Introduction

The rise of China has prompted the Middle Kingdom to challenge the United States’ supremacy on a number of dimensions, be it geopolitical influence, trade and investment, as well as the cyberspace.

Unfortunately, in the process, this has also put China at odds with other countries, complicating their intertwined and interdependent bilateral relations.

As exemplified by South Korea and the Philippines, their pursuit of fulfilling respective national interest has made them an ample target of China’s cyber operations. Their stories serve as a warning flag for other countries, particularly those that are still bent on state-building objective.

As a multidimensional partner to China, Indonesia could learn a few lessons from the experience of the two aforementioned countries.

China Cyber Operations in South Korea and the Philippines

In March 2017, South Korea’s Lotte Group became a target of administration investigation, business boycotts and cyber-attacks by China owing to its land being used as a site for Terminal High Altitude Area Defense (THAAD). A virus was planted on Lotte’s China branch website which successfully suspended its operation for several days. The cyber-attack could be considered as part of retaliatory attacks that cost Lotte’s supermarket a 95% loss in 2017.

It may seem trivial to blame Lotte’s financial loss solely on this cyber-attack, considering other business- and financial-related factors were also at play. However, it shows the extent to which China is ready to pursue its interest and shape the environment to be favorable to its vision.

This is reminiscent of the term “doghouse diplomacy”, referring to a state’s exercise of aggravated act towards disobedient party in order to reap profitable circumstances or gains. It also indicates a reversal of the touted best bilateral period between China and South Korea in modern history, which lasted from 2013 to 2016.

The Philippines faced a similar conundrum recently. A cyber-attack against a government institution was detected earlier in 2023 and findings by Palo Alto Network, a US-based cybersecurity firm, attributed the attack to Stately Taurus group from China.

The government of Philippines was hardly able to muster an appropriate response as the Department of Information and Communication Technology was only manned by 35 personnel. Budgetary restraint has hindered the country to build a sufficient measure to respond and counteract against such cyber-attacks.

Geopolitical factor also comes into play. Since coming into power, President Ferdinand “Bongbong” Marcos Jr. has pursued policies aimed at safeguarding the Philippines’ land and resources. This has necessitated some realignments in its relationship with the United States. For example, bilateral talks in November 2022 produced a few initiatives to further foster the alliance. Besides, a $7.5 million additional financial assistance was conferred to enable the Philippines Coast Guard acquire more patrol ships. In addition, a development grant under USAID helps the Philippines to embark on nature conservation and sustainable fishing agendas, with targeted area around the South China Sea.

Manila does not stop with just the United States. For example, the Philippines partnered with Australia for a joint patrol in the South China Sea in November 2023.

These steps, unfortunately, have caused discomfort among some in China’s security establishment. The aforementioned cyber-attack on a government body is also believed to be part and parcel of China’s displeasure. This should not have come as a surprise. After years of former President Duterte’s China-leaning foreign policy, the new administration suddenly took steps that signals its moving away from China’s orbit.

Lessons Learned for Indonesia

There are some valuable takeaways for Indonesia.

Firstly, the Philippines’ case shows the importance of capable human resource in the field of cybersecurity. Officials of the targeted government body were reportedly unable to respond to the threat properly.

Indonesia has taken the right step forward by establishing a national cyber agency called Badan Siber dan Sandi Nasional (National Cyber and Crypto Agency – BSSN). Whether BSSN would prove as an effective bulwark against cyber-attacks remains to be seen.

A formal infrastructure is not a cure-all solution, considering Indonesia’s digital protection ecosystem continues to be substandard. There have been some remedies to ameliorate this, such as the relatively new Personal Data Protection Act Number 27 2022, which stipulates the creation of a new data protection authority and calls for a structured, transparent and reliable data regime in commercial purpose.

Still in its transition process today, the Act will come into force in October 2024, a full two years after it was passed. Last year, the Ministry of Communication and Informatics (Kominfo) also announced that the government has drafted a derivative regulation that will administer the Act’s scope and aims in more details. The ball is now in the executive branch’s court to realize this vision of a more secure digital ecosystem in Indonesia.

Next, interagency cooperation, such as between BSSN and Kominfo, remains convoluted. As evidenced from a data breach case in July 2021, both agencies tended to be reactive in their response, failing to cut off the root of the problem in the country’s frequent personal data leak cases.

