The Indonesian economy is booming and promises steady growth. Good opportunities for companies so. But the entry into this huge market is also a challenge for international companies.
Due to a different business understanding, a different way of life and culture, some points should be considered to overcome hurdles and make successful business.
GROWING MARKET - INCREASING OPPORTUNITIES
Indonesia is currently a hot topic when it comes to promising future markets. The possibilities offered by this emerging country seem to be unbelievable and endless. In this spirit of optimism, it attracts a lot of international companies. They want to participate in this growth from the very beginning, join in at this upswing and enter a market which opens huge sales opportunities.
In fact, Indonesia is the fourth-most populous country in the world and has brought it in the years since the Asian crisis of the late 90s quite far. The economy is growing steadily, the increase in GDP in 2015 of more than 4.8% felt by many investors as a strong lure.
A consumer market of more than 250 million potential customers, a growing middle class, increasing local income, yet favorable conditions for manufacturing and production promises good, solid, long-term profits. Production and sales curves for alternative energy, palm oil, food and other agricultural products show a clear upward trend and many government programs facilitate foreign investors to get started.
All in all, the chances are currently as good as ever, and those who plan long term and want to participate in the growth, should seize the opportunities now to offer their products or services in Indonesia. Numerous companies from the US, China, Japan, Korea and South America have already taken this step or are about to do it. There is no reason for your company to remain outside, especially if your products or service fit to the growing demand of Indonesia’s population.
In many sectors international companies do already have a strong foothold or act as key players in Indonesia. They are present with their products and services in Indonesia and have built up a top reputation.
In some markets foreign companies do have a good stand and are expecting strong growth in the near future. This is the case in:
- Renewable energy
- Power generation & Distribution
- Consumer goods
- Food & Beverages
- Private Insurances & Banking
- Traffic engineering
- Public Transport and infrastructure
Of course, this is just an excerpt. But in all these sectors analysts expect an increasing demand and an opportunity for know-how and products from foreign investors to play a key role in the country.
CHALLENGE FOR MARKET ENTRY
Stepping into a new market and establish business there is rarely an easy task. The key to success is to analyze the market carefully, weigh risks and opportunities, define strategies and utilize the necessary resources. This is no different in Indonesia. There are however many helping hands and minds that want to make your first step easy.
Various Indonesian government organizations such as embassies, trade missions and organizations offer to an entrepreneur advice and information on investment and business in Indonesia. They can provide information on markets and opportunities and help to establish the first contacts.
If you took the decision to enter the Indonesian market, you will quickly meet many friendly people. And that's one of the first challenges that are typical for Indonesia. The openness and friendliness of the Indonesians is overwhelming and you soon find contacts. Everyone you meet, gives you new possibilities, recommends other contacts and the network usually grows much faster than expected.
The seemingly lucrative offers of cooperation and assistance are piling up and you get the nice feeling to be a sought-after and welcome partner. This experience, coupled with the prospect of winning an exciting growth market quickly leads to great optimism, even euphoria. Everything seems possible and already on the way.
If everything is going so well, then where is the challenge? Well, it is precisely here! From all this positive feedback, the huge range of ideas and proposals you get you need to carefully brake and find out exactly where the real opportunities, the reliable business partners and the big deals are and if all of this leads you into the desired direction.
Take a brake, breath-in, count to 10 or what so ever! But never ever take the first chance as the best, even if it looks so promising to you and your new “friends” push you friendly but certainly into business. You should clearly have in mind at this stage, where your chances actually are and what you want to achieve. Even though it may seem so at the beginning: Indonesia is not a easy catch, the market is a Diva and wants to be ensnared. But be careful a Diva is sometimes capricious and witty. If you want to do business there, you must have a clear strategy, patience, endurance and persistence.
FOUNDATION FOR MARKET ENTRY
As for any other country there is no panacea for Indonesia, but there are some key elements that facilitate market entry and increase the chances of success.
Market entries rarely fail in Indonesia because of not being feasible. Companies that fail notice this fact relatively late and then at its worst. Why is it like this? In Indonesia you will rarely find somebody who is communicating problems or difficulties direct. Often the problems are only revealed when they have already popped up and can barley be ignored.
Especially westerners do not understand the tiny signals, hidden hints and indirect information, which are convey well in advance by their Indonesian counterparts. Westerners and Indonesian do communicate in different ways and put the focus on different cultural values.
Another reason is the primacy of national interests in Indonesia. Although you are an investor and thus always welcome, you have to be clear on that you work in a foreign market, which is having its priority on national interests, the protection of local labor, local industry and protection of the local markets. This nationalist think is predominate in case of conflict.
The most difficult part is in such situations is that you will already be settled and established that a orderly exit strategy (if you have one) will be extremely difficult to accomplish and will go along with extremely high efforts, cost and a loss of reputation.
To avoid this, you may consider the following to be helpful:
- Good preparation, planning and strategy
- First, take a look behind the scenes
- Do not push, and don’t let yourself get pushed
- Get advise, get a good consultant
- Pack plenty of patience, endurance and persistence into your suitcase
- Take caution and follow your gut feeling
- Select the right people with due care
- Don’t think Indonesia is like Europe, USA, South America or other Asian Countries
- Not everyone who smiles is a friend
- In addition to business success also enjoy the cultural learning
Indonesia is a promising market in which many are trying their luck. The once who became successful took due care on the culture more than on the business. If you understand and appreciate this country, you will learn to love it - not only because of the good opportunities.
Of course, those information can not be an assurance that your endeavor becomes a success all along the line, and for sure it does not replace individual consulting and advice. But if you follow these points you will be on a good way for your business success in Indonesia.
If you want to enter the Indonesian market or expand your business there, simply contact Indoconsult for support and information.