Podcast

Lauren Stiebing 18 March 2019

Indonesia as a Leading Developing Market with Christophe Beau

Indonesia is a market for FMCG businesses to invest in at the moment. Indonesia is founded on a vibrant and flourishing economy that has surpassed one trillion dollars in size, one of the biggest populations in the world, and not only that, but more than a hundred-thousand people every year are entering into the middle-class. This means their purchasing power is improving and growing at very fast rates. For all these reasons, understanding the South East Asian market and its complexities is essential for any growing company who is looking to expand their horizons.

To shine some light on the matter, we have brought Christophe Beau to this episode of the Career Success Podcast.

Christophe’s career at Diageo spans a period of over 15 years where he has held various executive roles in the Caribbean, Latin America, Africa and now Asia. He has built his reputation transforming businesses in Emerging Markets. He is passionate about fast-moving and challenging economies which offer great opportunities to shape and deploy strategies based on the latest consumer, shopper and customer trends.

Lauren:
Hi, I’m Lauren Stiebing and welcome to this episode of the Career Success Podcast. Today, we’ll be joined by Christophe Beau. Christophe’s career in Diageo spans a period of over 15 years where he has held various executive roles in the Caribbean, Latin America, Africa, and now Asia. He has built his reputation, transforming businesses in emerging markets. He’s passionate about fast-moving and challenging economies, which offer great opportunities to shape and deploy strategies based on the latest consumer shopper and customer trends. For this reason, we’ve invited him here today to discuss Southeast Asia, but more specifically Indonesia. Welcome Christophe.

Christophe:
Thank you Lauren, to have me, very pleased to be with you tonight.

Lauren:
Well, thank you for joining us. And I’d like to start off, if you can just explain a bit about the current situation in Indonesia at the moment.

Christophe:
Well, Indonesia, it’s a very vibrant market. You know, we’re part of Southeast Asia and actually the most populated country here with more than 216 million people. And the vibrancy comes from, I will say the economy. It’s an economy that in the last 15 years as a kegger plus 5% GDP growth, even slightly higher. And, I know truly, as I said, a very big population, right? You make it very attractive, especially for FMCG company, but also what is very attracting is the fact that there is that sustainability in the performance, on constant great performance and is a lot of two weeks span in terms of infrastructure to improve naturally the communication, improve the logistic in the country. Therefore we’ll say it’s a country which is evolving very fast at a very high speed and I think is really the right time to be. To give you an idea in Indonesia, there are more than a hundred thousand people that every year that get into the middle class category. I know naturally it’s very attractive because of the purchasing power of these people, which is improving and naturally, these people are interesting to premiumize the lifestyle and for company like ours, Diageo and any of big FMCG companies are very interesting market to be in.
On top of that. I will just finish by saying it’s really a country that is on bedding the digital world when it’s — Indonesia is the market with the highest mobile penetration in the world. It’s a market that when you see that today in Southeast Asia, there is 10 unicorns company. Unicorn being, they started out to the over billion dollar revenue and four of them are in Indonesia. This is company that’s five to six years ago, didn’t even exist. It give you an idea of the change, the evolution on the– if I can say the vibrancy of the markets, this is why I’m think Indonesia is a great place to be at this stage

Lauren:
And for western companies, what do you think are some of the biggest opportunities?

Christophe:
Well, I think first of all is the size of the market. This is an economy that’s past $1 trillion this year or in a thing is the 16th largest economy in the world and they are aiming by 2035 to become the fifth largest. Okay? And that naturally all big companies are trying to establish a very clear footprint in Indonesia. Now to answer your question, we need to distinguish category by categories and that you have already very well established businesses like you know, Unilever, Nestle that are well over a billion dollars revenue in Indonesia and are tapping into this big population. As I said earlier, the emerging middle class which is growing very fast, where we should say naturally a significant quantity of millenniums because of demographic are very, very positive in Indonesia with a very young population which is a little bit different than all the Asian country like Japan for example, where you have a proportion which is getting older every year. And naturally I will say again, size of the business but also I think what is very attractive, it’s a government today which one is trying to improve the ease of doing business, trying to pass new regulation to enable for an investment to come into market on, try to find it easier, fighting corruption also and naturally tapping into these huge markets that there is for all FMCG. Now, I’m going to be honest, it’s not always as easy as possible because there is also sometimes radar for tight regulatory environment in different categories. But I think the opportunities here, as I said, a very flourishing economy, big population, middle class, improving on purchasing power on the rise.

Lauren:
Okay. And I think it’s quite normal or at least from what I’ve seen, there’s really a mix, heading up these companies and mix of locals and expats that are leading Western companies in Indonesia. In your opinion, you know, 25 years from now, who do you think will be leading Western companies in the region?

