Indonesia's footwear manufacturers cannot compete effectively because the sector depends on imported raw materials from China, according to a report by Indonesian news outlet VOI.ID.

The finding places the problem squarely at the input tier of the supply chain. Indonesia hosts significant finished-footwear production capacity, much of it serving international athletic and casual footwear brands that source finished goods from Vietnamese, Chinese and Indonesian factories. Yet the report indicates the country's factories assemble shoes from materials they do not produce domestically at competitive scale — leather, synthetic uppers, soles, adhesives and componentry that arrive predominantly from Chinese suppliers.

That structural gap converts every external shock into a factory-gate cost problem.

Why does input dependence undermine competitiveness?

When a footwear-exporting country imports its raw materials, it pays twice for logistics: inbound freight on inputs and outbound freight on finished shoes. Import duties and currency exposure on the input side then squeeze the margin between material cost and the factory's selling price.

For Indonesian footwear, the report identifies China as the dominant input source. That creates a specific vulnerability:

• Input costs rise with Chinese export pricing and freight rates, not with domestic Indonesian cost structures
• Depreciation of the rupiah raises the local-currency cost of imported materials before any factory efficiency gain can offset it
• Indonesian factories compete against Chinese factories that source the same materials domestically, without the added freight and duty layer

The result, per the report, is a competitiveness gap that sits in the bill of materials rather than in labour productivity or factory capability.

How does this affect brand sourcing decisions?

Buyers comparing Indonesia against China or Vietnam for footwear programmes typically weigh landed cost, lead time, compliance and capacity. A factory tier that imports its inputs from China lengthens the effective supply chain: material must move from China to Indonesia before assembly and onward shipment to market.

That adds days to lead times and adds a customs border to a programme that, placed in China, would involve none. For time-sensitive footwear programmes, the arithmetic can outweigh wage-rate advantages on the sewing floor.

What is the decision the report forces?

The report frames Indonesia's footwear policy problem as an industrial-supply-chain problem, not a marketing or demand problem. The competitiveness deficit originates upstream, in materials the country does not supply to its own factories at competitive cost.

For sourcing executives, the implication is direct. An Indonesian footwear quote reflects imported Chinese material costs plus two freight legs plus rupiah exposure. Buyers allocating volume should verify, factory by factory, how much of the bill of materials is locally sourced versus imported, and price the logistics differential accordingly.

For Indonesian policymakers and suppliers, the report points toward import substitution or investment in domestic materials capacity as the lever that would change the cost equation. Until that tier develops, the country's footwear exports remain structurally tied to Chinese input pricing — and the competitiveness complaint VOI.ID reports will persist.

Sourcing teams with Indonesian footwear vendors should treat material-origin disclosure as a standing due-diligence item in their next supplier review.