Supriyono, 43, unwillingly made holes in the carved wood with a chisel at the verandah. Not far from his seat were some sets of dusted chairs, a table and small cupboard. For more than three months those pieces of teak furniture were untouched. “Such furniture used to be at the house not more than a week. Now, those pieces of furniture do not attract buyers either from outside city or overseas,” said the craftsman in Krapyak village, Tahunan district, Jepara regency, Central Java.
Supriyono does not produce furniture if there is no demand. The slow business forced him to employ only one worker. Three years ago, he employed three assistants.
About 400 meters from Supriyono’s house, Nurdaim, 50, walked back and forth on his verandah. He was shocked that nobody had visited his small showroom in the past three months. Every day, Nurdaim had cleaned the cupboards outside his house to attract buyers. But, nobody came.
The fate of these two furniture craftsmen represents the condition of hundred of craftsmen in the Carving City, Jepara. Exploring the furniture workshops and showrooms, the level of activity was nothing like that seen in the 2000s. The noise of saws and sandpaper scraping wood from the workshops was no longer heard. Only one or two visitors looked around and left without making any transactions. Due to the high prices of wood, now they have to compete against foreign business players with big investment. Those investors are taking the Jepara furniture market in their hands. They dominated the export of Jepara furniture, which in 2015 recorded US$150.32 million or almost Rp 2 trillion.
Suparno, owner of UD Windi Barokah in Kedungcino village, struggling to maintain the production of doors, tables and cupboards. “With small capital, my business cannot compete against big companies, especially the foreign ones.”
Jepara Ethnic Furniture director Sahli Rais said many local furniture exporters have now turned into sub-exporters for foreign business players in Jepara. Meanwhile, suppliers and craftsmen in the kampongs become laborers in the foreign factories. The suppliers who used to be little bosses in the kampong now become factory supervisors.
Some foreign companies running factories in Jepara are mostly from Germany, China, South Korea, Taiwan, Malaysia and Japan. They get incentives to purchase the logs for manufacturing.
According to craftsman Sunarno of Mulyoharjo village, his sales have dropped due to lack of orders. Four years ago, he could make Rp 250 million a day in sales. But today it is only Rp 40 million a day. Now, he only employs three people. “I am in waiting. If the condition worsens, I will close thebusiness,” Sunarno said.
Local craftsmen are marginalized and it is getting worse because the foreign companies conduct business from upstream to downstream. The foreign companies (PMA) have advantages in some areas, from capital, ease in getting raw material, network and marketing. The workshop and showroom of the foreign-investment business are located in strategic places, making it easy for buyers to access. They have bigger spaces. Meanwhile, the local craftsmen are located in small alleys.
With its long history and big name in carving, Jepara is a magnet for foreign investors. Based on data from the Jepara Administration Office, there were 27 foreign companies with an investment of Rp 640 billion in 2014. In 2015, it increased to 32 foreign companies. In 2016, there were 18 foreign companies with an investment of Rp 3.15 trillion.
Contract marriage
Indonesia Craft and Furniture Union (HIMKI) Jepara branch chairman Maskur Zaenuri said there had been a shift in the model of furniture business since 2005. Prior to that year, the small and medium scale industries only produced furniture and then awaited the buyers. But, with technology development, the business model shifted. They did not wait for the buyers anymore, but went to the export destination countries.
Recently, they brought investors to Jepara. There are three patterns of the entry of foreign investors. First, the companies were established entirely with foreign capital, around 20 of them. They produced furniture and were export oriented with an investment of between Rp 1.5 billion to Rp 200 billion.
Second, they made a joint venture with local businesses. Their number is around 50-60 companies. About 70 percent of the capital was from foreign investors. Their investment was below Rp 1.5 billion. The capital is from foreign parties. But, it is registered as a domestic company. This is to make doing business easier,” Maskur said.
Nur Ain, manager of PT Razan Trading, one of foreign companies in Jepara, said the company started the cooperation with foreign parties in 1990. Initially, they worked with local craftsmen to setup a joint company under the banner of local business.
Nur Ain said new players in the furniture industry kept coming to Jepara. For local business players, as long as there is cooperation the local industry will not be disadvantaged.
However, small business players complained about the unfair competition. “Everything is like a photocopy machine. Every time a craftsman creates a new furniture design, within hours there are copies of the design at the big showroom,” Sunarno said.
A special policy is needed to prevent the small craftsmen from coming into direct competition with the giant business players. There must be regulations for favorable business, starting from a limitation of work types to the obligation of foreign investors. If it is taken for granted, the local carving traditions in Jepara will become a part of history.