Christophe:
Yeah, I think you’re right. Currently you don’t want to– if I look at my risk-match tricks in India, Asia, Indonesia, our number one risk is talent because we still have a lack of capability in the market place. What I mean is that, Indonesia is trying to narrow that gap, but it’s going to take a few years or few decades. Why that? You question around 2025 years, it takes smaller generation. I think that by then Indonesia will be able to produce the right level of capabilities in the current industry bill to the emerging industry. As I told you earlier, it’s a country which is driven by a significant digitalization of his world and I think they will have the capability in market.
Now from a leadership perspective, I think there is a lot of work that needs to be done, especially if Indonesia wants to be competitive and when you are aiming to become the fifth largest economy in the world, you want to be competitive, only that to answer your question today, there is still this multinational, a big percentage of expat that are leading the multinational. I will suspect that in 2025 years, you will see favorable swings towards locals because I think that they will be developed functionally from a leadership perspective. This is more or less that you know, big multinational like us, we are betting in or we’re investing in talent to make sure that our business will be lead by locals in the next few decades.

Lauren:
And for you, I mean having a western background or coming from a developed market, how do you think it’s possible to succeed in, in Asia where things are quite different?

Christophe:
You know, I’ve been touring the world that, you know, I had the opportunity to being in America and in Africa and in Asia and I will say Asia is a very different being French. I think you need to leave aside your own, if I can say assumption and making sure that you try to embed yourself with the local culture. Again, I don’t have much more experience than Indonesia, but what I’ve learned in Indonesia, it’s– first of all, Indonesia are very respectful. On the sense of respect, it’s something that is really, really important. It is not the fight that we tried to be un-respectful, but it’s such to a limit that for example, when you move into the corporate world and you are trying to embed a culture of feedback, it’s very difficult for people to receive feedback in front of orders because they call that losing face. Okay, why not? You need to be very respectful of the culture and making sure that the way that you act as a manager, as a leader is change on evolves based on the local culture. I know when it comes to coaching feedback session, you know that you need to do one to one session and you try to avoid naturally, a direct feedback to people. And there is that needs to really understand the cultural environment, flex your leadership style, flex the way that you approach some of the challenges or opportunities that you have to make sure that people are feeling that you understand them and you have the way to inspire, motivate them through their own culture, actually the ideal concept of global localization. You can have global concept, but you need to localize them.

Lauren:
And from the volatility point of Indonesia or really any developing market, how does your leadership style change because of that volatility?

Christophe:
Yeah, I mean that’s a good one. I mean there is different level of volatility. Okay. Through my carrier, I went through extreme level of utility market like Ethiopia or some of the market in Africa where the volatility drive you into crises management type of leadership that you need to embed. And then to answer your question, I think volatility tests you to an extreme to have the ability to stop, think on the side. You need to make sure you control your emotion through volatility. You need to avoid to overreact on the moment and I think the way to do that, it’s first of all be confident on a strategy that has been put in place but also be flexible, understanding that volatility will bring change that you might have thought about or might not have thought about and that you need to be flexible.

Christophe:
And after that I will say that you need to be very collaborative and you need to listen to a lot of locals that at sometimes have more experience than you are managing volatility because there’s sometimes, they grew up through volatilities. And the answer to your question is volatility tests you to a certain level that you try to control emotion, you try to make sure that you bring a more collaborative style, you embed everybody’s pinion and after that, you will be able to give clear direction based on your experience or what you want to deliver strategically. But I think for me, he has been really something where you need to stay focused, show the right level of resilience and out rightly showing to your team that you care about the outputs on the volatility. I want to say output. It’s not only, you know, purely performance drive and it’s also that people on what is going– how you protect your own people because volatility can go in a very big umbrella, you know?

Lauren:
And what do you think when experience, like your experience currently in Indonesia can bring to your career and your CV?

Christophe:
Yeah, that’s a very good question and yeah, I will try to make it suddenly more– Let me give you a bit of context. Indonesia is the largest Muslim population in the world. And as you know, I’m working for the Azure, which is the global giants in alcohol beverage. Even though Indonesia is a moderate Muslim, of portraying that, this is why we can sell alcohol beverage here. And I’m telling you that because it’s important to understand that we are operating on the much regulated environments and that difficult access to market, very high level of duties into our product, making it said not so affordable for the average income here. Right? And the answer to your question, first of all, there is the natural leader control aspect. It helped me to grow, to get a new experience, understand new culture and after that understood the new environment. As I told you, very regulated and that how do we navigate through this environment to one, try to advocate for a suddenly more flexible environments, more favorable environment for the industry and that there is all that work into helping to reshape the environment and working with lawmakers to make sure that we help the industry?
And after that, I think it’s always great to see different trading environment. Okay. Yeah. For me, it’s the first time where what we call general trade, you know, very traditional trade, very Asian type of trade, you know, small pop, normal pop’s type stalls are so dominant in the total mix of outside universe. And that it’s a different logistic, different route to market and naturally it’s also different consumer with different habits, different occasion, and different behaviors. I think to answer your question, this is the un-reaching parts. This is where you grow as a multinational leader through control announcements but also learning from a new working environment, new leadership skill developed to lead the new type of people, but also having the ability to shape new strategy based on local trends and that are evolving so fast. And this is what I’m looking for. And I think for myself, and then seeing my international experience because it’s such a different environment that what I’ve experienced before in America and Africa.

Lauren:
Well, Christophe, I appreciate all of your insight into Indonesia and it seems like a very exciting time to be there now, and I appreciate you joining us on the career success podcast.

Christophe:
Well, thank you very much Lauren. It was a pleasure and wishes you good luck.