A Case for Producer: Low Quality Products

A Case for Producer
Kemarin baru saja bertemu dengan teman lama di sebuah restoran di Surabaya. Setelah perbincangan nostalgia, kami pun berdiskusi mengenai barang2 produksi Indonesia. Satu pihak mengatakan bahwa barang2 Indonesia sulit bersaing secara global karena mutu yang tidak dijaga dan kalah dengan barang2 luar negeri. Mentalitas produsen Indonesia yang cepat puas sering kali menjadi penghambat untuk berkreasi maju dan bersaing di pentas yang lebih besar. Di forum ini aku sebagai produsen sepatu Indonesia ingin memberikan pendapat dari sudut pandang produsen maupun juga sudut pandang sebagai pengamat ekonomi makro.
Sebagai produsen kita hanya memproduksi suatu barang yang bisa laku dijual alias yang ada marketnya. Kita tidak memproduksi barang berdasarkan idealisme untuk menghasilkan produk kualitas terbaik tapi kemudian tidak laku di pasaran. Berhubung kebanyakan produsen Indonesia adalah padat karya (mengandalkan jumlah pekerja daripada teknologi tinggi) karena keterbatasan dana tentunya, maka barang2 yang dihasilkan secara kuantitas dan cost efficiency kalah dengan produsen kelas dunia. Tapi itu bukan alasan untuk menghasilkan barang dengan mutu rendah kan?
Betul, tetapi alasan tersebut masih separuh dari situasi sebenarnya. Separuh yang lain harus dilihat dari sisi konsumen. Dari sisi konsumen sendiri kebanyakan orang Indonesia tidak bisa membeli barang kualitas tinggi yang pastinya dihargai lebih mahal (you get what you pay). Situasi ini berbeda dengan negara2 maju yang mana kebanyakan daya belinya jauh lebih kuat sehingga memiliki privilege untuk membeli barang2 berkualitas. Maka dengan situasi demikian, produsen yang kalah secara efiesiensi cost dan konsumen yang kurang kuat daya belinya bersinergi untuk menciptakan situasi yang ada seperti sekarang, yaitu barang dengan bermutu menengah sampai rendah tapi mampu dijangkau oleh orang kebanyakan di Indonesia.
Dari segi ekonom, sangatlah aneh untuk menyalahkan produsen dalam hal rendahnya mutu. Sekali lagi produsen hanyalah memfasilitasi permintaan pasar. Pasar Indonesia yang lebih dominan dengan daya beli menengah ke bawah otomatis direspon oleh produsen dengan menghasilkan barang dengan mutu serupa. Jadi bila menginginkan barang Indonesia meningkat mutunya maka yang harus diubah adalah dari konsumennya. Bila konsumen bergerak seleranya ke arah barang2 bermutu tinggi, maka sudah pasti produsen yang bisanya cuman menghasilkan mutu rendah akan gulung tikar dengan sendirinya dan yang menjaga mutunya tetap bisa eksis. Itulah hukum pasar bebas.
Suatu dilema memang bisa terjadi, bahkan di negara maju seperti Amerika sekalipun. Konsumen Amerika yang daya belinya relatif kuat sekalipun pasti juga menginginkan harga murah tapi kualitas mahal, mana ada sih orang yang rela membayar lebih mahal untuk barang yang sama bila bisa mendapatkan yang lebih murah. Nah, persaingan yang sangat ketat membuat produsen memikir otak dan mencari kreativitas untuk merespon permintaan pasar tersebut. Terjadilah fenomena yang sekarang ini terkenal dengan nama outsourcing (pekerjaan produksi diekspor ke luar negeri, biasanya ke negara berkembang atau miskin dimana harga labor lebih murah) untuk menekan production cost. Apakah itu menjadi solusi ideal? Ternyata tidak juga karena sekarang banyak juga rakyat Amerika yang berteriak memprotes bahwa banyak lapangan kerja mereka dipindahkan ke Meksiko atau negara berkembang lain, atau juga ada dari komisi perlindungan anak yang protes bahwa outsource itu mempekerjakan anak di bawah umur sehingga bisa termasuk child abuse. Nah, padahal orang2 yang protes itu juga yang menekan produsen untuk mencari alternatif kreatif tersebut. Maunya barang berkualitas tinggi tapi bayarnya selevel kaki lima....ya repot.
Jadi sekali lagi produsen hanya merespon konsumen, produsen yang tidak bisa merespon trend perubahan konsumen pasti akan gulung tikar dan digantikan dengan produsen yang bisa menangkap momen tersebut. Selama konsumer tidak mau membayar harga yang pantas untuk kualitas yang seharusnya, maka produsen akan mencari cara-cara kreatif lain. Oleh sebab itu aku selalu menghargai orang2 yang mau memegang prinsipnya walaupun itu berefek ke kantongnya. Orang2 yang anti beli barang bajakan misalnya akan memberikan signal pada produsen barang bajakan untuk berhenti melakukan degradasi kualitas seperti itu. Jadi sebelum kita mengutuki para produsen yang menghasilkan mutu rendah sehingga imej barang Indonesia itu murahan atau mengutuki para pembajak, marilah kita bertanya pada diri sendiri konsumen macam apakah aku ini, produsen macam apakah yang aku sebenarnya support.

