Indonesians had been doing trading and selling for several centuries, perhaps more than a millennium. Indeed for some ethnics of Indonesia, trading and selling are highly correlated with them and almost being their middle name, ha ha. Let’s name it: Padang, Tasik, Solo, Indonesian Chinese, Indonesian Arabic, and many other ethnics. They had played a great role in selling and trading in Indonesia -if it can not be said to be dominating-, even though most of them do their business in conventional markets. Their significant roles can be found in each levels of the selling / distribution chain.
Some of them had successfully transformed their trading business into a kind of powerful modern market as well. Yogya Supermarket & Department Store is one of the examples. Yogya is a dominant player for modern market in West Java, with hundreds of outlets spreading across the province. It is becoming the main choice for most families due to their aggregate-lower price; since we all know that some retailer extremely lowering the price only for best seller products, while keeping other products’ prices normal or even higher.
The previous description showed us that Indonesians are highly capable for running a retail business; even more, they have been proven. In fact, retail business is quite a simple business. It is not requiring specific knowledge and technology as many other businesses might require -like mining, chemical and telecommunication.
If Indonesians can do it, so why are there many foreign retailers in Indonesia then? Yes, there are too many foreign retailers in Indonesia, from a mini market retailer like Circle K, to the hyper market like Carefour (Alfa Mart is now a subsidiary of Carefour Indonesia). What is the added value delivered by those foreign retailers to Indonesia? The answer, to me, is almost nothing; since almost all of the products being sold by those retailers are produced in Indonesia, and they had been well distributed in Indonesia long time before the operation of those retailers. In addition to that, almost all of their customers are Indonesians or someone who stays in Indonesia, which means a global recognition of an international company is not applicable to retail business (compared to the global brand of a hotel as the example, which benefits the franchisee with the brand recognition to attract foreign tourist who will stay in Indonesia). So what they brought to Indonesia is only a system, on how or the practice in running the business.
Speaking about the system, the significance of a system in retail business is quite different from other business that requires a precise operation and planning like technology business. Indonesian local retailers have also the system, even perhaps the system is not as good as the foreign retailer had. But imperfect system will not make the business collapse nor will directly disadvantage customers. Imperfect system will only have minor impacts, such as lowering the profit of the retailer.
So what is the benefit of inviting foreign retailer to Indonesia? It is indeed permitted by law (blame globalization!). In addition to globalization, I will blame the franchisee as well. Why did they choose foreign franchisor if at the same time there are local franchisors? Don’t they realize that choosing foreign franchisor means throwing lots amount of money out of the country? And why did master franchisees decide themselves to be a master franchisee instead of creating their own franchise system and becoming the franchisor?
I will blame the government as well. Even the globalization is here, please give a little restriction, especially on something that Indonesians are proven in having the capability. I have the same thought with Mr. Adi Sasono (Chairman of Indonesian Cooperation Board). At a talk show at ITB in 2007, while being asked about the presence of foreign hyper market in Indonesia, he said “If it is due to the lack of knowledge and imperfect system that Indonesian retailer had then teach them. Inviting foreign retailer is not the only solution for the problem, and should be considered to be the latest option”.
In addition, the presence of foreign hyper market is threatening the existing distribution / selling chain as well. In its country of origin, France, as well as other European country, Carefour hyper markets are all located in suburban area, while in Indonesia you can easily find it at the downtown. Principals (the producer of products) get the impact as well. Pressuring the principals to lower the product’s price beyond the normal price is a part of the “system” I have mentioned before. I heard that in Indonesia there is only one principal that is brave enough to refuse the pressure, due to their high market share, excellent distribution channel and high traditional market penetration.
I’m not anti-globalization, but I will say no to globalization practice that will harm Indonesia a lot. While Indonesian GDP is still very low, we have to try our best to preserve our income. For foreign retailer’ franchisee, it is not too late, you can cut your contract, and continue the outlet operational using your own brand; or perhaps the master franchisee could coordinate the takeover to minimize the impact. But be sure that you have the franchisor knowledge before doing it, ha ha; and I am pretty sure that franchisees will have the knowledge just after 6 months of cooperation if they involved themselves to the system.
In oil and gas industry, perhaps we have no technology for drilling; in telecommunication’ maybe we can not produce a competitive cell phone and network component. But for retail business, we have everything.. Be self-confident Indonesian!
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