ANALYSIS OF BUSINESS READINESS TO EXPORT FOR SMALL AND MEDIUM ENTERPRISE
EMBROIDERY SECTOR IN KUDUS REGENCY
Selva Ulzana, Budi Prasetya, Luqman Khakim
Business
Administration Department, Semarang State Polytechnic
ABSTRACT
Embroidery in Kudus has a potential to export. Based on these, the purpose
of this study was to identify and analyze the readiness of SMEs Kudus
embroidery to export their product. The methods of collecting the data were
questionnaire, Documentation, and Library Studies. Questionnaires were
distributed to 45 SMEs embroidery sector as respondents. The study method
uses multiple linier regression analysis.
The multiple linier regression result shows that Y = 0.456 + 0.315X1
+ 0.216 X2 + 0.036X3 + 0.904X4 + 0.193X5
+ 0.082X6. It means that result of regression
gives a positive influence on the export readiness. The coefficient of
determination is 0.681 or 68.1%. It means that product, production, marketing, human
resource, finance/export cost, and export procedure provide positive contribution
to export readiness of 68.1% and 31.9% were influenced by others variables that
were not examined in this study.
Keyword: SMEs, Embroidery, Export Readiness
INTRODUCTION
Background of Study
The export market has always been the goal and desire of all
small and medium enterprises, certainly not only the domestic market, but also
the enterprise will perform a variety of ways to be able to expand the
marketing of their products. Kudus regency is known as the city of cigarette
(kretek) producer, the largest in Central Java but actually there are also many
other industries that stand in Kudus, one of them is in embroidery sector. Since
early 1970s embroidery has been growing rapidly and becoming a prospective
business, their major markets are upper middle class people. Kudus regency is a
home for some well-known centers of embroidery crafts. Embroidery production in
Kudus units are scattered in various districts, namely: Kecamatan Kota, Jati,
Undaan, Kaliwungu, Bae, Mejobo, Jekulo, Dawe, and Gebog.
Moreover, as the technology characterized by the use of
electric-powered embroidery machine develops, the number of embroidery styles
increases. It has had a positive impact on the responses of the consumers,
making the business more popular. The potential to develop this business is
very large.
The Government encourages SMEs to grow sustainably so it can
absorb the workforce. Based on data from the Department of Industry,
Cooperatives and SMEs Kudus, it can be seen that business competition is
increasing from year to year. In addition the company also must have sufficient
resources. Both capital resources and human resources, these resources must be
able to be managed well by the company effectively and efficiently to achieve
company’s objective.
One of the centers of embroidery in Kudus now also designated
as a tourist embroidery village, Gebog.
Table 1
TOTAL SMALL INDUSTRY
and HOMEMADE HANDICRAFT
in Gebog
Sub-district 2010
|
No
|
Village
|
Small Industry
|
Home made Handicraft
|
||
|
Enterprise
|
Labor
|
Enterprise
|
Labor
|
||
|
1
|
Getassrabi
|
17
|
122
|
176
|
287
|
|
2
|
Klumpit
|
44
|
338
|
298
|
538
|
|
3
|
Gribig
|
23
|
134
|
78
|
132
|
|
4
|
Karangmalang
|
28
|
220
|
80
|
156
|
|
5
|
Padurenan
|
77
|
559
|
303
|
432
|
|
6
|
Besito
|
16
|
116
|
287
|
366
|
|
7
|
Jurang
|
19
|
137
|
154
|
210
|
|
8
|
Gondosari
|
23
|
168
|
283
|
368
|
|
9
|
Kedungsari
|
13
|
89
|
438
|
514
|
|
10
|
Menawan
|
31
|
234
|
256
|
328
|
|
11
|
Rahtawu
|
4
|
20
|
274
|
305
|
|
Total
|
295
|
2.177
|
2.627
|
3.636
|
|
Source: BPS Gebog Sub District in number 2011
Based on the Table 1,
small industry and homemade handicraft Padurenan was widely available in the
village. It has a total of 77 small industrial units that absorb of 599 people
labor force. Under these conditions, so Padurenan village is suitable for investment.
