failure when market entry to Indonesia

Reasons for Unsuccessful Market Entry in Indonesia

  • InCorp Editorial Team
  • 31 January 2018
  • 4 minute reading time

So you want to start a business in Indonesia? You’d better get comfortable with the idea that every business is susceptible to failure, especially when you commit some irreversible mistakes that stop you from progressing further in the market.

Here are the top reasons for unsuccessful market entry we have compiled from people who have done business in Indonesia for the past decade. We’re hoping that you can learn from the lessons, and take advantage of these useful resources to guarantee your market entry success in Indonesia.

1. Not Doing Your Market Research

The main reason why some startups fail is that they have done little or no research of the market they want to make an entry. This could mean not selecting the proper market for your services or products, identifying the wrong client base, setting inadequate pricing, or not having enough knowledge of your competitors.

Extensive market research is extremely important, accompanying the great products or services you offer when you start a business in Indonesia.

2. Not Understanding Local Laws and Regulations

It is never a good idea to work in a foreign country without understanding its legal rules and regulations, or certain red tapes. Especially in a country like Indonesia, you will set your business up for a complete failure.

We can’t emphasize this enough — local laws and regulations in Indonesia are complicated, and sometimes a little ambiguous. Plus, they are frequently amended. Therefore, get as much information of local legal basics before anything else. If you do not have sufficient resources to cover the complex regulatory issues, please seek advice from Cekindo.

3. Doing Too Much On Your Own

We understand that as a startup, especially who is new to the whole Indonesian business scene, trying to do every business activities yourself and fit your expenditure within your budget is unavoidable. However, there are some tasks you shouldn’t take the DIY approach. The reasons are simple: they are either mundane tasks distracting you from your core business activities, or they are too complicated and you will risk your business to be non-compliance with certain laws or regulation.

Therefore, outsourcing or engaging a professional third party will be your best option. Non-core activities that are suggested to be outsourced include accounting and tax reporting, payroll processing, recruitment, audit and review services, etc. For legal compliance processes such as company registrationin Indonesia, product registration, local partner selection, business licenses, business visa and work permit, legal advice from a professional consultant is for a higher chance of approval.

4. Doing Business in Indonesia the Same Way You Do at Home

Assuming everything is the same as in your home country while doing business in Indonesia will get you into deep trouble. Why? – Because Indonesia has their own culture and regulations as well.

While you shouldn’t just say “Yes” to all things that don’t fit your standards, trying to push things too hard on staff, or challenge the authorities, will get you no way. Respect their cultures and regulations, adjust situations you can control, and adapt yourself to this new business environment will double your market entry success.

You might want to read Learn from TOP 10 Indonesian Companies in 2018

5. Not Having a Professional Advisor

Any successful entrepreneurs once had an advisor, or service to help their business grow and prosper. You should be no exception to this rule. You can spend a lot of time finding all information online, but are they all accurate? Some might be authentic and valuable, but some might not be.

Instead, hiring a professional advisor or consultant during your company set up in Indonesia is a powerful shortcut. A professional advisor sets a solid foundation for your business — the very first step of successful market entry in Indonesia.

No matter which market or stage of startup lifecycle you’re in, feed yourself with resources and information and hire a professional team who actually understand the market to help you out. Unsuccessful market entry is NOT inevitable. Get in touch with Cekindo now to find out more.

Pandu Biasramadhan

Senior Consulting Manager at InCorp Indonesia

An expert for more than 10 years, Pandu Biasramadhan, has an extensive background in providing top-quality and comprehensive business solutions for enterprises in Indonesia and managing regional partnership channels across Southeast Asia.

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