Further complicating the picture is the presence of two bodies tasked to carry out cyber-intelligence activities. While BSSN’s oversees the public sphere, Badan Intelijen Strategis (Strategic Intelligence Agency) operates foreign and military cyber-intelligence under the auspices of the Indonesian Armed Forces.

Meanwhile, both agencies are separate from Badan Intelijen Negara (State Intelligence Agency – BIN), an independent body that carries out general intelligence operations on behalf of the state.

Any effort to improve interagency cooperation must be cognizant of the jurisdictional maze controlled by either of these agencies. Since overlap is a risk, ensuring a clear standard of operation and procedure as well as data sharing mechanism are crucial. Clear boundaries between the two would also assist the prospective data protection authority to identify and remove gaps as well as executing its task efficiently.

Will all of these issues, it might be too tall an order to expect BSSN to safeguard our data and systems in Indonesia, especially if multiple cyber incidents occur simultaneously. Therefore, there is an importance to enable the private sector, civil societies and the grassroots to learn the most basic cybersecurity and cyber-hygiene skills. Local universities could serve as an important partner to advocate for and administer such agenda. 

Linked to that is the importance to tweak the ICT curriculum in schools and universities, which must now incorporate some elements of cybersecurity. This will prepare young Indonesians to better equip themselves against potential cyber incidents.

In an era where cyber-attacks can be used as a bargaining chip in a geopolitical game, Indonesia must uphold its guiding foreign policy principle of bebas aktif (free and active). This principle continues to bestow Indonesia with a large strategic room to manoeuvre the uncertain geopolitical landscape, allowing Indonesia to avoid being overdependent on a single partner.

As indicated above, a previous alignment (the Philippines) or a golden bilateral relationship era with China (South Korea) did not spare the two countries from being targeted by China’s cyber activities. These should serve as a warning alarm to other middle powers such as Indonesia, that must undertake a selective alignment process to balance its approach to different powers in today’s geopolitical flux.

For example, Indonesia should consider enhancing its cooperation with partners in the Mexico, Indonesia, the Republic of Korea, Turkey and Australia (MIKTA) grouping. The last of these three countries are open for collaboration with others in the regulation of the cyberspace. It is thus to these three countries that Indonesia could potentially turn in order to elevate its cyber capacity through close consultations and exchange of best practices.

Introduction

The bilateral relations between Indonesia and South Korea have notably developed in the past few years.

For one, the Indonesia-South Korea relations was upgraded into Special Strategic Partnership in 2017 under the augur of the New Southern Policy, championed by former President Moon Jae-in. This upgrade resulted in an increase of South Korea’s investment into Indonesia.

More recently, the Indonesia-Korea Comprehensive Economic Partnership Agreement (IK-CEPA) was concluded in 2020 and officially entered into force on the first day of 2023. The agreement is expected to accelerate South Korea’s investment in Indonesia to 15,59% on average by its fifth year.

The sitting President Yoon Suk Yeol has also displayed a positive disposition towards Indonesia. President Yoon organized a state dinner during President Joko “Jokowi” Widodo’s visit in July 2022 that included prominent individuals such as Shin Tae-yong, the coach of Indonesia’s football team, as well as chairmen of Hyundai Motor and LG Group.

The bilateral relations is in its 50^th year in 2023, a cause for celebration, and Indonesia seems to have grabbed on this opportunity to foment the relationship stronger. This is reflected in the cultural, economic and entertainment sectors. 

Cultural Diplomacy

Indonesia’s cultural diplomacy with South Korea consists of a variety of initiatives. For instance, an Indonesian delegation participated the 14^th Seongbuk Global Food Festival Nurimasil in Seongbuk District on 25 September 2022. The Indonesian Embassy introduced some local cuisines including bakso, nasi goreng, martabak telur and tempe goreng to visitors.

A month later, Indonesia also participated in Itaewon Global Village Festival 2022. This time, the Indonesian booth exhibited traditional-style clothing, fabric and garment products. To liven things up, Kelompok Tari Tradisional Indonesia (Indonesian Traditional Dance Group – KTTI) performed Gantar Belian, a traditional dance from Kalimantan region. KTTI consists of Indonesian migrant workers and professionals who settle in South Korea.

Moreover, another boot displayed Indonesia popular such as Kopiko, a coffee-flavored candy, and Indomie, a worldwide instant noodle phenomenon. At the end of the event, the Mayor of Yongsan District named the Indonesian delegation as the top exhibitor and rewarded them with a gold medal, while KTTI clinched the Gold Prize and won KRW5 million.