The existence of small embroidery and garment industry may help to reduce the
number of unemployment in the village of Sub district Padurenan Gebog. It is
because the labor demand is high.
SMEs in Indonesia are very substantial for the country
development. This sector has contributed 57.12 % to the Gross Domestic Product
(GDP). According to Ministry of Cooperatives and SMEs, the number of SMEs in
Indonesia has reached 55.2 million units, or 99.98 % of the total Indonesian
business unit (2015). In fact, this sector has absorbed 101.72 million workers
or 97.3 percent of the total Indonesian workforce. The enterprises provide an important opportunity
in order to escape from poverty and have a better life.
One potential
overseas market for export of embroidery is Canada.
Table 2
CANADA's MERCHANDISE
TRADE WITH INDONESIA
In US Dollars ($)
|
|
2010
|
2011
|
2012
|
2013
|
2014
|
|
Exports
|
1,030,680
|
1,662,735
|
1,682,176
|
1,853,908
|
1,836,172
|
|
Imports
|
1,212,787
|
1,445,182
|
1,314,517
|
1,334,013
|
1,368,598
|
|
Trade Balance
|
-182,107
|
217,552
|
367,659
|
519,895
|
467,574
|
Source: Trade Data Online. Industry
Canada. 30 August 2015. http://www.ic.gc.ca/eic/site/tdodcd.nsf/eng/Home.
From the data (Table 2), it can be seen that there was an
increase import volume from Canada. Although in 2012 import from Indonesia
decrease amounting to 130,665 compared to 2011. On the other hand in base year
of 2010, in 2012 the import shows on increased to 101,730. Thus from the table
2 there was an increase import sales from 2010 to 2014.
Opportunities and challenges in the embroidery business have
to be explored by conducting a good business strategy in anticipating global
competition due to the opening of the free market world.
\Based on the above facts, the author is interested in
conducting research in Kudus with the title “ANALYSIS OF BUSINESS READINESS TO EXPORT FOR SMALL AND MEDIUM
ENTERPRISE EMBROIDERY SECTOR IN KUDUS REGENCY”.
Objective of the study
The objectives to be accomplished are:
a.
To identify and analyze the readiness of Kudus embroidery small
and medium enterprises to export products.
b.
To determine whether the independent variable
simultaneously influence on the dependent variable.
LITERATURE REVIEW
Based on Law
No. 20 of 2008 about Micro, Small and Medium Enterprises. Here is an excerpt
from the contents of Law 20/2008 “Small businesses are productive economic
activities that stand alone, which is done by the individual or business entity
that is not a subsidiary or branch of a company not owned, controlled, or be a
part either directly or indirectly, of a medium or large businesses that meet
the criteria of Business small as referred to in this Act.
Medium
businesses are productive economic activities that stand alone, done by the
individual or business entity that is not a subsidiary or branch company owned,
controlled, or be a part either directly or indirectly by the Small Business or
large enterprise with total net assets or the annual sales revenue as
stipulated in this Law.”
According to the Central Statistics Agency (BPS) provides a
definition of SMEs “based on the quantity of labor, for small businesses have a
workforce of five to 19 people, while medium-sized businesses have a workforce
of 20 up to 99 people.”
On July 4, 2008 stipulated Law No. 20 of 2008 in Micro, Small
and Medium Enterprises, the MSME definition given by the Law is also in
contrast to the above definition. According to Law No. 20 of 2008, which is
called Micro business is that has a net asset of at most Rp50.000.000,00 (fifty
million rupiah) excluding land and buildings or having annual sales of
Rp300.000.000,00 (three hundred million rupiah). Then the small business is an
entity that has the following criteria:
a.
