Finding a Good Agent Is Critical To Navigating Your Way to Business Success in Indonesia

Use the "bridge" to move accross great divides at the negotiation table.

Indonesia is an emerging Asian market which is attracting increasing investment from Australian and other western companies.  Indonesia and its business environment can be confusing, daunting and challenging, but in many cases this is due to a lack of understanding of the Indonesian management behaviours that influence business relationships. If Australian companies want to succeed in this emerging Asian market, then they will need to develop knowledge and awareness of the Indonesian business culture, much the same way as Australian companies have succeeded in China now that there is a growing understanding of the Chinese business culture and etiquette. The latest research from UniSA has identified the use of third party agents as one of the important Indonesian management practices that influence business. These third party agents are referred to in Javanese (an Indonesian dialect commonly used amongst the business and government elite) as Parantara or ‘the bridge’, and acts as a conduit between the negotiating parties behind face to face negotiations, where issues of conflict can be raised without disrupting the harmony of the negotiation.  

 Maintenance of harmonious relationships between negotiation parties is critical to successful business engagements in Indonesia, and is grounded in the Javanese court traditions established prior to Dutch colonial rule. In Indonesia today, there is a renewed focus upon an independent, national identity, free from the western influence of Dutch colonialism. This nationalistic identification has seen many of the Javanese cultural behaviours re-emerge in the postcolonial period in Indonesia, and this has been driven by the political, governmental, and business elites which in many cases identify themselves with the Javanese culture. 

The Parantara is characteristic of a postcolonial Indonesia that has re-discovered the cultural norms of the pre-colonial Javanese court structure that favoured relationships, networks, and a system of favours and rewards. Utilising agents to further business relationships and aid negotiations is not a uniquely Indonesian experience, as it is common experience in other parts of Asia, in particular China with the use of the Zhongjian Ren or the Intermediary.  However, there are distinctive differences between the Zhongjian Ren and the Parantara in their level of involvement in the negotiated deal. The Zhongjian Ren will often be a part of the deal, as a partner, stakeholder or direct benefactor of any business agreement. Whereas the Parantara is bounded by the cultural traditions of the Javanese court system that places importance upon the network. As a consequence the Parantara is more of a broker, who operates in the background, for the betterment of both parties and who is rewarded for success.

Understanding Indonesian management behaviours is vital if Australian companies are to develop successful Indonesian investments in the coming years.  So if your company is looking to invest in the Indonesian market, then you would be best advised to find a good agent who can help navigate a harmonious relationship and build a strong deal. Fore without a good agent, you may find yourself in a sea of conflict, and on the path to investment failure.

Parantara vs Zhongjian Ren: Use the bridge to successfully negotiate in Indonesia

China and Indonesia both share some similar elements of culture, but dont assume they are the same

 

Indonesia has a long history of interaction with China and although the Ethnic Chinese have been trading in Indonesia for more than 1000 years, most of the present day Chinese Indonesian population started to arrive in Indonesia during the Dutch colonial period during  the 19th Century. Chinese Diaspora communities have brought with them cultures and traditions from China, and as a consequence the styles of behaviour common in China will be transferable to other countries and cultures within the broader Asian region. This assumption is not so straightforward in the Indonesian context due to the recent and historical conflict, criticism and victimisation of the ethnic Chinese-Indonesians by the ethic Indonesians.  Entrenched victimisation and discrimination has even been initiated and conducted by various Indonesian governments over the past 60 years since achieving Independence from Dutch colonial rule. Chinese identity in Indonesia has been eroded over time to the point where it was regulated by law that family names be “Indonesianised” and so it is now not possible to identify a person of Chinese heritage by their name. There has consequently been part assimilation in recent generations of ethnic Chinese Indonesian with the local ethnic Indonesian, and so it is not uncommon to find a person with a Chinese father and an ethnic Indonesian mother, or vice versa. 

The importance of Guanxi or ‘Social Capital’ has long been acknowledged in China, and similar issues of trust and social capital are equally important in other parts of Asia (see my article on Guanxi: http://wp.me/pS6DN-37). This principle is not solely related to managing your professional network, but additionally maintaining a strong and solid reputation within the network. As I wrote in a previous article (Zhongjian Ren: http://wp.me/pS6DN-3e) the importance of Zhongjian Ren or ‘The Intermediary’ in the Chinese business context, is a tried and tested method of transferring Guanxi and social capital from one person to another through introduction to members of a network. In practical sense using Zhongjian Ren is the principle of guaranteeing the quality of business partner, and putting one’s own Guanxi up as a guarantee of their good standing. The Zhongjian Ren in many cases will continue to play a part in the deal as a formal partner, until a sufficient level of Guanxi has been established. 

International business negotiations are a daily occurance in Indonesia today, don't be unprepared

 

Negotiators in Indonesian adopt a similar version of the Zhongjian Ren principle, however in Indonesia it is referred to as the Parantara or ‘The Bridge’. It is very important to utilise Parantara if a business negotiation is to be successful in Indonesia, and has been described as fundamental to conducting business the Indonesian way. The role of the Parantara changes during the many phases of the negotiation process. During the Pre-negotiation phase, the Parantara is used to sound out potential partners and make appropriate approaches and subsequent introductions on behalf one side. The Parantara is unseen during face to face negotiation, and in the early stage builds the bridge (metaphorically speaking of course) over which the negotiating parties can meet. An important distinction between the Chinese Zhongjian Ren, and Indonesian Parantara is that in the Indonesian business context the Parantara acts on behalf of both parties to assist in creating a successful and lasting outcome for both the negotiating parties. 

As the negotiation process progresses from pre-negotiation to face-to-face negotiation there are often issues that need to be resolved in order for the negotiation to continue. During the negotiation process in Indonesia it is imperative to maintain harmony, which often means that issues of conflict are not raised face to face in the formal negotiation. To raise issues that may cause conflict will affect the harmony of the relationship and would not be good for the long-term success of the negotiation or the future partnership. It is therefore necessary to utilise the Parantara to conduct informal negotiations to overcome the problem. The Parantara rarely forms part of the deal or partnership itself, and because of this separation from the negotiated deal the Parantara is able to maintain neutrality between the negotiating parties. Maintaining this neutrality is the key to the success of Parantara in forging successful business negotiations in Indonesia. 

So when you conduct business in Indonesia manage your professional networks by finding yourself a trusted Parantara who can help maintain the harmony in the relationship while you conduct your negotiations.