In March 2023, the Indonesian Embassy opened a free class on Indonesian Creative Economy and Cultural Program that lasted until June 2023. The class consisted of a gamelan course and a traditional dance course jointly taught by KTTI.

Furthermore, the Embassy also hosted the Indonesia Festival Week in Busan University of Foreign Studies on 26-28 April 2023. The festival included an open lecture by the Indonesian ambassador, a storytelling and poetry-reading competition, and a book review session titled Budaya Indonesia di Mata Orang Korea (Indonesian Culture in the Eyes of Koreans). The Festival was also held on 4 June 2023 in Ansan, where it was reported to have attracted 2000 visitors.

These series of cultural activities attracted a large following and crowd from the public, while the participation and achievements of Indonesian representatives in local festivals surely boosted Indonesia’s profile in the eyes of Koreans. Moreover, it also reflects a positive development in the Indonesia-South Korea relations, as evidenced by the enthusiastic reception of the Korean public and local government.

People and Capital Movement

On the economic front, some activities are worth mentioning. The Indonesian central government assisted the local government of North Sulawesi to promote its creative economy and tourism sectors through the Colorful North Sulawesi event, which was held on 07 December 2022.

The event was also a business matchmaking platform between Indonesia and Korean stakeholders, especially in the sectors of hospitality, fashion and culinary, as per President Jokowi’s mandate to advance post-pandemic economic recovery.

Prior to this, Jeju Airlines and the Governor of North Sulawesi inked a Memorandum of Understanding (MoU) in September 2022 to boost the region’s connectivity. At the national level, the state-owned flight carrier Garuda Indonesia gradually increased additional flights between Jakarta-Seoul and vice versa from twice a week to three times by May 2023. Moreover, Garuda Indonesia also offers a Bali-Seoul route, scheduled twice a week.

In the financial sector, the Korea Financial Supervisory Service (FSS) agreed to implement employee exchange program with Indonesia’s Otoritas Jasa Keuangan (Financial Service Authority – OJK) to facilitate Korean companies’ familiarization of the Indonesian market and regulations.

Activities on these fronts indicate that the movement of people and capital between the two countries would be a key aspect of the bilateral relations in the future. Increased flight schedules between the two countries would surely facilitate Indonesia’s target of hosting 20 million tourists per year. Meanwhile, assisting Korean companies to understand Indonesia’s regulatory landscape would help with the inflow of foreign investment into the country, especially at the time when Indonesia pursues ambitious projects such as Nusantara, the new capital city.

The Entertainment Industry

South Korea’s entertainment industry, which is well-known for its K-pop and K-drama, is gradually warming up to Indonesian talent. In February 2019, two Indonesians, namely Mavin Saputra and Zhavanya Meidi, debuted as K-Pop idols under group Z-Boys and Z-Girls respectively. These groups uniquely consist of non-Korean idols from across Asia. A year later, a girl group called Secret Number also debuted, a member of which is Indonesian Dita Karang.

Furthermore, Indonesian Muhammad Zayyan joined a new boy group named Xodiac, which debuted in April 2023 under One Cool Jasco (OCJ) Entertainment agency. Recently, the Korean Foundation for International Cultural Exchange (KOFICE) also organized a project hosting overseas idol groups to take a part within cultural exchange program Grow TwoGether in South Korea. A Bandung-based girl group, StarBe, participated in the event and will release a Korean-language single.

On the K-drama side, Indonesian actor Chicco Jerikho stunned the public when he starred in Office Romance Recipe, a four-episode drama that premiered in November 2022. Chicco shared a scene with A Business Proposal stars, Ahn Hyo-Seop and Kim Sejeong, two popular faces in K-drama these days.

Ways Forward

Despite the above soft diplomacy thrusts by Indonesia in South Korea, are these efforts sustainable and effective?

In terms of the entertainment industry, at least some headways are made through the inclusion of Indonesians in new K-pop groups. Indonesian showbiz companies such as talent agencies should utilize such an opening. For example, these companies could learn from their Thai counterparts on ways to match-make their media stakeholders with Korean counterparts, including the regulator agency and entertainment companies. Moreover, a public-private cooperation scheme between Indonesia and South Korea in showbiz should be considered as well.