The net asset of more than
Rp50.000.000,00 (fifty million rupiah) up to at most 500.000.000,00 (five
hundred million rupiah) excluding land and buildings.
b.
It has an annual sales turnover of
more than Rp300.000.000,00 (three hundred million rupiah) up to at most
Rp2.500.000.000,00 (two billion, five hundred million rupiah).
Meanwhile, the Medium Enterprises is a business entity that has the
following criteria:
a.
The net asset of more than
Rp500.000.000,00 (five hundred million rupiah) up to at most
Rp10,000,000,000.00 (ten billion rupiah ) excluding land and buildings.
b.
It has an annual sales turnover of
more than Rp2.500.000.000,00 (two billion five hundred million rupiah) up to at
most Rp50.000.000.000,00 (fifty billion rupiah).
Advantages and Disadvantage of
Export
Some of advantages which are owned by Small and Medium
Enterprises (SMEs) compared with large businesses (Partomo and Rachman, 2002)
include:
a.
Innovations in
technology that can easily occur in product development.
b.
Familiar human
relations.
c.
Flexibility and
ability to adapt to changing market conditions faster than with large companies
which are generally bureaucratic
d.
There is a dynamics
managerial and entrepreneurial role.
According to Kuncoro (2005: 43), exports have disadvantages:
a.
Conducting exports may be more expensive than other methods
in terms of fees, commission, export duties, taxes and transportation, and also
because of mistakes made by beginners.
b.
Exporting less products can be used as a tool to optimized
market penetration due to insufficient promotion worked properly.
c.
Additional market share may be lost when local competitors
plagiarized products or services offered by exporters.
Export Standard
According to Arianto
(2007; 66) a number of criteria that should be the standard of the business
service are:
a.
Products Quality
b.
Uniqueness of design
c.
The quantity and continuity
d.
Accuracy
Stages for Export
According Sutedi (2014; 87) Preparation needs to be done in general can be
divided into four groups:
a.
Preparation of Administration, it is the availability of
office equipment that allows them to do a better communication, especially
correspondence with suppliers and prospective buyers in foreign country.
b.
Preparation of Legal aspects is defined as a preparation in
terms of the completeness of a business license in accordance with government
regulations that must be met to allow exporters strive lawfully / legally.
Which are included in this preparation are:
1)
Trading License
2)
TIN (Taxpayer Identification Number) it can be obtained from
your local tax services office where the company is domiciled.
3)
Special permits exporters and importers listed company
conducting export and import of goods or commodities.
c.
Physical Preparation namely goods guaranteed supply of
commodities to be prepared for the export market. Physical preparation, among
other things:
1)
Contracts with manufacturers in export-import trade.
2)
Opening the brochure of any commodity export markets
generally preceded by promotional activities aimed at attracting buyers to the
commodities to be exported.
3)
Price List.
4)
Goods sample brochure is intended to provide an overview of
the commodity supplied.
d.
Preparation of operations is a basic knowledge of export-import
business that will allow to act in the field of export-import operations. Basic
knowledge is meant, among others:
1)
Export Process
2)
Export Strategy
3)
Export Regulations
4)
Export-Import Procedures
Meanwhile, according to Arianto (2007;70) there are a few ways to
penetrate export markets, among others:
a.
Understanding the export procedure
b.
Choosing products
c.
Determine the target market
d.
To anticipate export standards
e.
Set the export costs
f.
Prepare a promotional tool
g.
The strategy follows the exhibition
h.
Optimizing the benefits of the
Internet
RESEARCH METHODS
This study is aimed to explore all the information related to SMEs
especially in embroidery sector in order to provide recommendations for its
development policy making.
Population and sample
In this study population was all the owner of small and medium
enterprise sector producing embroidery. Kecamatan kota, Jati, Undaan,
Kaliwungu, Bae, Mejobo, Jekulo, Dawe, and Gebog, of Kudus regency. There are
144 small medium enterprise of Kudus registered in the Ministry of industry and
trade of province of Central Java as population of this research. The sample
were taken 30 % from 144 SMEs, there are 43,2 sampels are rounded to 45
sampels. Techniques used to collect data in this study are questionnaires based
on Likert scale, documentation, and literature studies.
