INDONESIA FINDINGS

Edelmantrustbarometer2013 emerging market supplement

TRUST

• Trust is leading indicator of reputation• Trust in society is correlated with economic

growth and prosperity(study by Paul Zak & Stephen Knack)

BUSINESS REPUTATION IS BUILT ON TRUST

• Trust within the community is essential to a business’s operations.

• Long term business success is built on trust, whether within the local, the national, or the global community.

2013 TRUST BAROMETER: EMERGING MARKETS SUPPLEMENT

4

GLOBAL

ONLINE SURVEY IN NINE COUNTRIES

• 5,400 respondents

• Nine countries:

• Developed: U.S., U.K., Germany, France

• Emerging: China, India, Indonesia, Mexico, South Africa

INFORMED PUBLICS

• 600 respondents in each country

• Ages 25-64

• College-educated

• In top 25% of household income per age group in each country

• Report significant media consumption and engagement in business news and public policy

• 13 years of data Indicates Global Data

Indicates Indonesia Data

Indonesia 74

Mexico 82

China 74

India 81

US 62

UK 56

Germany 48

France 44

DIS

TRU

STER

STR

UST

ERS

NEU

TRAL

TRUST IN BUSINESS IN MAJORITY OF EMERGING MARKETS TRENDING UPWARD

5

Indonesia 77

Mexico 74

China 79

India 81

US 64

UK 56

Germany 52

France 55

South Africa 69

+3

-8

+5

No Change

+2

No Change

+4

+11

New

2013Field date: Q4 2012

2013 Emerging Markets Supplement

Field date: Q3 2013

8 MARKET AVERAGE: 56 8 MARKET AVERAGE: 65 9 MARKET AVERAGE: 67

2012Field date: Q4 2011

Indonesia 78

Mexico 77

China 71

India 69

US 50

UK 38

Germany 34

France 28

HOW MUCH DO YOU TRUST BUSINESS IN GENERAL TO DO WHAT IS RIGHT

Q7. [Business in General] Below is a list of institutions. For each one, please indicate how much you trust that institution to do what is right using a 9-point scale where one means that you “do not trust them at all” and nine means that you “trust them a great deal”. (Top 4 Box, Trust) Informed Publics Ages 25-64

77% TRUST IN

BUSINESS IN INDONESIA

MARKET AVERAGE

67%VS.

Image: republika.co.id

2013

33 point gap between developed and

emerging market trust

2009 2010 2011 2012 201320%

30%

40%

50%

60%

70%

80%

90%

Brazil

China

France

Germany

India

Russia

UK

USA

EMERGING MARKET HEADQUARTERED COMPANIES HAVE DECLINING TRUST SINCE 2011GLOBAL TRUST ACCORDING TO WHERE MNCs ARE HEADQUARTERED

DEVELOPED MARKET AVERAGE

EMERGING MARKET AVERAGE

Now we would like to focus on global companies headquartered in specific countries. Please indicate how much you trust global companies headquartered in the following countries to do what is right. Use the same 9-point scale where one means that you “do not trust them at all” and nine means that you “trust them a great deal”. (Top 4 Box, Trust) Informed Publics Ages 25-64 in 20-country global total# 2012 data is not available – a simple average has been used to show a trend

The 2013 Emerging Markets Supplement to the Edelman Trust Barometer explores the following factors that may affect developed markets’ trust in emerging market-based businesses, based on our hypotheses:

• Tangible actions dominate: Perceived poor performance against concrete trust-building actions (e.g., supply chain management, IP protection, etc.) erodes trust.

• Low brand familiarity: Respondents in developed markets are not familiar with emerging market-based multinational corporations (MNCs).

• Sensitivity about the state: Developed markets perceive emerging market-based businesses to have close ties with their national governments, whom they do not trust.

