When you think about doing business in another country, something significant is often overlooked – how people do business there. Understanding business culture in a globalized world is vital because it enables effective communication, relationship-building, and excellent negotiation across diverse cultural backgrounds.
Indonesia has a diverse blend of cultures and traditions. With various languages and different beliefs, doing business there comes with its own set of rules. People emphasize togetherness and showing respect, which significantly impacts how they work and make choices.
Knowing these factors is critical to thriving Indonesian business, where old customs and modern concepts mix uniquely. Read below to find out the business culture in Indonesia.
1. Indonesia Cultural Background
Step into Indonesia, a fascinating place where history, languages, religions, and ethnic groups unite across thousands of islands. Think of it like a colorful patchwork with over 300 different groups and languages, making it a place full of different cultures.
Indonesia is a place where many religions thrive, adding a diverse range to its spiritual side. The importance of religions in Indonesia’s heart is quite clear. It’s important to note that most Indonesians are Muslims. This means that businesses dealing with products considered haram in Islam might face difficulties due to the strong religious beliefs in the country.
Pancasila stands as Indonesia’s national ideology, consisting of five key principles: belief in one God, humanity, national unity, participatory democracy, and social justice. Within Indonesian modern democracy, Pancasila acts as a fundamental set of norms and values guiding various aspects of citizens’ daily lives and dynamics in the business.
Indonesian companies often employ individuals from various backgrounds. How can diverse individuals work well together? The principles of Pancasila, such as “humanity” and “national unity,” encourage mutual respect and a shared identity, fostering collaboration and understanding among team members. That enables them to effectively contribute their unique perspectives and skills, creating a harmonious and productive work environment.
Another example is the fourth principle, which includes ‘musyawarah mufakat’ or making decisions together as a group. In practice, implementing this principle encourages collective and inclusive decision-making, where every voice is valued. This ensures that the decisions made reflect a variety of perspectives within the team and result in better overall solutions.
2. Values and Etiquette in the Business Culture of Indonesia
Furthermore, two principles contribute to inclusive and harmonious business culture in Indonesia. Firstly, “gotong royong” highlights collaboration for shared objectives. In a business setting, it promotes collective cooperation to achieve success, fostering unity and enhancing a company’s ability to overcome challenges with greater effectiveness.
Secondly, “tut wuri handayani” signifies a bond of mutual trust and regard for diverse viewpoints. This encourages leaders and employees to appreciate different perspectives and to treat each other with respect and trust. This approach can improve communication, cooperation, and overall team performance.
In addition, Indonesian is known for the concept of ‘face-saving.’ In this context, it is safeguarding the reputation of others by not confronting them directly, despite differing viewpoints, to mitigate potential conflicts that might jeopardize enduring business relationships.
To express respect, they utilize proper titles like “Bapak” or “Ibu” during greetings, exhibiting a smile, making eye contact, and adopting an amicable demeanor. Similarly, exchanging business cards often involves utilizing both hands and briefly acknowledging it.
3. Communication Styles
The communication style is closely related to the culture of politeness. Indonesians commonly employ a high-context communication approach, whereby messages are subtly and non-verbally conveyed to avoid appearing aggressive to others.
Decisions are often made through ‘musyawarah’ or group consensus, where the goal is to find an agreement, ensuring that no party feels excluded. In business, this might involve different people, like teams or partners, discussing things everyone agrees with.
Engaging in negotiations can be a rather time-consuming process. To communicate effectively, displaying patience and actively practicing attentive listening is crucial. Devote complete focus to the partner and demonstrate engagement through appropriate body language to convey genuine interest.
4. Hierarchy and Leadership
In the world of Indonesian business, there is a prevailing hierarchical structure. The positions and status of the individuals matter when asking questions or holding discussions. Typically, major decisions are made by senior company representatives, so it’s advisable to address any concerns with them initially.
However, a close and caring relationship between team members and superiors is highly valued. The culture of nurturing and ensuring each other’s well-being resonates within the professional connections.
5. Building Relationships
In Indonesia, individuals commonly perceive business interactions as person-to-person rather than entity-to-entity. This aspect results in personal connections assuming a significant role within the Indonesian business culture. Trust is regarded as the cornerstone of successful business interactions. Hence, it’s not uncommon for inquiries about family and personal life to arise as people attempt to establish familiarity.