Source of Data
Data were collected by providing
a questioner to the owner of Embroidery’s SMEs in Kudus regency.
Theoretical Framework
This study deploy theoretical
framework as Picture 1.
Picture 1.
Theoretical Framework
Source : Arianto (2007); Jaharnsyah,
Muhammad. dkk (2013)
FINDING AND DISCUSSION
This research setting classic assumption test, namely : normality test,
heteroskidastity test, multicollinearity test, autocorrelation test. Also
setting Multipple regression analysis, individual parameter significance test
(t statistic test), simultaneous significance test (F test statistic), and the
coefficient of determination (R2).
Normality Test
Testing criteria can be seen from Table Normal P-Plot of Regression
Standardized Residual.
Picture 2
THE RESULT of NORMALITY TEST
Source: Primary data that have been processed, 2015
It can be seen in the Picture 2, that there are points in a
straight line / track means that the data are normally distributed.
Heteroskidastity Test
Scatterplot is used to test the heteroscedasticity. If the
dots randomly spread, both at the top of zero or below zero on the vertical or
horizontal axis, it can be concluded that no heterokedatisitas.
From the scatterplot Picture 3, there were no systematic
patterns. It can be seen that the dots disseminated randomly on the above and
below of zero number in the vertical zone. Thus, it can be concluded that there
is no heterocedasticity indication in the model.
Picture 3
HETEROSKIDASTITY
TEST
Source: Primary data that have been processed, 2015
Multicollinearity Test
The result of multicollinearity test is as Table 3.
Table 3
MULTICOLLINEARITY TEST
|
Model
|
Collinearity
Statistics
|
||
|
Tolerance
|
VIF
|
||
|
1
|
(Constant)
|
|
|
|
X1
|
.396
|
2.527
|
|
|
X2
|
.278
|
3.594
|
|
|
X3
|
.466
|
2.146
|
|
|
X4
|
.495
|
2.021
|
|
|
X5
|
.478
|
2.090
|
|
|
X6
|
.692
|
1.446
|
|
Source: Primary data that have
been processed, 2015
The VIF of independents variable in the research were 2,527;
3594; 2,146; 2,021; 2,090; 1,446. Based on the result, it can be said that
there was no multicollinearity between independent variable in the model. It
was because the VIF < 10.
Autocorrelation Test
In the model the Durbin – Watson test is used to test the autocorrelation.
Based on the calculation of the equation is known that:
k = 6; n = 45
dU = 1,835; dL = 1.238; 4 - dU = 2,165
dU <DW <4 - dU
1,835 <1,940 <2,165
It can be concluded that there is no autocorrelation in the
equation.
Multiple Regression Analysis
In this study, if there are dependent variable that influence
the independent variable, thus is used Multiple regression analysis. This is
used to determine the effect of the product (X1), production (X2), marketing
(X3), human resources (X4), financial / export costs (X5), export procedures
(X6) to the export readiness of Kudus Embroidery (Y).
Table 5
REGRESSION ESTIMATE RESULT
Source: Primary data that have been processed, 2015
It can be seen from the Table 5 multiple regression equation
as follows
Y = 0.456 + 0.315X1 + 0.216 X2 + 0.036X3 +
0.904X4 + 0.193X5 + 0.082X6 Unstandardized regression equation used because until now there has been
no standard for measuring the level of export performance.
Individual Parameter Significance Test (t Statistic Test)
t statistical test is deployed to identify the magnitude of
the effect of partial influence between variables X1 (Products), X2
(production), X3 (marketing), X4 (human resources), X5 (financial / export
costs), X6 (export procedures) to Y (export readiness).
