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Published October 17, 2024
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Published October 17, 2024
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As businesses expand globally and the marketplace becomes more accessible to companies of all sizes, the future offers increasing opportunities to operate internationally.
The virtual working space has made multinational and cross-cultural teams more common, enabling businesses to tap into diverse knowledge and gain fresh perspectives on business issues. Yet, with these advantages of diverse insights, global organisations can also face potential cultural challenges while conducting international business without the appropriate advice and knowledge.
In an international business setting, the norm for a professional may differ significantly from the expectations of a colleague from another country. Understanding how different cultures influence key aspects such as communication, etiquette, and organisational hierarchy can help businesses avoid misunderstandings and succeed in global business.
Indonesia has a diverse and wonderful mix of cultures and traditions. The Indonesians speak various languages and practice many different beliefs, and because of this, conducting business there comes with its own set of rules. People in business and outside the office tend to concentrate on togetherness and showing respect, which significantly impacts how they work and make choices.
Knowing these different elements is extremely important for business practice in Indonesia, where old customs and modern concepts mix seamlessly. Below is a guide for those wanting to respect those business customs and to find out more about business culture in Indonesia.
Indonesian meetings can be structured and, at the same time, casual! The Indonesian participants will enter the meeting room based on their hierarchal positions. Most Indonesian businesspeople are Chinese and tend to be prompt for all appointments. Others are ethnic Malays, who, in contrast, can sometimes place less of an emphasis on efficiency, punctuality and deadlines.
Meetings almost always start with a lot of small talk, which can last some time – up to an hour! Do not think this is wasting time, though; this is for all participants to become well acquainted. There is no pressure on you to take the lead, so be patient and let the Indonesians set the pace. They will appreciate a sense of humour but keep it light and friendly. Remember – business is a serious subject in Indonesia.
Negotiations generally proceed very slowly, and little progress is usually made in the first session. In general, Indonesians like bargaining, and giving concessions too quickly will be viewed as naivete. Verbal contracts and understandings are considered important, but a written legal document should follow.
Indonesians generally take a non-aggressive approach to business as they view boisterous behaviour negatively. Instead, they speak softly and with little emotional weight. Try to echo this same style of communication. Show compassion and be personable, but do not be confrontational or let emotion get in the way of negotiations.
Almost everything can be seen as negotiable in Indonesia, so expect some bargaining. Indonesians 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.
If there is one thing that many Indonesian workers value, aside from a harmonious place of work, it is reputation. Otherwise known as ‘face’, reputation determines a worker’s life. It is linked to a person’s dignity, honour, and value.
Most Indonesian workers avoid conflicts and confrontations mainly to save face. A blemish on Indonesian workers’ sense of pride could potentially push them to resign from the company. You should avoid mocking or insulting anyone and address shortcomings privately.
Foreigners should keep the importance of ‘face’ in mind in all business dealings and not just in employment situations to be successful in the Indonesian business culture. Your counterpart will be sensitive to this aspect in negotiations, partnership undertakings, public meetings, discussions about joint performance, expectations, etc.
In Indonesian business culture, personal relationships hold significant importance. Trust is considered essential for a successful business, and your Indonesian business partners will look for a genuine commitment to the relationship from you. Business networks there often consist of relatives and close associates, as nepotism is seen as a way to ensure trust and success in the business’s future.
Indonesians tend to approach business as a relationship between individuals, not just companies. You are viewed more as a person than as a representative of your organisation. As a result, expect questions about your family and personal life as part of building rapport. While this may seem direct or overly personal, it is not meant to offend. In fact, reciprocating this interest by asking similar questions will show mutual respect and help grow a stronger connection.
Once a business relationship is established, always be present in all business discussions, and remember that schedules could be flexible and lead times longer, so be ready to adapt.
Focus more on building rapport and a good relationship with your business partners rather than rushing to close a deal. Although there may be cultural differences, taking time to learn the etiquette, customs, and culture will help your business in the long run.
Most Indonesians know that multinationals have a different corporate culture and will accept differences.
Adhering to a country’s business etiquette is not just a matter of courtesy — it’s a smart business strategy. As you prepare to expand internationally, take time to research the country and its culture. This will help you build respectful business relationships and avoid unintentionally violating local laws or offending cultural or religious norms.
Business regulations may vary significantly from what you’re accustomed to, so ensure you’re familiar with them to ensure legal compliance. Additionally, if the country conducts business in a different language, learning it could be a valuable asset.
Successfully navigating the intricacies of Indonesia’s business culture requires more than just surface-level knowledge. If you’re entering new markets or managing international teams, understanding cultural norms can mean the difference between success and missed opportunities.
Global Business Culture specialises in helping businesses thrive in cross-cultural environments. Our tailored training programs equip your team with the insights and strategies needed. With expert guidance, your business can build lasting partnerships in Indonesia and beyond, avoiding costly missteps and enhancing collaboration.
This guide has been produced by Marvin Hough, a Canadian business executive and university professor with extensive experience in international markets. During his career, he has facilitated Canadian exports and investments to global markets while working for 30 years with Canada’s official export agency, Export Development Canada (EDC). His career included overseas assignments in India, China, and Mexico where he faced and observed business culture issues on a day-to-day basis.
Since completing his EDC career, Mr. Hough has continued to be actively involved in international business through teaching at the University of Ottawa’s Telfer School of Management where he has led MBA consulting trips to markets such as China, Brazil, South Africa, and Vietnam.
Mr. Hough also runs his own firm, Marvin Hough International Research and Analysis Limited (MIRA) (www.miraservices.ca) which supports Canadian and international companies, educational institutions, and governments in entering and operating in diverse international markets.
Throughout his career, Mr. Hough has felt that Western firms should place more attention on understanding and adapting to business culture as they conduct business in global markets. He is pleased to collaborate with Global Business Culture to support greater understanding on the business culture file by producing these guides.
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