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Why Indonesia holds such appeal for businesses looking to manufacture outside of China

Indonesia has caught the attention of entrepreneurs seeking a new high-end manufacturing base where they can tap into traditional know-how. Here, we meet Philippe Delaisse, co-founder of one of the nation’s pioneers, Ethnicraft.

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Spanning 12 palm-leaf volumes of text and illustrations, the Serat Centhini manuscript is one of the treasures of Indonesian literature. Written in the early 19th century under the supervision of the crown prince of Surakarta, it is both a story and an encyclopaedia in which characters wander the island of Java, learning about the world. 

Within the pages – alongside advice on Islamic practice, how to have great sex and farming – are detailed instructions for making use of teak trees. The number of branches, the surroundings of the tree, the presence of flowers and animals making their home in its trunk all influence what the wood is best used for, be it a column in a house to bring family harmony, the frame of a mosque to bring calm or a storage chest to bring wealth.

Ethnicraft workers in Tegal
Ethnicraft workers in Tegal

Today Indonesia is one of the world’s biggest teak producers. The timber is renowned for the beauty of its colour and grain, and the natural oil that helps to protect it from termites and the weather. These elements form the core of Philippe Delaisse’s business, Ethnicraft. All of its teak is sourced from responsibly and carefully managed forests. “The way that we win and ensure we’re competitive here is by embracing the raw materials and craftsmanship,” he says.

Enchanted by beautiful teak objects he came across while travelling in Bali in 1995, Delaisse began to export antiques and local crafts, before quickly jumping into production. He started in 1996 in Rembang, East Java, where he found skilled woodworkers willing to work with recycled teak taken from old buildings. “They used very basic tools and a lot of great craftsmen were working barefoot,” says Delaisse. From this emerged a series of beautiful teak cabinets and, piece by piece, the rest of Ethnicraft, the business that he and his business partner, Benoit Loos, have built.Trade wars and the long legacy of the coronavirus pandemic have increasingly pushed companies making products in Asia to explore manufacturing options outside China. But so far, Indonesia has struggled to get a look in: complex trade barriers, tricky labour markets and corruption meant that many companies went elsewhere. 

Planks cure in the lumberyard at Ethnicraft
Planks cure in the lumberyard

Buffeted by the current trade war, the government is signalling reform. If it is serious, Indonesia has a lot to offer: a large and young labour force, a wealth of natural resources and pockets of deep expertise in various industries and crafts, of which woodworking is one. In a country where the previous president, Joko Widodo, built his fortune selling chairs, sofas and beds to the world, the hope is that others will follow.

Ethnicraft is showing what’s possible. Its main operations hub of some 1,600 workers is in the coastal town of Tegal. The setup here might feature high-precision machines, sturdy safety shoes and modern production lines but the dedication to material and craft remains rooted in tradition. The process always begins with the wood. Ethnicraft buyers scour government-owned teak plantations across Java for the best logs; competition is fierce, with rivals trying to poach the choice specimens. Transported and stacked in the lumber yard, each log is tagged with a QR code with which the company can trace the exact provenance of the tree down to a few metres, ensuring both sustainable sourcing and careful inventory management.

Next the logs need to cure – dry out – until they’re ready to be worked on. With teak, this is traditionally done by simply leaving the fresh lumber out in the sun for about three to four months. Once it is sawn into planks, it then dries for another month before spending a final few weeks in a vast oven. Other woods such as jackfruit and mahogany have their own timelines. The process is painstaking because the products being made demand precision. Wood “breathes”, expanding and contracting fractionally – and planks with different moisture levels will do so in their own ways. For precise work, a moisture difference of more than 1 per cent is unacceptable. 