Facing The Giants

It's been two months since I moved back to Indonesia. I joined my dad's company, a shoe company. We are practically still a small fry compare to other local brands, let alone giant shoemakers like Nike or Adidas. Our brand is called Record. The market segment that we target are the lower-middle income families. It is not the marketing strategy that I would like to share in this blog, but our company's philosophy.

Since our capital is very limited, we need to be more alert of our cost, both operational and production cost. We employ those who are not highly educated to pull the salary down. Our suppliers are also small home industries barely understand the current technology to produce shoes. The compensation definitely is it requires more time (and patient) to train them to achieve the standard performance.

Thus, it is not wrong to say that this company is run by the lower-middle class people trying to challenge those who have more capital and better human resources.

Many people laughing when I told them that I decided to help my dad to grow this company. There are two reasons for the laugh, one is I am wasting my education degree to bother about this small business. I am supposedly working for world-class corporation in United States, not a small shoes industry in Indonesia. The other reason is the doubt over my business skill or character. They say I am too straight and naive to run a business, or I don't have the necessary background to be successful (my education is in economic and statistics, not management or anything else related to business).

So, all the elements (technology, employees, and the boss) are indeed not the recipe for success.

I, however, have a different paradigm. Many of my employees are not in good financial situation while having numbers of dependent they need to take care of. And that, I believe, contains a great potential to make a miracle. Humans are capable to make miracles when their loved ones' lives are at stake. Their families are the biggest asset for them to work and to give all they have.

This is the kind of philosophy I want to engrave in everybody's mind: never underestimate those who are at the bottom and your destiny is not written on the stone.

Unfortunately, we don't know the ending yet, whether we can formidably challenge the giant companies. But, I pray, God, help us to win this war, not for us but for our loved ones, not for our glory but to prove Your Mightiness over challenges. If we don't win this war, let's have a good fight.

The economics of smoking

Indonesian media is now discussing the Muhammadiyah's fatwa (decree) to categorize smoking or cigarrette as illegitimate (I am not sure if it is the correct word to use, but the original arabic word is "haram"). And the issue is snowballing that they try to pressure the government to ban cigarette, and treat them equally as other prohibited addictive substance like coccaine.

I would not comment about Muhammadiyah's interpretation of Koran in regards of smoking. But, I am more interested to spin things around from economics perspective.

Smoking is an activity that everybody would agree causing problem, everything from pollution, health problem even causing harm on those who don't smoke. The economist call this negative externalities ( cost that imposed to society outside of the transacting parties). The conventional wisdom to solve the problem is to tax the activity. If the tax is as much as the cost imposed to society than everybody should be happy (think about it as a fair compensation). In fact, from the discussion on tv, I heard that cigarrette industries and the smokers are attributed for about 60 trillion rupiahs of the national income (I don't know whether the number is true).

Then, is 60 trillion rupiahs not enough to atone for the smokers' and cigarette industries' "sin"?

The dilemma is if the government increase the tax for the tobacco industries, it will have a negative domino effect. It is a big tree that its roots are feeding many other small industries. The big bosses might still survive with less profit, but the factory workers and tobacco farmers will pay the biggest cost. The unemployment rate will definitely rise.

So there has to be a way to keep the market demand for smoking the same to protect the industries, while the problems could be reduced or at least to be localized (I will explain later what I meant by localizing the problem).

I have a proposal to solve the problem. It might not be applicable for Indonesia, but seems to be feasible in more technologically advanced countries.

First of all, there should be no cigarrette pack being sold, it has to be in singles, so it couldn't be shared. Either the buyer smokes it or he let it go for another person.

All the transaction is done through vending machine.

For every smokers, they have to apply for "smoking card", it is like a credit card to store the information of the card holder's name and the number of cigarrette bought.

