Chinese Food Outlets Flood Indonesian Market

Local Businesses Face Intense Competition

Indonesian small and medium-sized enterprises (SMEs) are grappling with a significant increase in food and beverage (F&B) outlets originating from China. These new entrants are rapidly appearing across the archipelago, intensifying competition for local businesses.

A Lucrative Target Market

The vast Indonesian population and its consumer habits have made the country a prime target for Chinese businesses. According to Levita Ginting Supit, Chairman of the Indonesian Franchise & License Association, the nation’s large demographic is the primary driver behind this influx.

“Indeed, Indonesia is a target market for businesses in foreign countries. So now we are the target market for China. Why? Because Indonesia is a large country and population. That is the target market of F&B that enters Indonesia.”

—Levita Ginting Supit, Chairman of the Indonesian Franchise & License Association

Levita Ginting Supit further noted the Indonesian propensity for trying new culinary experiences. “Take a look at every time there is an F&B that enters new Indonesia from abroad, it must be immediately invaded, immediately crowded because Indonesian people always want to know every food from abroad that enters Indonesia. That is typical of the Indonesian people,” she explained.

Pricing and Trade Agreements Fuel Growth

The affordability of Chinese F&B options is a key draw for consumers, attributed to lower raw material costs. Bhima Yudhistira, Executive Director of the Center for Economic and Law Studies (Celios), highlighted the impact of favorable trade agreements.

He stated that low tariffs under the China-ASEAN Free Trade Area (CAFTA) and RCEP significantly reduce the cost of imported Chinese ingredients for F&B businesses operating in Indonesia. Additionally, lower operational expenses, including more economical rental spaces outside of major shopping centers, contribute to Indonesia’s appeal.

This surge in Chinese F&B presence is part of a broader trend. Research from Singapore’s Momentum Works indicates that over 6,100 Chinese F&B outlets entered the Southeast Asian market since 2022, with Indonesia and Vietnam accounting for approximately 4,000 of these establishments. This expansion is partly a response to a struggling domestic market in China, where over a million F&B businesses closed in 2024 due to oversupply and stagnant consumption.

The Indonesian market’s economic stability and relatively permissive regulatory environment present a compelling alternative for Chinese businesses seeking new growth avenues. For context, the global fast-food market is projected to reach $1.77 trillion by 2030, demonstrating the immense scale of opportunities in the sector (Grand View Research, 2024).