Chinese Companies in Indonesia Face Specialized Talent Shortages

BEIJING, September 4 (TiPost) -- There are various methods for Chinese companies operating in Indonesia, the most populous country in Southeast Asia, to tackle the "talent shortage" problem, such as poaching from each other, talent transfers from China, and cultivating local talents from scratch.

Indonesia is a popular destination for Chinese companies going abroad, but when it comes to establishing local teams, it pours cold water on the bosses - the talent pool is almost non-existent.

In the view of Zhou Haibo, CEO of Indonesian human resources platform KUPU, Indonesian employees are relatively “obedient.”

"It is easy to recruit entry-level employees, but it is difficult to find junior managers who have managed more than two employees," said Zhou, adding that many Chinese entrepreneurs starting up businesses in Indonesia often expressed such frustrations.

Talent shortages in the wave of going abroad

In recent years, an increasing number of Chinese internet companies have been heading to Indonesia to seek market opportunities.

From initially gaming companies and applications to e-commerce platforms, entertainment social networking, financial technology, SaaS, artificial intelligence, MCN, and Tik Tok Shop Partners, have successively "replicated" Chinese business models in Indonesia.

But then they realize it is not easy to find suitable talents locally.

TikTok has around 2,000 employees in Indonesia. According to local TikTok employees who spoke to TiPost, about 80% of TikTok's Indonesian employees were recruited locally, who have strong education backgrounds and relevant work experience, and the remaining employees come from Singapore and China.

"It is difficult for overseas businesses (TSP and MCN) to recruit employees with knowledge of e-commerce in Indonesia. The average Indonesian is not familiar with e-commerce and operations," the TikTok employee who spoke on the condition of anonymity emphasized.

Huang Chun, a pseudonym for a Chinese entrepreneur, mentioned that since they arrived in Indonesia last year, their team has recruited more than 30 local operating and live-streaming employees. They have to start training the employees from scratch on live-streaming skills and operational knowledge.

In addition to operations, there is also a shortage of technology development talents in Indonesia. According to statistics from consulting firm A.T. Kearney, Indonesia only produces an average of 278 software engineers per million people annually, while Malaysia and Thailand produce over 1,000 software engineers per million people annually. The World Bank predicted in 2018 that Indonesia could face a talent gap of 9 million in the digital technology by 2030.

Zhou described the talent gap in the local market from the perspective of the development stages of overseas companies. "At the beginning, there is a shortage of basic operational positions (finance, administration, HR, legal, etc.) needed for the establishment of overseas companies in the local market. After the establishment, there is a shortage of general talents (operations, marketing, sales, business) for expanding and strengthening local businesses. And when companies need to upgrade products and services, there is a shortage of specific industry experience and vertical talents (product, research and development, experts)."

"Indonesia is not lacking top-quality talents. For example, the Indonesian giant, JG Group, has high-end talents from more than a dozen countries. However, there is a scarcity of junior white-collar workers in the middle management needed for the rapid development of the industry in Indonesia," Zhou Haibo emphasized. "However, the business owners who go overseas and KUPU are trying to solve the talent problem."

Talent poaching among peers

To find suitable talents, overseas companies have tried various methods.

An Indonesian cross-border warehouse entrepreneur stated that warehouse management is one of the most arduous aspects of the e-commerce industry. In order to find local people who are hardworking and can endure hardships, he investigates the family background of the interviewees and selects those who come from less privileged families and can endure hardships for his company.

In the rapidly changing MCN industry, Huang Chun always faces difficulties with Indonesian employees who are too rigid and lack creativity. To find creative talents, Huang Chun's MCN company uses the Southeast Asian recruitment website JobStreet to conduct a large number of recruitments and interviews. Through rapid screening and fast rotations, they eventually find and retain local employees who are proactive and have creative thinking.

In addition to finding suitable talents through various channels, overseas companies have started to cultivate the talents they need on their own.

The Delong Industrial Park has obtained approval from the Indonesian Ministry of Education to establish the Indonesian DeLong Institute of Technology. It has also partnered with the Bandung Institute of Manufacturing Technology, Surabaya Maya University, and Surabaya Mazu University to offer majors in metallurgy, power generation, civil engineering, and other fields. Graduates will be directly employed by the Delong Industrial Park.