Then comes the craft. A few hundred kilometres away in Jepara, a workshop of about 600 staff produces furniture for some of Europe’s top luxury brands. Along this stretch of northern coast below the slopes of Mount Muria, woodworking skills are particularly sought after.Under a canopy of wooden beams, the process unfolds as the wood moves from turners to carvers and then to woodworkers, before being polished and varnished several times over. In their hands, simple planks, rough to the touch, are turned into exquisite tea boxes, sinuous ornaments and elegant furniture with a texture like heavy silk. 

And it is very much hands doing the work. The processes here involve minimal modern technology. While a few high-precision machines have been installed, sheer skill gives the workers an uncanny exactness in their movements. At one bench Marsudi leans over an exquisite panel of wood that will become a luxury chess set. He has worked here for 24 years and the work is in his blood. “My kid also works here as a carpenter,” he says.

Philippe Delaisse poses at a workshop in Jepara
Philippe Delaisse poses at a workshop in Jepara

This tradition of generational craft is important, says Marsudi. “It helps a lot because of the skill that is needed; we’re working at a scale that is calculated down to the millimetre.” Everyone who enters the workshop must pass a rigorous test. But when such high levels of skill are required, growing up living and breathing wood helps. As we walk away, Marsudi bends over a gameboard that he is shaping. “He’s supposed to be a supervisor,” says Delaisse wryly. “But he just can’t stay away from doing some of the work himself.”

This ingrained culture and the pool of expert labour that it sustains is attracting many brands to manufacture furniture in Indonesia. Despite a rocky few years in the global economy, the furniture industry remains strong. International and local entrepreneurs and businesses alike jostle for production capacity. This includes Giovanni Gallizio, who operates another furniture factory in Jepara, producing to order for clients globally. “The manual dexterity and skill of the people here is outstanding,” he says. “There are few places in the world that have anything similar.”

China and Vietnam have reputations for being more efficient, says Gallizio, and that attracts many producers focusing on the low to middle end of the market. But he thinks that few manufacturers there possess the skills to match the sort of high-end work that can be produced in Indonesia’s teak heartlands. While Jepara is the zenith, skilled workers are present across Java. Back in Tegal, Delaisse’s other factory hums with activity: not just a world of sawdust, glues and varnishes but also one of metalworking, glass staining, stucco spreading and upholstery. “I’ve worked across the world and I’ve never seen a factory like this before,” says Steve Hauters, general factory manager, with a touch of pride.

The quest to ensure quality at every stage means that as the product line has evolved – from elegant chairs in plain wood to minimalist modular sofas and elaborately patterned trays – the number of processes performed in house has grown too. From planks to pillowcases to packaging, everything is checked and rechecked at 65 quality-control stations. Such practices fly in the face of much received wisdom about how to do business: in the name of efficiency, the usual advice is to specialise. But Delaisse says that his philosophy is that the product is everything, ahead of concerns about efficiency or marketing. “If you have an interesting product, do not spend too many resources on sales. The world is a very big place. Customers will find you.”

Other companies might come to discover the virtues of doing more in-house too. “I think futurewise, a vertically integrated brand is very valuable,” Delaisse says. Control over the process gives a wealth of data to analyse. And, in a world where fashion trends move fast, it lets companies experiment with greater ease.

The beauty of the wood is visible on display

The restless experimentation continues. In Tegal production of a new line of Morpho furniture for the music festival Tomorrowland is taking full advantage of the factory’s ability to combine wood, fabrics and metals in elegant designs. Back in Jepara, the firm has a new factory producing micro-cement. Spread it over foam and fibre glass, and you get a smoothly attractive and deceptively light stone-like slab that’s perfect for tabletops.

Still, the older traditions remain. Decorative woodcarving – one of Java’s most appealing arts that adds grace notes to mundane objects such as doors, window shutters and benches – is seen throughout the Jepara workshop. A coffee table is chiselled with irregular lines that ripple before the eye. Exquisitely patterned cabinets are making a splash in the Chinese market. And a series of elegant one-off pieces, each unique in its design and patterning, waits quietly for the right customer to find them.

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