Indonesia – South East Asia’s largest economy, Australia’s 13th largest trading partner and one of the fastest growing economies in the Indo-Pacific...
According to the Department of Foreign Affairs and Trade, bilateral goods and services trade between Australia and Indonesia was worth a cool $16.8 billion dollars in the 2017-2018 financial year. The recent signing of the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) in March is set to provide even more economic opportunity between the two nations going forward.
With this in mind, we felt it would be remiss of us not to include our Indo-pacific neighbors in our ‘Negotiating in a Culturally Diverse World’ blog series. As such we’re taking a look at the cultural nuances which may influence the cross-cultural negotiation process.
As a precursor to the following guidelines, we need to say that these are general observations from our experience, but cultural diversity within every country - just as there exists in Australia - will mean that there will be exceptions to our observations.
INDONESIAN NEGOTIATION CULTURE
- The concept of ‘time’ is somewhat more flexible in Indonesia, therefore times set for meetings or appointments may not be strictly adhered to. However, whilst your counter-party may be late you should still endeavour to be punctual.
- If entering a carpeted room during your negotiation, remove your shoes. You should also do this if you see your counter-party remove theirs. Try not to show the soles of your feet or shoes at any time.
- Be aware that hierarchy is important in Indonesian culture - showing respect to elders and those who have higher title, status, education or power is expected. Keep this in mind when greeting members of your counter-party – as a sign of respect, you should greet in order of age.
- When given a business card, you need to show it the same respect as you would show the person who gave it to you – take some time to study it carefully before placing it on the table in front of you. Always take the card with both hands or with your right hand only, never the left as the left hand is considered to be unclean.
- To begin with, your counter-party may want to make small talk and ask you many questions about your family and life back home. Although we may see this as time consuming, be patient and follow suit as this is done to establish rapport and trust and to build the relationship.
- The concept of ‘face’ is extremely important in Indonesia – that is, maintaining one’s reputation or honour. Causing someone to lose face by pointing out a mistake or error in a very public manner or in an overly critical way which would cause embarrassment would be a huge no-no. In these situations, discretion and sensitivity are key. On the other hand, ‘building face’ for your opponent by showing respect and complimenting when and where appropriate would help in establishing good relations.
- Indonesians tend to use an indirect style of communication and shy away from saying ‘no’ directly in order to keep the peace and save your face. However, this communication style can result in ambiguity and/or misunderstanding. As such, you should pay attention to non-verbal signals, ask questions for clarification and summarise.
- Maintaining too much eye contact can be seen as rude. Diverting your eyes when speaking to elders is a sign of respect.
- Take pause after your opponent has made a proposal or shared information. Doing so demonstrates that you have given careful consideration to what they have had to say. Likewise, if after you have spoken your opponent is silent do not jump in or interrupt as they are likely showing respect for what you had to say.
- Indonesia is a collectivist culture – one in which the interests of the ‘group’ (e.g. family, the company or even one’s country) is deemed more important than that of the individual. In such cultures, emphasis is put on cohesiveness and doing what is best for the group as a whole, rather than the individuals which comprise it. Therefore, an integrative negotiation approach (which is what we teach at Scotwork) is ideal. This means both parties work together, both are invested in the outcome and there is mutual gain. This is as opposed to distributive bargaining in which one side gains and the other does not.
The basic negotiation framework remains the same - regardless of country or language. However, having an awareness of cultural business and negotiation norms can prevent misunderstanding, frustration and confusion, and allow for a positive, smooth negotiation process for both parties.
Senang bernegosiasi! (Happy negotiating!)