5 Insider Tips on How to Nail A Business Deal in Indonesia

BRIGHT Indonesia consultants give their advice for Indonesian business deals.

Let’s say you are a company from Europe or America looking to expand to Indonesia to reap its market potential. You are preparing for a business meeting with an Indonesian partner to export your products to the country. Your ultimate goal is to land a successful business deal for market entry. What information about Indonesian business communication are essential for you to know before the meeting?

In our communication article series, we have explained the importance of understanding culture for business communication and discussed the five techniques that Indonesians use for bargaining. For this article, we talked to consultants from BRIGHT Indonesia, a global trade and investment specialist consulting firm in South-East Asia, who share their experiences and the lessons they have learned from years of experience working on the field with clients from multiple continents. What are the aspects that we should look out for that are not talked about in outside sources? What things deviate from the theories suggested in academic articles? These are 5 insider tips.

1. Everything begins with a cordial relationship

In Indonesia and most other South-East Asian countries, people do not immediately get down to business during the first meeting and completely end contact after the last meeting. They spend time building cordial relationships with partners before they can trust one another. This business relationship often lasts for years, reaching even 40 years by becoming life-long business partners with a very favourable position.

Despite this well-known fact that relationships are important in countries with a collectivist culture, many Western businesses still choose to overlook this. A common mistake among international businesses that want to distribute their products in Indonesia is assuming that if their product is good, it will immediately sell. This is very rarely the case because Indonesian distributors already have a list of existing partners that they work together with, why should they add you to the list?

Convincing your potential partners through the superiority of your product is not enough. In this aspect, forming a good warm and outgoing first impression with key decision-makers during a meeting is important. There is actually an easy trick to make a good first impression. You need to learn two phrases: “Apa kabar” (how are you) to break the ice, and “Terima kasih” (thank you) for a good meeting closure.

2. Non-verbal communication tells more than words

Indonesians are indirect communicators; they find it very hard to say something negative in front of the person and to say no. The problem here for international businesses is, how would they know that they are being rejected?

In this aspect, understanding non-verbal communication such as body language is essential. The Indonesian partner might be saying yes, but the way the person says it, the hand gestures, the way the head moves in an unsure way, or how the person’s eyes darts all over the place, are clear indications of a “no”. Thus, non-verbal communication acts as a better sign of whether or not the business deal is going favourably.

3. Understand that schedules are rarely set in stone

Usually, international businesses prefer meetings to be scheduled at least two weeks before to reduce uncertainty and better order plans. Yet, last-minute meeting changes are very common for Indonesian companies under the excuse of “keperluan mendadak” (there is a sudden need to do something else).

This, however, does not mean that the company is not interested in the deal. It is just part of the business culture; because other businesses often change their appointments, the schedule of the business partner you want to meet up with is also not set in stone. In this aspect, you need to give in by showing understanding and flexibility because it is the norm. Rescheduling meetings are especially easy for virtual meetings. Therefore, this is something that you should be prepared for.

Nonetheless, one cannot carelessly generalize this to all businesses in Indonesia. Whether or not this culture applies highly depends on the director of the organisation. Usually, if the director is a foreigner, or has worked or studied overseas, the company rarely re-schedules according to the experience of our consultants. The same goes for international franchise or subsidiaries.

4. Utilize the preferred mediums of communications

While knowing how to effectively communicate is important, choosing the right communication medium is just as important. Contrary in Western countries, the email culture in Indonesia is not established. Companies and business people do not always check their emails. The preferred medium of communication here is WhatsApp for both business and private matters.

Based on our consultants’ experience, foreign businesses are usually reluctant to use WhatsApp for business matters because it is regarded as informal. Our advice is to get rid of this assumption and utilize the application instead. The best time to reach out for a partnership is between 8–10 AM before the first morning meeting takes place. Emails are usually sent to people in higher positions and even when sending emails, you should call them afterward to tell them that you have sent an email. Receiving an email not followed by a call usually leads to the email being ignored.

The right medium also needs to be chosen for virtual business meetings, a type of meeting that is currently gaining popularity. The most common online meeting platforms used in Indonesia are Zoom, Google Meet, and Skype. The people are often nervous and worried about using other platforms due to technical issues, which can lead to a business meeting being canceled.

5. Understand when an interpreter is needed and when it is not

A common question when preparing for a business meeting is whether or not an interpreter should be present. To avoid the other party to lose face, you should carefully ask if they would prefer an interpreter to be present (for their convenience), not ask if they need it. It is also worth considering for your part that if you think the other party truly needs an interpreter, whether or not it is a good idea in the first place to pattern up with that company because it might be difficult to follow-up with them.

Furthermore, it is important to note that for business meetings, the role of an interpreter is not only to translate but also to soften the way messages are conveyed so that it translates correctly to the Indonesian culture. For example, when the foreign business is asking something directly, the interpreter might need to communicate the question in a more round-about way.

A Remark on the Reality of Business Deal Negotiations

There are certain aspects of a business negotiation that are not talked about in academic or open sources. Business negotiation scenarios are usually painted in a good light in articles and books, as authors are often reluctant to talk about sensitive issues such as honesty. Facing the darker realities of business deal negotiations, we should not have prejudice on the other party but we should still be cautious. In truth, not all information will be shared between negotiators (like company trade secrets) and not all shared information will be true. Knowing this, both sides usually conduct due diligence without the other’s knowledge to verify the information given during the meetings. This act is both normal and recommended.

Touching upon the issues of honesty, for businesses that want to export products to Indonesia specifically, it is better to rethink trusting direct cash on delivery. Having a down payment or pay-in-advance option is preferable. Also, make sure that you have a good letter of credit from a trusted bank to avoid issues in international business payments.

Do Business with BRIGHT Indonesia

The five insider tips mentioned above should give you better practical guidance on how to nail a business deal in Indonesia. With the reality remarks in mind, aside from learning the five tips, it is recommended for a foreign business to have an advisor with acute business acumen and good knowledge of the local market for an easier market entry process.

At BRIGHT Indonesia we will help your businesses to enter Indonesian market through services such as Business Partnership Engagement, Foreign Direct Investment Promotion, and Management and Strategy Consulting to secure the agreement between your company and your future Indonesian business partners, support your company from the private sector with the development of corporate/business unit strategies or helping your company from public sector organizations with public policy, and link your company both from the private and public sectors in global foreign direct investment (FDI).

For more information, email info@brightindonesia.net.