Chinese phone maker OnePlus quits Indonesia

OnePlus’ new flagship, the OnePlus 3.

Chinese phone maker OnePlus is halting its operations in Indonesia. That means the company’s upcoming flagship phone, the OnePlus 3, will not be sold in the archipelago through official channels.

The news of OnePlus’ decision was first reported by local media and confirmed by OnePlus co-founder Carl Pei last week.

An older model, the OnePlus X, is still available via local ecommerce partner site Blibli.

The entire local OnePlus team was let go earlier this month, Shinta Hawa told Tech in Asia. She was OnePlus’ community manager in Indonesia.

“For the after-sales service, we are in a transitioning phase,” she added. “While before we had a service center directly from OnePlus, now the service center will be taken over by the the distributor Multi Mobile Indonesia,” she explains.

Victim of murky regulations

OnePlus blames Indonesia’s complicated rules on imported smartphones for its decision.

Last year, the government passed a law that requires imported 4G phones to contain 30 percent locally sourced components. Alternatively, foreign phone makers can invest in R&D or use local software to meet the requirements. The rule is set to come into full effect in January 2017, but there’s already a process foreign phone brands have to go through now to get assessed on their “local content.”

Other foreign smartphone brands like Samsung, Oppo, and Asus, are doing well.

For OnePlus, the trouble began when it wanted to launch its OnePlus 2 phone in Indonesia last year, but failed to complete the mandatory certification process on time. To avoid a similar fate for the OnePlus X, the model was sold as a 3G phone in Indonesia, although it’s 4G compatible in other countries.

It sounds like the effort and investment needed to comply with the regulation in full by 2017 is too much for OnePlus to handle right now.

“To build a factory or join a local factory we need to meet certain criteria which OnePlus cannot yet fulfill,” Shinta said. “Especially the frequent changes in the regulation and its interpretation has been harmful to OnePlus, which is still very new in Indonesia.”

“That said, we’re not ruling out the possibility of coming back to the Indonesian smartphone market if there is a change in the regulation in the future. Sales of the OnePlus have been good,” she added.

Indonesia’s tech minister Rudiantara, who spearheaded the regulation on imported smartphones, didn’t have much sympathy for the Chinese brand.

Why give up now?