A guide and things to consider in finding perfect business partners.
When building a business you feel passionately about, of course, you will do everything you can to succeed. As they say, if you want it to go perfectly, you might as well do it yourself. However, carrying all this burden means spending long hours and days, and less social life. What started as your passion may turn into an endeavor that saps all your energy and motivation.
In a way, launching a business and doing it solo will only get you so far. But if you find a compatible business partner with the right mix of skills, experience, and attitude, you can successfully nurture your business for the long-term.
According to Pat Flynn on SmartPassiveIncome, entering into a business partnership is somewhat equivalent to getting married. It is not uncommon to spend more waking hours with a business partner than with a spouse. Furthermore, before you even think of pulling the trigger with a business partner, contemplate whether you even need one at all. If you decide it is a good idea, make sure you get the best match for your values, goals, leadership style, and skills. Because once you become partners, it is vastly more difficult to undo the partnership than it is to create it.
In this article, we will provide some tips on what not to do when searching for business partners, especially in Indonesia.
1. Do Not Forget the Culture
In our previous article A Foreign Business Deal in Indonesia, we have outlined how Indonesians owned a collectivist, face-saving, hierarchical culture. This means that it is necessary for you to build and maintain a close and lasting personal relationship before making any deals with your future Indonesian business partners. Furthermore, Indonesians usually only do business with people they know and like. Also note that these business relationships exist between people, not companies. Hence, although you might have won the trust of your local partners, this does not mean that they would trust someone else from your organization.
Another thing to recognize is that Indonesians have the tendency of “saving face”, which means that they need to avoid being humiliated to maintain their reputation and social standing. In many cases, if you cause your business partners to lose face in doing business deals, it would become very harmful and bring disadvantages. You need to understand that Indonesians are using emotional appeal to gain favorable bargaining positions, mainly through smiles. Lastly, by hierarchical means that the decision-making process in the country is concentrated on the highest level, with only little inputs from the lower levels.
In a way, we recommend you not to forget about the cultures that have been around Indonesians for ages. For instance, the Javanese uphold collectivist and communal lifestyle, where they valued relationships before business partnership; The Balinese who valued hierarchy and place concerns on body language & manners; or the Bataknese in Northern Sumatra, where they appear tough and communicate very directly. (Read more Understanding Different Ethnic Cultures in Indonesia and How They Do Business: The Series). You have to understand that Indonesia is a country with hundreds of cultures, and people with certain business gestures might cause you confusion and oftentimes, ambiguity.
2. Do Not Use High-Pressure Tactics
A negotiation tactic, as compared to a negotiation strategy, is a single maneuver to be employed in the heat of battle; a move, countermove, or adjustment employed as you work to gain the best possible outcome at any given moment. According to James A. Baker, tactics may also be used manipulatively by another party, to move you from a position of safety to a place where you are more vulnerable to attack. As a negotiator, you must be prepared for such tactics at every turn.
However, when searching for a business partner or simply conducting a business meeting, do not use high-pressure tactics on Indonesians, as it may turn against you. Indonesians have their version of negotiation pace, and it usually takes a long time due to the need for trust-building. To gain their trust, you need to be prepared to attend several meetings before the deal, and you need to be patient and neatly control emotions throughout the whole process, just in case you encounter delays.
In Indonesia, it is difficult to get rid of a partner if things do not work out. Careful selection of a partner is therefore imperative. Moreover, in regards to Indonesia’s business ethics, avoid talking about government/military corruption in Indonesia as broaching sensitive topics such as these can make an Indonesian feel uncomfortable. They may not know how to respond without losing face.
3. Do Not Assume That Yes Means Yes
One thing to highlight is that Indonesians are very well associated with non-verbal communication. If you are new to South East Asia, this might be a big surprise for you. Indonesians love to smile nearly all the time, talk on any occasion and sometimes exaggerate. These cultural features also apply to business dealings. A local businessman can smile at you even if you made a mistake and all of your money got wasted. Especially if you do not understand the language, do not suppose things are running smoothly when the partner is smiling or even laughing and bring an interpreter to the business meeting.
Furthermore, in terms of communication, do not expect the answer “yes” to mean yes. It could mean one of many things and can only be fully understood through gentle probing and questioning. For example, Indonesians might answer “yes” only to signal that they heard you, not necessarily to agree. Ambiguous answers such as “we will think about it” are also often heard.
An Indonesian’s preoccupation with saving face and politeness can mean that they will be reluctant to give a flat “no” or negative response, even when they do not agree with you. Therefore, focus on hints of hesitation. Listen closely to what they say, but also pay careful attention to what they don’t say and double-check understandings to clarify meaning.