Tabel 6
t STATISTIC TEST
|
Variable
|
t count
|
t table
|
Sign
|
Note
|
|
Product
|
2.105
|
1,686
|
0.042
|
Sig
|
|
Production
|
1.823
|
1,686
|
0.013
|
Sig
|
|
Marketing
|
0.495
|
1,686
|
0.623
|
Not sig
|
|
Human Resources
|
6.487
|
1,686
|
0.000
|
Sig
|
|
The financial / Export Costs
|
1.750
|
1,686
|
0.038
|
Sig
|
|
Export procedures
|
0.432
|
1,686
|
0.068
|
Not sig
|
Source: Primary data that have been
processed, 2015
Hypothesis Testing Products (X1) of the Export Readiness (Y)
It shown from the Table 6, t test of Products and Export
Readiness showed that the t value for the product is 2.105, while the value of
t table of 1.686, the value t count (2.105) > t table (1.686), therefore it
can be concluded that Ho is rejected and Ha is accepted. Thus, the hypothesis of
influence the readiness of the export product is accepted.
Hypothesis Testing Production (X2) of the Export Readiness (Y)
Based on the table, t test of production and export readiness
showed that the value of t for production was 1.823, while the value t table of
1.686, then the value of the t count (1.823)> t table (1.686), therefore it
can be concluded that Ho is rejected and Ha is accepted. Thus, the statement of
the hypothesis that stated there is an influence the production of export
readiness is accepted.
Hypothesis Test Marketing (X3) of the Export Readiness (Y)
It can be seen from the table, t test of Marketing and Export
Readiness showed that the t value for marketing is 0.495, while the value of t
table 1.686, then the value of t count
(0.495) < t table (1.686), therefore it can be concluded that Ho is accepted
and Ha is rejected. Thus, the hypothesis that stated there is no affect of the
marketing of export readiness is accepted.
Hypothesis Testing Human Resources (X4) of the Export Readiness (Y)
It shown from the table, t test Human Resources (HR) and
Export Readiness showed that the value of t for Human Resources is 6.487, while
the value of t table of 1.686. Therefore it can be concluded that Ho is rejected and
Ha is accepted. Thus, hypothesis stated that human resources (HR) effect on
export readiness is accepted.
Hypothesis Testing Finance / Export Cost (X5) of the Export Readiness (Y)
It can be seen from the table, t test of Finance / Cost
Export and export readiness showed that the t value for financial / Export cost
is 1.750, while the value of t table of 1.686, then the value of the t count (1,
750)> t table (1.686 ). therefore it can be concluded that Ho is rejected
and Ha is accepted. Thus, hypothesis of Finance / Export Cost influence on the
export readiness is accepted.
Hypothesis Testing Procedure Exports (X6) of the Export Readiness (Y)
Based on the table, test t of export procedures and export
readiness showed that the t value for the quality of services is 0.432, while
the value of t table of 1.686. Therefore it can be concluded that Ho is accepted
and Ha is rejected. Thus, the statement of the hypothesis stated that the
export procedure does not have any affect the export readiness is accepted.
Simultaneous Significance Test (F Test Statistic)
Table 7
SIMULTANEOUS TEST (F Test)
|
ANOVAb
|
||||||
|
Model
|
Sum of Squares
|
Df
|
Mean Square
|
F
|
Sig.
|
|
|
1
|
Regression
|
123.123
|
6
|
20.521
|
16.666
|
.000a
|
|
Residual
|
46.788
|
38
|
1.231
|
|
|
|
|
Total
|
169.911
|
44
|
|
|
|
|
|
a. Predictors: (Constant), X6, X5, X4, X1, X3, X2
|
|
|
||||
|
b. Dependent Variable: Y
|
|
|
|
|
||
Source: Primary data that have been processed,
2015
It can be seen from Table 7 the F value is 16.666 with a
probability value (sig) = 0.000. The value of F table at a significance level
of 5% and the value of F table 2,35. F count (16666)> F table (2.35), then
the decision is Ho rejected and Ha accepted. Thus the statement of the
hypothesis of products, production, marketing, human resources, financial /
cost of exports, export procedures are simultaneously influence the export
readiness of Kudus embroidery.
