Americans Doing Business in Indonesia

Introduction

I am employed in the research and Development Department of Excellent Products, inc. who is located in Lansing, Michigan? My CEO believes that the company may have potential expansion capabilities outside the United States of America and has asked me to find and assess information on the cultural fit between Excellent Products Inc. and specific target countries around the globe. She asked me to research Indonesia, and this is the report of my research findings:

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Indonesia is a country formed by a total of over 17,000 islands. The population of this country is estimated to be 234.7 million people. This makes it to be the number four highly populated country in the world. The capital city of this country is Jakarta. The country has approximately 350 different ethnic groups. The Javanese form 45 percent of the population. Other large groups include Sundanese forming 14 percent, coastal Malayas form 8 percent well as the Madurese and the Chinese make 2 percent of the population. The private economy of this country is under the control of the Chinese. On religious grounds, the country is dominated by Muslims that stand at 80 percent of the total population. The Christians represent 8 percent and the Hindus together with other religions 2 percent (Culture Grams World Edition, 2009). The Indonesian current president is called President Susilo Bambang Yudhoyono. Indonesia has had a female president by the name of Megawati Sukarnoputri. She was the daughter of Indonesia’s first president, Sukarno. She was the country’s fifth president and came into power in the year 2001 (Anonymous, Megawati becomes Indonesia’s 1st woman president, 2009).

The common stereotypes

Indonesia is known to be the World’s number one host country for the Islam religion. Most Americans have a misconception about this religion. To them, the mention of the word “Muslim” reminds them of terrorism that greatly hurt the American people that occurred on September 11, the year 2001. More so, what also comes to their mind is the war in Iraq (Childs, 2005). Therefore, Americans tend to view the people from the Muslim world as those that do not love peace. They regard it as quite risky to do business in a country dominated by Muslims.

However, this is not true. American people have been able to do business in Indonesia or with Indonesia for a long time. For instance, according to the United States Commercial report, (2009), “Doing Business in Indonesia”, Indonesia is a top-ten United States market of Agricultural commodities and this country is among the first thirty overall markets for the exports of the United States.

Modernizing of the country

Indonesia is making an attempt to do away with the old habit of corruption and put in place a government that upholds transparency and accountability. However, in this country, the former elites, whether the business elites, the political elites, or administrative elites go on to look for influence and build up their position in the current system that embraces democracy through the networks that are informal (United States Commercial Report, 2009).

In this country, there is a very high rate of foreign investment but even if that is the case, the investors are still very much concerned about corruption and a doubtful legal environment. These issues are viewed as the main challenges one can encounter in the course of doing business in this country. The government has introduced important changes in the financial sector and these include making reforms regarding tax and customs, the treasury bills have also been introduced, and also there is some improvement in the supervision of the capital markets (Anonymous: Indonesia, 2008).

Business Protocol

Language

It is quite vital for one conducting business in Indonesia to get to understand the local official language which is Bahasa. However, the English language is as well frequently used but using English can not be enough. All the correspondence that is official and made with the government officials should be in the Bahasa language. It should also be understood that making advertisements and publications are supposed to be done in the local official language. Luckily, several interpreters are easily available and one can get one without so many struggles. But great care should be taken in picking these interpreters because some of them tend to be untrustworthy in carrying out the translation for they may alter the message that was intended to be conveyed. Someone looking for a translator should take great caution to ensure that the kind of interpreter she or he is having is someone of the highest integrity (Anonymous: Indonesia, 2008).

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Appointments

In general terms, the citizens of Indonesia do not put very much emphasis on punctuality, efficiency, and deadlines the way people from the west do. The punctuality of these people is dependent on one’s status in the hierarchy of the organization with the superior coming later than the subordinate. But for the case of a new person who is just coming in this country, he or she is expected to come at the right time during the appointments. So it is quite important for someone to exercise patience and compose him or herself.

Business Attire

Generally, in this country the business attire is conservative. On the part of women, they should be much aware of the beliefs of Muslims and dress in a most conservative and modest way. The clothes that are tight should be avoided as much as possible. The skirts are not supposed to be short as to be above the knees and the top clothes should cover the upper arms.

Names and Titles

To the Indonesians, titles symbolize status and they regard them very highly. When addressing an Indonesian, one should start with the title and then the name. When someone is not sure, it could be very well if one confirmed the title from the individual to be addressed.

Conversation

The Indonesian people like not passing their messages in a direct manner. So it is the responsibility of the one being communicated to be keen or to pay very close attention to the gestures and the language of the body in order for him or her to get the intended message. These people strongly don’t like being confronted. When one is polite to them, they may take their time to explain clearly to the person the right message they intend to communicate.

