CVIC

In the last two years, a trade route has been extended from China to the Indonesian island of Batam

Batam has attracted some Chinese manufacturers to build factories in the local area, such as HUACHUANG, HONGFU BIOLOGY, HUABAO, MASON VAP, CELLULAR WORKSHOP, VTV, and some enterprises. Most of them are already in production, some of them are not in production, perhaps the funds can not keep up with the problem.

Because Batam encourages tobacco investment, free tariffs, and even land has preferential policy support, local labor costs are relatively cheap, such as Indonesian workers’ monthly salary of Rp 4,813,671.08- Rp 5,022,961.13 , while Shenzhen city workers’ monthly salary is about Rp 12,557,402.82 on average, so many Chinese enterprises will migrate part of their production capacity. At the same time, based on China’s policy adjustment, it is also seeking a region with lower production costs, and Batam Island is a good choice

In addition to cheap labor, another advantage is tariffs, with the United States exempting or imposing lower tariffs on some goods from Indonesia, including e-cigarettes.Since the restoration of most favored nation treatment in Indonesia’s trade in 2020, the United States has imposed only 2.6% import tariffs on Indonesian e-cigarette sets exported to the United States, but China has as high as more than 30%

In addition, Indonesia has a rapidly growing consumer market, and it is more convenient to import e-cigarette raw materials from China, from Shenzhen and through the Strait of Malacca to the port of Batam, and then transported into the Batam industrial park by truck

Overseas brands have also forced China’s excellent e-cigarette foundries to set up factories in Indonesia, a third-party country with lower taxes and labor costs

For example, HUABAO International’s Batam factory plan has been launched in 2020, and it has invested tens of millions of dollars to build at least three factories in Batam. A factory that produces e-juice, a factory that produces Heat Not Burningtobacco products, and a factory that works with other e-cigarette brands

In addition, large companies like SMOK can directly cooperate with the local government and choose to build factories in Malang, and the local government will also give preferential support policies separately. In July 2022, SMOK’s 14th global factory was officially completed in Indonesia. Located in the city of Malang,the plant covers an area of 6 hectares and has 16 production lines, each of which can produce 7,200 e-cigarette cartridges per hour, and the annual output value of the plant is expected to be about $860 million

In the 1970s and 1980s, the Indonesian government realized Batam’s strategic position and began to build it into an industrial, commercial and tourism center. In 1978, Batam Island was set up as a bonded area, enjoying preferential policies such as exemption from import and export duties and consumption taxes, and the current population of Batam Island is 1.19 million, with Chinese accounting for more than 6%

So far, dozens of Chinese e-cigarette factories have emerged in Indonesia, not only Batam Island, but also Surabaya, Jakarta and Tangerang in Indonesia

Right now , Batam Chinese factory are more concerned about the issue of orders. Batam has gradually become one of the transfer bases of China’s e-cigarette factories, rewriting the fate of the supply chain and increasing the number to the world.

Related articles：

Middle East e-cigarette market Dynamics Report PERATURAN MENTER KEUANGAN REPUBLIK INDONESIA UK E-Cigarette Market Analysis Report Observations on the E-Cigarette Market in London