The Coefficient of Determination (R2)
Table 8
THE COEFFICIENT of DETERMINATION
|
Model
|
R
|
R Square
|
Adjusted R Square
|
Std. Error of the Estimate
|
Durbin-Watson
|
|
|
1
|
.851a
|
.725
|
.681
|
1.110
|
1.940
|
|
|
a. Predictors: (Constant), X6, X5, X4, X1, X3, X2
|
|
|||||
|
b. Dependent Variable: Y
|
|
|||||
Source: Primary data that have been processed, 2015
From Table 8 it can be seen determinant R square coefficient or
= 0,681 = 68,1% and the influence of other
variables namely,
ρY ɛ1 =
1 – 0,681 = 0,319 = 31,9%
Adjusted R Square based on the Table 8 was 0.681 or 68.1%. It
means that product, production, marketing, human resource, finance/export cost,
and export procedure provide contribution to export readiness of 68.1% and
31.9% were influenced by other variables that were not described in this study.
CONCLUSION
Based on the research that has been
conducted in small medium enterprise embroidery sector in Kudus Regency, there
are some points that can be concluded.
1.
The readiness of Kudus embroidery
enterprise to export, based on the analysis there are 2 variable which
negatively influence on export readiness namely marketing and export procedure
and there are 4 variable namely product, production, human resource, and
finance/export cost which have positive influence.
Based on the t test (partial test) of
product showed that tcount > ttable (2.105 > 1.686)
with significance of 0.042. Therefore, it can be concluded that product
significantly and positively influence on export readiness. About production
showed that tcount > ttable (1.823 > 1.686) with
significance of 0.013. Therefore, it can be concluded that production
significantly and positively influence on export readiness.About marketing
showed that tcount < ttable (0.495 < 1.686) with
significance of 0.623. Therefore, it can be concluded that marketing
significantly and negatively influence on export readiness. About Human
Resources (HR) showed that tcount > ttable (6.487 >
1.686) with significance of 0.000. Therefore, it can be concluded that Human
Resources (HR) significantly and positively influence on export readiness.
About financial / Export Costs showed that tcount > ttable (1.750
> 1.686) with significance of 0.038. Therefore, it can be concluded that the
financial / Export Costs significantly and positively influence on export
readiness. And about Export procedures showed that tcount < ttable
(0.432 > 1.686) with significance of 0.068. Therefore, it can be
concluded that Export procedures significantly and negatively influence on
export readiness.
2.
The value of F table at a
significance level of 5% and the value of F table 2,35. F count (16666)> F
table (2.35) and the level of significant sig (0.000 < 0.05). Therefore, the
decision is Ho rejected and Ha accepted. Thus the hypothesis of products,
production, marketing, human resources, financial / cost of exports, export
procedures simultaneously influences the export readiness of Kudus embroidery.
RECOMMENDATION
Based on the results of the research
analysis, the following are suggestions that can be given.
1.
Result of the questionnaire that was
distributed to SMEs embroidery sector in Kudus regency, it can be said that embroidery
producers have opportunities to export their product. its just need a few
things that must be improved. Among others are digital marketing using the
Internet network, product creativity to
compete with the embroidery in the global market. Training for increasing skill
of human resource, promotional embroidery products by performing exhibition in
domestic market and in overseas market. The government should give support to
SMEs of Kudus embroidery to overcome the limitations of capital, improve the
quality and product feature. By giving easier capital loan and regular training
were expected to make embroidery product more innovative.
2.
Kudus Embroidery SME owners should be
able to know and understand about export procedures. So that prices can be
offered much more competitive and the export process could be dealt with
directly.
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