Let's say we allow a person to have only 3 cigarrettes per day, then for every transaction after the third, the price should increase exponentially to penalize their behavior. The number will be reset to zero every month.

The smokers can sell their cards to other people. So, eventually the number of people smoking will be less, but the number of cigarrettes demand would not significantly affected since the "right to smoke" is transferrable.

Thus, only those who really really want to smoke and really really have money are able to smoke a lot, and the rest will be better off if they sell their cards to the heavy smokers. My theory is one person smoking 100 cigarretes per day is way better than 100 people smoking 1 cigarrette per day. It means the chances that we meet a smoker is reduced significantly, but once we find one, we bet that the person will smoke for the whole day. It is a lot easier to avoid that one person smoking for the whole day rather than avoiding 100 people smoking for couple minutes. It is also easier to anticipate the problem. Let's say that one person spends a lot of his time in one room, then we only need to install air cleaner machine in that one room, rather than to install it in every room to sanitize the air as a result of many people smoking. If my intuition is correct, there should also be less second-hand smokers as the result of localizing the smoking problem.

Of course, the government should be able to control the number of "smoking card" circulating, otherwise we would not be able to localize the problem.

The hardest part is always to find the "efficient" amount of cigarrette allowed per day per person.

Well, again, it is just a crazy idea.

The Cult of Apple Inc.

Cult is usually identical to an extreme fanatical devilish practice. The cult followers are easy to spot since they are wearing strange clothes, speaking unlike "normal" people, or behaving very extreme that does not fit into society. They are also small group and having just one or a few leaders whose commands are accepted as divine.
In this information era, cult is apparently not limited to religion area, there is now a cult movement in technology field. Apple Inc could well represent the argument. Their followers are still considerably small and Steve Jobs perfectly fits as the leader of the cult.
The movement is started in 1980's when Mac or Apple launched a computer set to challenge IBM. Back then, it was not as easy as now to operate the computer, one needs to know a set of commands or steps to execute simple task such as opening files. But Apple was the first to launch the idea of using icon/picture to execute commands that changed the way of operating computers. Since then, Apple is seen as the revolutionary movement against the "giant, corrupted, and evil" PC companies like IBM.
Apple also succeeds to create a new lifestyle with its other products like iPod and iPhone, that helps its followers to distinct themselves even more than outsiders. If someday Apple decides to produce its own clothes, kitchenwares, bottled water, car et. al, I would guarantee those Apple geeks would certainly buy them regardless the needs, the qualities, or the price. It is the identity of belonging to an exclusive group that they buy.
If you ever use Mac, you will notice some huge differences compare to regular PC. Mac keyboard does not have delete command. What they call delete is actually a backspace. You can only delete the character on the left of the cursor in Mac.Doesn't it sound inconvenient to have just backspace but not delete? Your can't help to notice there is a key with apple symbol in the keyboard next to alt. In PC, you need to press ctrl key to perform any shortcut command. But in Mac you press apple key instead. The funny thing is, Mac also has a ctrl key that hardly ever use. Why do they put it there if there is no use of it? In the beginning, I thought Mac was just plainly inefficient. They omit the key that should be there (delete) and provide the key that shouldn't be there (ctrl). But, it is actually their marketing strategy. They want to be different more than just efficient. If everybody else in the world pressing ctrl for the shortcut, they press APPLE. If everybody else can conveniently delete the character in the left or right of the cursor, they don't mind to give an extra effort to make a statement that they are different.
One more interesting fact is Apple has a department of evangelism in the company. It is basically a marketing department, but they call it evangelist that is again embracing an idea that apple is not a mere computer sellers, but a way of life.
Now, a little bit of personal stories. I am a PC user. I love PC for its inexpensive price, its fast performance, its varieties of games, its services that are available almost everywhere in the world. It sounds like a winning argument for me for everyone to choose PC instead of Mac. However, if you ever encounter Mac user and have a debate with them, you will notice how fanatic they usually are defending Mac and even trying to convert you to be Mac user. They usually brag about Mac's exclusive design and its virus protection. Sometimes I feel like talking to a cult evangelist who's trying to tell you the truth of the universe and the way of salvation instead of talking about computers.
Nevertheless, I applaud the works of the Apple company, it is a very smart marketing move to present the products more than just what they do, but also what the values they represent. Everyone wants to be seen different. Ironically, if they keep growing in numbers, it will eventually be a self-defeating marketing strategy. They are no longer the revolutionary minority group who wants to change the world but they are now the giant empire that needs to be defeated.