An effective means of broadening business networks is participation in social gatherings, such as ‘arisan’. This social tradition involves a group of individuals regularly contributing funds, subsequently distributed among the members. In business, ‘arisan’ presents an opportunity to connect with diverse professionals spanning various industries and fields.
Engagement in such social forums can foster an atmosphere that encourages relaxation and openness, inviting fresh ideas and making meaningful relationships. These measures can yield positive outcomes by enhancing prospects for future collaborations and business partnerships.
6. Negotiation and Decision-Making
Decisions are commonly reached collectively rather than solely by one party. Thus, negotiation is potentially taking more time, as all parties aim to ensure that decisions are thought through and gain agreement from everyone involved. This decision-making process also calls for patience, as not all matters can be swiftly and directly resolved.
With mutual trust and respect, the negotiation process can run smoothly and achieve outcomes that serve the interests of all parties. Within the negotiation context, this underscores the importance of each participant’s willingness to attentively listen to and comprehend diverse perspectives while also allowing space for the viewpoints of all participants.
7. Dress Code and Appearances
Indonesia’s rich variety of cultures and religions shapes people’s attire, particularly in business. Adopting suitable clothing in a professional setting is significant in shaping others’ perceptions of your professional demeanor.
Presenting oneself appropriately contributes to making a positive impression. Individuals who opt for attire in a considerate manner aligned with local customs are regarded respectfully.
For foreigners planning to engage in business in Indonesia, it is vital to understand the proper dress code. Formal attire such as suits, blazers, or traditional batik is recommended. It’s advisable to steer clear of excessively casual or revealing clothing.
8. Business Meetings and Time Management
The term ‘rubber time’ is frequently used to characterize the concept of time in Indonesia. This reflects the idea that time can exhibit greater flexibility, particularly in the context of meeting schedules and business engagements. As a result, the ability to schedule becomes an essential competence.
Yet, this doesn’t imply that efficiency or professionalism is overlooked. Maintaining punctuality continues to be crucial, signifying trustworthiness and integrity in business associations. It highlights your respect for the commitments and timetable of your business partner.
Moreover, being familiar with the etiquette before a meeting is beneficial. Start with formal greetings, and it’s typical for informal discussions to arise that might not be directly related to business affairs. Show consideration for everyone’s perspectives and avoid overly critical remarks. Once the discourse wraps up, show your gratitude.
9. Challenges and Adaptation
Foreigners might encounter a few challenges when operating a business in Indonesia. It could range from navigating the local regulatory framework to understanding the consumer behavior and market dynamics unique to the country. Cultural differences, language barriers, and legal intricacies are examples of the potential hurdles that might arise.
To succeed in business, it’s crucial for foreigners to be sensitive to the cultural nuances and to adapt their behavior, communication style, and business practices accordingly. This might involve understanding social customs, traditions, and etiquettes, which are significant in building relationships and conducting business transactions.
McDonalds is one example. McDonald’s has adapted to Indonesian culture as a global fast-food chain. They tailored their menu to local preferences by introducing items like the “Ayam McD Balado” and “Burger Balado” as a special Independence Day menu – incorporating flavors and ingredients familiar to Indonesians.
They also prioritize cultural sensitivity by maintaining Halal certification and creating family-friendly dining spaces. This adaptability has enabled them to establish a strong presence in Indonesia, showcasing how international corporations can connect with local consumers through cultural awareness.
Conclusion
Understanding and respecting business culture in Indonesia is paramount for creating successful collaborations. Embracing Indonesia’s values, customs, and communication styles lays the foundation for building solid and harmonious partnerships.
It is crucial to approach cross-cultural interactions with an open mind and a genuine eagerness to learn. Doing so can bridge cultural gaps, foster mutual respect, and unlock the full potential of international business endeavors.
Remember, cultural sensitivity is not just a courtesy; it’s a key to unlocking successful and enduring collaborations that benefit everyone involved.
If you are looking for software that can help you to manage your business operations in Indonesia effectively and efficiently, you don’t need to look any further. Mekari is the perfect solution for you, as it is tailored to meet the specific needs and preferences of the Indonesian market. Experience the difference yourself!
References
Global Business Culture. “Business Culture in Indonesia”
Asialink Business. “How to grow business with stock market”