THE STATE OF TRUST IN EMERGING MARKETS AND INDONESIA

10

50%

11

DEVELOPED MARKET-BASED MNCs HAVE 33-POINT TRUST LEAD OVER MNCs HEADQUARTERED IN EMERGING MARKETSMOST TRUSTED NATIONAL IDENTITY FOR COMPANIES – GLOBAL VIEW

Developed Markets 76% Emerging Markets 43%

Q8. [TRACKING] Now we would like to focus on global companies headquartered in specific countries. Please indicate how much you trust global companies headquartered in the following countries to do what is right. Use the same 9-point scale where one means that you “do not trust them at all” and nine means that you “trust them a great deal”. (Top 4 Box, Trust) Informed Publics Ages 25-64 in 9-country global total

Germany UK US France Brazil South Africa

Russia India China Mexico Indonesia

80% 78%72% 72%

47% 45% 44% 43% 42% 40% 39%

TRUST DIVIDEND

• European and American based businesses gain from a trust dividend in emerging markets, including in Indonesia.

A 33-POINT TRUST LEAD OVER MNCs HEADQUARTERED IN EMERGING MARKETS

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Image: wikipedia

50%

13

INDONESIAN HEADQUARTERED COMPANIES BENEFIT FROM A 32 POINT TRUST BONUS AMONG DOMESTIC POPULATIONMOST TRUSTED NATIONAL IDENTITY FOR COMPANIES – INDONESIAN VIEW

Q8. [TRACKING] Now we would like to focus on global companies headquartered in specific countries. Please indicate how much you trust global companies headquartered in the following countries to do what is right. Use the same 9-point scale where one means that you “do not trust them at all” and nine means that you “trust them a great deal”. (Top 4 Box, Trust) Informed Publics Ages 25-64 in 9-country global total

Germany UK France US Indonesia Russia China Brazil Mexico India South Africa

91% 89%85% 84%

71%65%

61%55%

51% 50%45%

Developed Markets 87% Emerging Markets 57%

22%

46%

71%

23%

50%

64%

31%

55%

61%

24%

50%

83%

28%

48%

83%

50%

TRUST GAP: EMERGING MARKETS TRUST THEIR LOCALLY-BASED MNCs SIGNIFICANTLY MORE THAN THE REST OF THE WORLD TRUSTS THOSE COMPANIESTRUST RELATED TO COMPANIES’ NATIONAL IDENTITY

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Indonesia-Based MNCs South Africa-Based MNCs

India-Based MNCsChina-BasedMNCs

Mexico-Based MNCs

EMERGING TRUST IN COUNTRY-BASED MNCs

NATIONAL TRUST IN LOCALLY-BASED MNCs

DEVELOPED TRUST IN COUNTRY-BASED MNCs

Q8. [TRACKING] Now we would like to focus on global companies headquartered in specific countries. Please indicate how much you trust global companies headquartered in the following countries to do what is right. Use the same 9-point scale where one means that you “do not trust them at all” and nine means that you “trust them a great deal”. (Top 4 Box, Trust) Informed Publics Ages 25-64

• Indonesian companies are mid-ranking in trust among emerging market companies operating in the west.

• Indian and Brazilian companies are slightly more trusted in the west than other emerging market companies.

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TRUST GAP

16

• Why are Indonesian companies struggling to gain trust abroad?

• One of the issues is likely to be low brand familiarity – can you name an Indonesian MNC operating abroad?

TRUST GAP

LOW BRAND FAMILIARITY

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PROMPTED AWARENESS OF BRIC MARKET BRANDS BY MARKET

BRIC-BASED MNCs HAVE TO RAISE OVERSEAS AWARENESS; CONSUMER-FACING BRANDS MAKING PROGRESS

RUSSIA

BRAZIL

INDIA

CHINA

50%

Petrobras Vale

26%

9%

38%

11%

Lenovo Air China Bank of China Haier

72%

63%54%

45%

70% 68%63%

26%

89%79%

87%81%

Tata Infosys

25%36%

54%

23%

99% 98%

Gazprom Lukoil

20%30%

65%

23%

50%

US EUROPE OWN MARKET

Q15. Below is a list of companies. Which are you aware of? SELECT ANY THAT APPLY. Informed Publics Ages 25-64 in US, Europe (France, Germany, UK) and own market

India* Russia China* Brazil0%

20%

40%

60%

80%

14% 12% 10% 10%5% 4% 3% 2%

BRIC COMPANY CEOs HAVE LOW VISIBILITY GLOBALLY, ESPECIALLY IN DEVELOPED MARKETS

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UNPROMPTED AWARENESS OF BRIC MARKET COMPANY CEOs or CHAIRPERSONS BY MARKET

