to be fixed or improved.
Although RMB has launched many new models, it is usually hard to find the bike in stores, creating the term "ghost bike". On the ecommerce, often the bikes are sold double the original price tag. Hendra says this is also part of his marketing strategy, but the pandemic brings more risks to workers and the company if they increase production.
"Unlike other brands that introduce a small variant of models and flood the market with it, we prefer to have many models with limited production. We also see the bicycle as a lifestyle. One person could own three different models and join three different bicycle communities," Hendra says, adding that despite the high demand for his bike, RMB doesn't increase the price of the bikes. The company asks its retailers to sell at a suggested price. Still, sometimes people bought it to resell and gain profit by cornering the prices, "which is beyond our control," he says.
According to the Indonesia Bicycle Industry Association (AIPI), domestic sales in 2020 could reach 8 million units, with only half is contributed by local bicycle manufacturers. Hendra says imported products from China remain one of the biggest challenges for local producers. Still, he is confident his strategy could win the competition. Another big challenge as the demand for bicycle surge globally is the availability of components. Hendra says 70% of the bike components manufactured are imported. To deal with the condition, RMB has already begun using components from alternative brands from China.
"Shimano is the most sought brand, and everybody buys from them. We ordered the group set in September, but the delivery schedule is April. So we started using Sensah, a China brand. Customers are also familiar with the quality. It's not just us using it, other brands too. We use from the cheapest to their most expensive products. We exclusively use Sensah or mixed them with Shimano's," Hendra says.
Hendra says that the bikes using Sensah components are sold cheaper. On the ecommerce sites, Sensah components are roughly half the price of Shimano's. However, this too fits with the RMB strategy. Hendra sees that now the consumers buying the bikes have shifted to those who are more price-sensitive and have a limited budget.
This year, Hendra expects the market demand will be lower than last year's. Thus he plans to maintain production output. He also sees that the trend will shift from folding bikes to road bikes – currently, 70% of RMB sales are contributed by folding bike. However, Hendra already has many plans to sustain sales. In terms of collaboration, this year, he also plans to explore beyond celebrities and go more with other consumer brands like Sosro, Pocari Sweat, and even the Ministry of Tourism. With Tiket.com, RMB is working on a ride experience travel package. Hendra had also bought 2.1 hectares of land next to his factory to set up facilities for export. The facility will be built in the second quarter of this year. Currently, he said RMB already exports a small amount to Singapore and eyeing new markets in India and Europe where there's an anti-dumping regulation for bicycles made in China.
More Than Two Wheels
Beside bicycle company PT Roda Maju Bahagia, Hendra also owns and manages toys manufacturer PT Pangeran Maju Bahagia and wheelbarrow producer PT Cahaya Maju Bahagia. The name Maju is taken from his father's bicycle store name. While the toy business started before the bicycle, he said a friend suggested him to make wheelbarrow since it uses the same equipment to produce bikes. Hendra says the three companies' sales exceed a trillion with 60 % coming from bicycles, 30% from toys, and the rest from wheelbarrow sales. All are profitable, except for the wheelbarrow business, which is still relatively new and finding its market. Total employees for the whole group are now over 1,000 people.