In 2022, Lazada launched the "AKAR Digital" program, a talent development plan for digital skills in Indonesia. It collaborated with the Ministry of Cooperatives and Small and Medium Enterprises to introduce various educational training programs in West Java and East Java, including training for micro, small, and medium-sized enterprises to enhance their understanding of e-commerce and encourage digital transformation.

In addition, overseas companies will bring Indonesian employees to undergo training in China to enhance their theoretical knowledge and practical skills.

However, for companies that want to quickly build a team, such a long training period is not their first choice. "Headhunting among peers is happening in Indonesia," revealed Zhou Haibo. "Furthermore, to address the talent shortage, companies can also choose to recruit overseas talents from China, releasing domestic competition pressure into the vast overseas talent market gap."

KUPU, as a human resources platform, was the first to perceive the changes in the talent market. Driven by high demand, KUPU has built an intelligent recruitment and application platform to replace JobStreet's traditional recruitment model and has launched headhunting services specifically for overseas companies.

However, the key to solving Indonesia's talent crisis lies in building a group of mid-sized companies in the Indonesian digital economy industry that can cultivate a large number of high-quality talents through their own industry training.

Zhou gave an example. "Around 2012, companies like Xiaomi, Didi, Toutiao, and NIO were established one after another. They started with campus recruitment and the systematic training of white-collar workers who had just entered the workplace, creating the current talent pool and elites in China's Internet industry. However, Indonesia currently lacks such an ecosystem, and the development of talent resources in Indonesia requires the growth of a group of local mid-sized companies to drive it,” said Zhou.

Rethinking the local workplace culture

The local workplace culture in Indonesia and the underlying social culture are factors that cannot be ignored when managing local employees for Chinese companies.

Indonesia is a multi-religious country, but the majority of people are Muslims. Islam prescribes that Muslims perform five daily prayers at dawn, noon, afternoon, sunset, and before nightfall. Therefore, Indonesian employees are required to perform at least two prayers during working hours, and companies may need to provide prayer rooms.

Apart from religion, the locals' slow-paced work routine also make it difficult for Chinese enterprises to adapt. But for Bin Ge, who is engaged in the Indonesian leisure food industry, the locals' work routine and sense of responsibility are his favorite parts, and he sees that local employees never slack off.

The different requirements of different industries for personnel lead to different evaluations of similar performance. This contrast is also reflected in the two different social cultures of China and Indonesia.

Some Chineae entrepreneurs who do not understand the Indonesian culture may think that Indonesian workers are “inefficient, lazy, unwilling to work overtime, and do not reply to messages after work.” However, according to Wang Rui, who has lived and worked in Indonesia for more than 20 years, Indonesians pay more attention to the balance between life and work. He said that facing the Chinese people's "extreme efficiency", locals are puzzled why Chinese people are so obsessed with money.

Unlike the “996” work culture in China, which means six 9 am to-9 pm work days a week, Indonesia has a "no overtime" culture. Local labor laws and infrastructure reflect this "no overtime" work culture.

The Indonesian "Job Creation Law" stipulates that for the first hour of overtime on working days, the compensation is 1.5 times the hourly wage. From the second to the eighth hour, the overtime pay increases to 2 times the hourly wage. If overtime is on an off-work day or a statutory holiday, the overtime pay for the first eight hours is twice the hourly wage, the overtime pay for the ninth hour increases to 3 times the hourly wage, and the overtime pay for the tenth, eleventh, and twelfth hours reaches 4 times the hourly wage. In addition, the Indonesian labor protection law is strictly enforced and provides strong protection for workers.

In addition, according to Zhou, the office building he works in has a power outage at 6:30 pm. Power outages in office buildings after work time are common in Indonesia. There are no lights, no air conditioning, and no fans. Indonesian workers rush out of the hot Jakarta office.

"However, local white-collar workers do not completely reject overtime." Zhou Haibo observed, "As long as sufficient reasons are given, local employees can accept overtime. And KUPU has many active job seekers who are currently employed. This shows that they still pursue better job opportunities and upward mobility."

(This article was first published on the TiPost App. Reporting by Shen Ping and editing by Yang Xiujuan.)