4. Do Not Ignore the Language Differences
According to Adler & Gundersen in the International Dimensions of Organizational Behaviour (2008), the notion that cultural differences are a barrier to doing business abroad is now commonly accepted. However, this commonplace acceptance might have blinded researchers and practitioners to a more basic country-related characteristic with the same impact: differences in national languages.
In Indonesia, for the past decade, the government has stepped up efforts to mandate the use of the Indonesian language in all aspects of life. These regulations reach beyond the traditional role of language in culture and education and invade into the business space. As written by EastAsiaForum, the effort began with Law No. 24/2009 that seeks to protect the sanctity of the national flag, language, emblem, and anthem by regulating their reproduction and use. Beyond its common application in-state communications and education, Article 26 of this law also states that the Indonesian language must be used in all agreements involving Indonesian organizations and individuals.
One thing to highlight is that the standard form of Bahasa Indonesia is rarely found in daily communication. Foreign language speakers in Indonesia can rarely identify the differences, while native speakers know them well. The language you find in textbooks, news broadcasts, or formal publications can be significantly different from those spoken in daily life.
In other words, we recommend you to start learning the basics and fundamental parts of the language, in this case, Bahasa Indonesia. You may take language courses and train with a certified translation agency.
5. Do Not Avoid Business Networking
Networking comes in many forms. It can be through a language class when you just moved to Indonesia, a group or association made up of citizens from the same country or even a runners club. However, the fastest and most productive way to go to expand your network is to join an organization or two that either unite people from certain nations or regions or deal with certain industries.
Regardless of your industry, you are going to have to find useful contacts in Indonesia if you are to do any business here. According to Emerhub, the problem today is that there is simply too much information. The multitude of online sources is huge and there seem to be networking events that might potentially help your business grow at every step. Your time, however, is limited.In Indonesia, there are many clubs and business gatherings that you may join. For instance, Chambers of Commerce and Business Associations; many countries have a chamber of commerce in Indonesia exactly to ease the transition their citizens’ businesses might encounter when entering Indonesia. They usually do not provide services but can most likely help you with valuable advice. Among them are EuroCham, AusCham, BritCham, and many more.
Things to Consider:
- Indonesian business culture is hierarchical based on age and position. Leadership is paternalistic, and the oldest person usually leads to the discussion.
- Despite the hierarchical structure of the Indonesian business, a consensus is sought from everyone before a decision is made to maintain harmony.
- Arrive on time but consider that your Indonesian counterpart may be late to a meeting. Try and be flexible with your time-planning to allow for this.
- Be prepared to answer personal questions from your business partner; he/she wants to know your position first before entering into a business conversation.
- Initial business meetings are usually reserved for acquainting people with each other and building rapport. In the first few meetings, the business might not even be discussed. Avoid seeming hasty to get to the matters at hand as a good relationship is critical to doing business with Indonesians.
- Almost everything can be seen as negotiable in Indonesia, so expect some bargaining. They do not bargain aggressively and high-pressure tactics are likely to collapse negotiations. Therefore, if they have unrealistically high starting positions, allow time to gently sway them over the course of the meeting.
- Do not interrupt an Indonesian. They will usually give you plenty of room to speak and often show a great amount of respect during the conversation. If you do not do the same, they may be too intimidated to share their opinions at all.
- Your Indonesian counterpart may ask for your help or advice. It’s a good idea to readily give personal favors when possible.
Given the thorough explanation, Indonesians can be tricky and hard at times, but once you develop a mutual trust & understanding, your business can run very smoothly, as Indonesians would ensure the partnership and maintain the trust of both parties.
Lastly, this guide should assist you in identifying those individuals who can be invaluable as well as those who should be avoided.
Find The Right Partner Through BRIGHT Indonesia
It is advisable to check out several partners before making a decision, which should be based on a detailed partner profile as the baseline for your search. The best way is to hire a good consultant with knowledge about the local business and Indonesian culture. With BRIGHT Indonesia, you can get the support you need for the profile development and give you some intercultural guidance on how to select the proper partner.
We offer services such as Business Partnership Engagement, Business Incubation and Accelerator, and Business Registration and Establishment. You will be able to secure an agreement with your future Indonesian business partners while getting business advice, business support, and local representation.
You can also obtain expatriates utilization plan (RPTKA), expatriates utilization permit (IMTA), and limited stay permit (KITAS) and establish an initial team in Indonesia and your Indonesian office by getting shared office space, appoint accounting and taxation service providers, get access to mentorship and investors, as well as logistical and technical resources.
For more information, email info@brightindonesia.net.
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