One could say that this opportunity is wider now that ROK is experiencing a form of stagflation, which means the country is channeling extra efforts to boost its creative economy sector (which includes the entertainment industry). This translates to potential job creation, enhanced people mobility and capital flow between both countries.

Two-way travel between Indonesia and South Korea should also be maximized. There is already a steady inflow of Indonesians into South Korea owing to the latter’s cultural appeal and technological sophistication. Indonesia simply needs to increase its appeal as well, not only as tourism hotspot but also as a destination country for foreign investment.

Lastly, Indonesia’s attempt to enhance its visibility in the Korean public, through participation in local festivals, events and competition, is already a step in the right direction. An increased public approval and sentiment by the Korean people towards Indonesia could build a solid foundation on which the bilateral relations could stand and develop further in the future.

Introduction

At the time when China was first accused of exporting the virulent Covid-19 in 2020, China’s popular ice cream and tea chain Mixue also opened its first outlet in Bandung, Indonesia. It was first franchised to PT. Zisheng Pacific Trading and by the end of last year, 300 more Mixue outlets had opened. Notably, Mixue has recently established its branches in Malaysia as well.

The positive reviews Mixue has received in Indonesia have spurred youths to create memes and videos about its rapid expansion. While creating comic relief, it is also worth a closer analysis, as it indicates heightened local taste for Chinese product and China’s effective soft power.

A Lucrative Business

Mixue’s business strategy is undeniably behind its popularity. The company conducts effective promotion in social media that are popular among the youths: Instagram and TikTok. For example, Mixue’s account would repost consumers’ recent purchases of Mixue’s products. Reviews and postings by minor celebrities have also elevated the popularity of its menu. Mixue’s direct interaction with consumers’ accounts led to a creation of a Mixue fan page on Instagram that further solidifies consumer loyalty.  

Mixue’s cheap price and low operational fee are the main attractions to consumers and business owners respectively. Mixue’s selling price for its products is highly competitive, starting at Rp8,000 for an ice cream and Rp10,000 for its tea beverages. This pricing strategy appeals strongly to Indonesia’s middle-class market, which is dominated by youths.

For business owners, it is budget-friendly to obtain Mixue’s license. Potential licensees only need to spend around Rp300 million after a discount given by PT. Zisheng Pacific Trading. Furthermore, the Indonesian company also provides a plethora of assistance to new licensees, including space setting, recipes for the menu, staff uniform, banners, social media promotion, raw materials and equipment. Meanwhile, owners can expect an income of Rp300 million per month from sales, making this deal highly lucrative.

Licensees also benefit from Mixue’s own supply chain ecosystem that is centralized in China. Henan Daka Food Co. and Shangdao Intelligent Supply Chain Co., Ltd. respectively are Mixue’s collaborators for product development and storage as well as logistics. This centralized ecosystem is a huge benefit to Mixue as China’s local supply chain is relatively stable compared to the rest of the world, owing to the public-private collaboration on land management, agrotechnology and financial support. This stable supply chain is a boon for Indonesia’s market as it renders Mixue’s product price impervious to fluctuation.

Mixue’s business model might be reminiscent of popular coffee chain Kopi Kenangan, which has obtained the “unicorn” status in Indonesia. This chain is even bigger, with almost thrice the number of Mixue’s outlets and more presence in Sumatera and Sulawesi. Compared to this, Mixue’s outlets are concentrated mainly in Java’s urban centers, such as Jakarta and Bandung.

The difference is that Kopi Kenangan does not franchise its business to external investors, as all outlets are owned and operated by its parent company. This contrasts Mixue’s model which opens the opportunity to anyone.

This is where Mixue’s uniqueness compounds. Its model demonstrates a more egalitarian orientation, allowing local investors to engage in its business while deriving the benefits of stable supplies from China. Furthermore, business owners can directly interact with its arm in Indonesia, PT. Zisheng Pacific Trading, without the inconvenience of relying on a middleman. This model, thus, appreciates and empowers local entrepreneurs while bestowing the advantage of China’s supply chain on them. A double benefit for business owners.

Chinese Soft Power?

Mixue’s popularity in Indonesia cannot be extricated from the larger phenomenon of China’s huge economic interest in Indonesia. China remains as Indonesia’s largest trading partner for nine years in a row, with the trade value in 2021 stood at US$124.3 billion. The Middle Kingdom is also among Indonesia’s top five sources of foreign direct investment (FDI) – in 2021, its total stock of FDI reached US$20.08 billion. Surely, the proliferation of Mixue outlets moves in the same direction as China’s heavy investment in the Indonesian market with socio-economic implications that might follow.