Indonesians do not believe that it is polite to disagree with someone in an open manner; it is not common among them to say “no” to a person. Someone listening to an Indonesia is supposed to be keen enough to identify a “no” response (Morrison & Conway, 2006). This problem can not be there if one learned to speak and hear the Bahasa language since this language has about twelve ways of saying “no”. It is hard to translate this to any other language. More so, the Indonesian people are not disturbed by the silence of someone they are talking to whether in a social scenario or business one. To them, silence does not essentially imply acceptance or refusal. This conduct makes Westerners be really uncomfortable since they are not used to this. A pause with a show of respect can take up to fifteen seconds. The people from the West in most cases make an assumption that there is agreement and go on talking before the response is obtained from the Indonesian (Morrison & Conway, 2006).

Meetings and Negotiations

The first meetings may be all about just seeking to get to know you than discussing business matters. It is not a big surprise to realize that in these initial meetings even no business is discussed. According to the business culture, they seek to establish trust and respect in someone they are dealing with. The Indonesians by nature have no hurry in making decisions so someone dealing with them has to practice a lot of patience. More so, Indonesians like to negotiate so much in order for them to get the best deal possible. Haggling over a business deal is quite normal here (Anonymous, Indonesia. 2008).

Acceptable Public Conduct

When speaking, it is vital that this be done in gentle and quiet tones. More so, one is supposed to stay calm and put in check his or her emotions. Apart from the handshakes, no other physical contact between opposite sexes is allowed in public but that between members of the same sex is accepted. The Muslims and Hindus believe the left hand is not clean and therefore, one should make all the efforts possible not to use it to give out anything or receive. Standing with your hands akimbo is seen as a posture that portrays anger and aggressiveness. Eating as one walks in public or chewing gum is discouraged (Nwanna, 1998).

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Conclusion

Since now the cultural setup and the business environment of Indonesia, in general, has been considered, the main concern now focuses on how the Excellent Products Inc. Company will have to sell its products in this country. Given the fact that, as indicated earlier, several firms of American origin have been operating in this country, this implies that the EPI Company can as well do business in this region. The main products to be exported to this country will be food products and mostly liquid proteins with all vitamins included.

This initiative to sell the food products follows the estimates given by the World Food Program. It was reported that over 13 million children especially those under the age of five suffer from malnutrition. Several of them died of malnutrition during the first six months of the year 2008. It is reported that, in Indonesia, the cost of protein-rich, soya-based products went up by 50 percent making it quite unaffordable for the local people since the cost of fuel prices had as well gone up by 30 percent. It is also reported that about half of the total population of Indonesia lives on less than two dollars each day (Anonymous, Child malnutrition aggravated by food, oil price rises, 2009). All this information indicates that there is an opportunity in the Indonesian market. Taking the initiative to supply these people with affordable food products will enable them to overcome the problem of malnutrition and clear off starvation.

The main challenge here is how to access this market and start operating in it more effectively especially given the fact that this is the first time EPI is extending its operations to this country. As already seen, people in this country have a completely different culture from the one the American people have.

However, because EPI has a business interest in this country and is ready to supply products that might be having high demand, these cultural differences should not stand in the way. The company is supposed to embark on training people who are supposed to be involved in the new operations in Indonesia on how best to go and fit in the Indonesian community. As already pointed out, an American entering Indonesia with an intention to succeed in business, or should exercise a lot of patience and observe the above-mentioned mode of behavior. The common stereotypes such as associating the Islam religion with terrorism and wars should be put away. It is very important for the CEO of EPI to be aware that by understanding these people and following what they regard as generally accepted behavior the company will definitely succeed in selling its products in this country.

References

Anonymous, Child malnutrition aggravated by food, oil price rises. Web.

Anonymous (2008). Indonesia. ABC-Amega Inc. Web.

Anonymous, Megawati becomes Indonesia’s 1st woman president. Web.

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Childs, C. (2005). Breaking the Stereotypes of Islam. Associated content. Web.

Culture Grams World Edition. (2009). Republic of Indonesia. Culture Grams.

Morrison, T. & Conway, W. (2006). Kiss, bow, or shake hands: the bestselling guide to doing business in more than sixty countries. 2nd Ed. Adams Media. ISBN: 1593373686, 9781593373689.

Nwanna G. I. (1998). Dos and Don’ts Around the World: Asia. Baltimore, MD.: World Travel Institute. ISBN: 1890605018, 9781890605018.

United States Commercial Report (2009). Doing Business in Indonesia. BUYUSA.GOV. Web.

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