Top CEOs† Emerging Developed Emerging Developed Emerging Developed Emerging Developed

1 Ratan TataTata

Ratan TataTata

Alexey MillerGazprom

Alexey MillerGazprom

Yang YuanqingLenovo

Yang YuanqingLenovo

Maria das Graças Silva Foster

Petrobras

Maria das Graças Silva Foster

Petrobras

2 Naveen JindalJindal Steel

Power Limited

N. R. Narayana MurthyInfosys

Oleg DeripaskaBasic Element

CompanyAndrey Kostin

VTB BankRobin Li

BaiduHong Qi

Minsheng Banking Corp

Murilo Pinto de Oliveira Ferreira

ValeEike BatistaEBX Group

3 Mukesh AmbaniReliance

Industries

Mukesh AmbaniReliance

IndustriesAndrey Kostin

VTB BankOleg DeripaskaBasic Element

CompanyRen Zhengfei

HuaweiFu Chengyu

SinopecRicardo Semler

Semco SAMurilo Pinto de Oliveira Ferreira

Vale

*India: Emerging market data does not include Indian data; China: Emerging market data does not include Chinese data†The top first-mentioned three CEOs by market

68% of Chinese can name a Chinese HQ CEO

77% of Indians can name an Indian HQ CEO

Level of unprompted CEO awareness in their

own country

EMERGING MARKETSDEVELOPED MARKETS

Q16. When you think of CEOS/Chairmen of companies from the following markets, which individuals first come to mind? [INSERT MARKET: CHINA, BRAZIL, INDIA, RUSSIA] (Respondents answering with at least one current CEO/Chairman of a company headquartered in China/Brazil/India/Russia. Informed Publics Ages 25-64

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INDONESIAN COMPANIES AND CEOs NEED TO RAISE THEIR PROFILE ABROAD

• More engagement

• Be more active in public discourse – establishing yourself as a thought and industry leader

• Raise your profile and visibility

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INDONESIAN COMPANIES AND CEOs NEED TO RAISE THEIR PROFILE ABROAD

• This will all contribute to growing trust. Growing trust equals a more positive reputation. A positive reputation makes it easier for your business to operate in the community.

• TRUST BUILDING IS A MUST!

TANGIBLE ACTIONS DOMINATE

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Big difference in most important trust building attributes for Indonesians.

Indonesian priorities differ from the developed market norm…

DIFFERENCE IN TRUST BUILDING ATTRIBUTES

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CONSISTENT FINANCIAL RETURNS

TOP GLOBAL COMPANY

ADMIRED TOP LEAD-ERSHIP

PARTNERS W/ 3RD PARTIES

INNOVATOR

POSITIVELY IMPACTS COMMUNITY

ADDRESSES SOCIETY'S NEEDS

PROTECTS ENVIR-ONMENT

CUSTOMERS BEFORE PROFITS

LISTENS TO CUSTOMERS

LOOKS AFTER EM-PLOYEES

COMMUNICATES OFTEN

ACTS RESPONSIBLY IN CRISIS

IS ETHICAL

HIGH QUALITY PRODUCTS

TRANSPARENT & OPEN

59%48%50%

48%58%

51%50%

47%48%

54%52%

50%49%49%

58%48%

65%68%68%70%

72%74%75%76%77%78%80%80%81%81%82%82%

TRANSPARENT & OPEN

PARTNERS W/ 3RD PARTIES

TOP GLOBAL COMPANY

PROTECTS ENVIRONMENT

INNOVATOR

COMMUNICATES OFTEN

LOOKS AFTER EMPLOYEES

ACTS RESPONSIBLY IN CRISIS

CUSTOMERS BEFORE PROFITS

IS ETHICAL

CONSISTENT FINANCIAL RETURNS

ADDRESSES SOCIETY'S NEEDS

HIGH QUALITY PRODUCTS

ADMIRED TOP LEADERSHIP

LISTENS TO CUSTOMERS

POSITIVELY IMPACTS COMMUNITY

73%

70%

71%

70%

72%

73%

71%

72%

70%

72%

75%

71%

76%

72%

73%

73%

79%

80%

81%

82%

83%

83%

83%

84%

84%

84%

84%

84%

85%

86%

86%

87%

DEVELOPED MARKETS PERCEIVE A LARGE GAP IN EXPECTATIONS VS. PERFORMANCE ON KEY TRUST BUILDING ATTRIBUTES FOR BRIC-BASED MNCS