Mixue’s popularity could be viewed from the lens of China’s soft power. The craze over Chinese sugary beverages could temper some of the negative perception towards China and ethnic Chinese in Indonesia, which seems to be building up in the last few years. Conversely, there were calls to boycott Mixue with a small-scale demonstration staged in Jakarta in January 2023 due to the lack of halal certification. This is interesting considering that foreign establishments such as Breadtalk (Singapore) have not received such reactions despite the expiration of its halal certificate years ago.

In 2022, it was  also reported that 25.4% of Indonesian respondents viewed China’s rise as having negative impact on Indonesia. Similarly, 65.9% of Indonesian respondents expressed concerns over China’s growing economic influence in Indonesia in 2021. Such downward trend is likely exacerbated by occasional negative incidents, such as the recent riot between Chinese and Indonesian workers of PT. GNI in Morowali, Central Sulawesi.

Interestingly, this negative perception towards China does not necessarily impact Indonesians’ financial decision. Chinese smartphones Oppo and Vivo topped the Indonesian market share in the past four years, beating Samsung and Apple. It was also reported that Chinese smartphone brands always made it to the top five in the past years.

When viewed as individual companies, they may seem insignificant at changing any negative perception towards China. However, the increasing ubiquity of Chinese products in the daily lives of Indonesians could help improve China’s image. Additionally, while such studies have yet to be conducted in Indonesia, studies have suggested that knowledge of the country of origin of a brand can enhance the image of the country in which the brand originated.

Potential Socio-Economic Issues

However, Mixue’s culinary diplomacy could face obstacles as Indonesia is on a campaign to curb the domestic consumption of sugar in a bid to address the proliferation of diabetes. In Southeast Asia, Indonesia ranks third in terms of per capita consumption of sugar sweetened beverages (SSB), at 20.23 litre per person. This high consumption rate is primarily due to the cheap cost and accessibility of SSB.

In 2022, the Ministry of Health stated that 19.5 million of Indonesians suffered from diabetes, while 219 million others were at risk of developing this condition. Notably, Indonesia’s population is around 270 million. The total economic cost for diabetes treatment in 2016 alone was Rp7.7 trillion and this figure is expected to go up as more Indonesians develop the condition in each succeeding year.

This is part and parcel of an ongoing discourse in Indonesia regarding the prospective introduction of an excise tax on SSB. The government has acknowledged the negative effects of overconsumption of SSB, especially in its contribution to obesity and diabetes. Such excise tax would certainly impact the industry across the board and the ball will be in the court of private companies like Mixue to balance the dual interest of maximizing profit and being sustainably responsible.

Here, it is worth looking into whether increasing critical views towards sugary beverages in Indonesia would stop at the producing company (i.e, Mixue) or extend all the way to China. In comparison, Indonesians often associate McDonald’s and Starbucks with the Western interests, whether rightfully or wrongfully. Despite its popularity, for example, McDonald’s in Indonesia has often been targeted by angry demonstrators who object to capitalist ethics. Sarinah’s Starbucks was also a bombing target in a 2016 terrorist incident because of its perceived association with the Western interest.

Conclusion

While there is an ongoing negative perception towards China among Indonesians, perhaps Mixue’s sugary products are a cog in China’s remedy to the problem. The potential of Mixue, a private sector company, to emerge as tool to promote China’s positive image abroad should be taken into account by the epistemic community, analysts and policy makers in Indonesia alike. The same applies to other popular Chinese products in Indonesia, such as Oppo, Vivo or even Miniso. After all, soft power is not the exclusive dominion of the state, as other actors could wield this tool to affect a perception shift on the target as well.

It should be remembered that China puts a big bet on its soft power and has utilized both traditional (e.g. Confucius Institutes as well as educational exchange) and non-traditional tools of soft power (e.g. literature, art, film, music, scholars, sports figures and even pandas) to advance its agenda.

Nevertheless, leveraging on such soft power approaches requires fine balancing due to its potential of being a double-edged sword. Negative associations with such soft power tools may lead to a backlash against China. It does seem like a murky water to navigate, but China is unlikely to be hesitant to rise up to the challenge.