FOR INDONESIANS, COMMUNITY INVOLVEMENT, LISTENING TO CUSTOMERS AND ADMIRED TOP LEADERSHIP ARE SEEN AS THE MOST IMPORTANT TRUST BUILDING ATTRIBUTES

INTEGRITYENGAGEMENT PURPOSEPRODUCTS & SERVICES OPERATIONS

STATED IMPORTANCE VS. COMPANY PERFORMANCE (TOP 4 BOX)

Q16. How important is each of the following actions to building your TRUST in companies headquartered in [INSERT BRIC]? Use a nine-point scale where one means that action is “not at all important to building your trust” and nine means it is “extremely important to building your trust” in a company. (Please select one response for each.) Q. 18 Please rate companies headquartered in [INSERT BRIC] on how well you think they are performing on each of the following attributes. Use a nine-point scale where one means they are “performing extremely poorly” and nine means they are “performing extremely well”. (Top 4 Box, Trust) Informed Publics, ages 25-64 (excluding “don’t know”)

Q80-Q96. [TRACKING] How important is each of the following actions to building your TRUST in a company? Use a nine-point scale where one means that action is “not at all important to building your trust” and nine means it is “extremely important to building your trust” in a company. (Top 2 Box, Very/ Extremely Important) General Population in 26-country global total (excludes ‘Don’t Know’ responses Q114-Q129. Please rate [INSERT COMPANY] on how well you think they are performing on each of the following attributes. Use a nine-point scale where one means they are performing “extremely poorly” and nine means they are performing “extremely well”. (Top 2 Box, Performing Very/ Extremely Well) General Population in 26-country global total

FROM EDELMAN TRUST BAROMETER 2013 GLOBAL SURVEY: DIFFERENCE IN PRIORITIES BETWEEN THE ANNUAL SURVEY AND THE EMERGING MARKET SUPPLEMENTHOWEVER, INDONESIANS MORE DRIVEN BY SOCIAL ISSUES IS STILL A CONSISTENT THEME

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COMMUNITY – THE NUMBER ONE PRIORITY FOR INDONESIANS!

• Indonesians expect companies to operate with a social conscience.

• Strong Corporate Social Responsibility (CSR) programs and community outreach is mission critical to doing business in Indonesia. Image: World Bank

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COMMUNITY – THE NUMBER ONE PRIORITY FOR INDONESIANS!

•Poor community engagement will result in poor trust levels – this eventually will have a negative impact on business operations...

•Neglect the community at your peril…

THE PATH FORWARD

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DELIVERING A MESSAGETo communicate your message with authenticity and trust, use academics and experts as spokespeople in Indonesia.

Regular employees, unlike the market norm, are taken less seriously…

Image: gettyimages.com

RECOMMENDATIONS FOR PROMOTING INDONESIAN AND BRIC HEADQUARTERED COMPANIES OVERSEAS

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BUILD YOUR BRAND

BE MORE PROACTIVE AND TRANSPARENT

FOCUS ON ETHICAL BEHAVIORS

USE EXPERTS AND EMPLOYEES AS SPOKESPERSONS, NOT CEO

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Key Pointers For Doing Business and Building Trust In Indonesia

Developed market based companies benefit from a trust dividend in Indonesia; they are more trusted than all emerging market based companies, including Indonesian companies.

Indonesian’s still have high levels of trust in business – significantly higher than the market average.

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Key Pointers For Doing Business and Building Trust In Indonesia

Indonesian based companies are the most trusted emerging market based companies in Indonesia –Indonesian’s are loyal to home grown MNCs.

European and American companies have a trust advantage in Indonesia.

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Key Pointers For Doing Business And Building Trust In Indonesia

Companies are expected to exercise social responsibility and a real commitment to local societal issues.

Community engagement really does matter in Indonesia; it is the number one trust driver.

Stephen LockEdelman Indonesia

THANK YOU