It is not difficult to find ICBC in the Indonesian capital of Jakarta. You can stop any taxi and tell the driver you are heading to "ICBC Tower", he will take you directly to your destination. The magnificent building of ICBC, located in downtown Jakarta, has already become a landmark bringing beauty and brightness to the Financial Street; and together with ICBC's name, has long been well known by local people.

"When we decided to choose this office building for ICBC's Indonesian headquarters, the developer offered free of charge to name it after ICBC. They thought that ICBC, with the highest market value and profit-making capability in the world, would develop and prosper in Indonesia, thus its name would bring good luck to this building as well as the companies which had moved in here". Yuan Bin, the general manager of ICBC's Indonesian headquarters said.

The developer had it right. Since establishment of the Indonesian headquarters, ICBC, by integrating its resources and expanding its business, has successfully completed mergers and acquisitions, and reported profit in the first full year (2008) after the merger, creating new record in profit-making of overseas institutions which had entered Indonesia. In 2009, businesses of ICBC have not only shown no sign of negative influence by the international financial crisis, but also have manifested a momentum of accelerated development. In the first quarter of 2009, the total assets of ICBC's Indonesian headquarters increased 62.4%, balance of loans 63%; its pre-tax profit achieved 622.4 thousand U.S. dollars, doubling the amount at the beginning of the year.

Such a thriving scene makes a sharp contrast with the "drawbacks" experienced by many domestic and foreign institutions when trying to bottom-fish the stocks of European and American financial institutions, and also draws attention from many entrepreneurs and scholars exploring the pattern of internationalization for Chinese enterprises. For this, Jiang Jianqing, the Board President of ICBC said, the successful mergers and acquisitions in Indonesia are attributed to years of experience of ICBC in carrying out the strategy of internationalization, the rapid development of Chinese economy and enterprises. An important principle of ICBC in developing internationalization is to follow the clients. As Chinese enterprises have changed their roles from global purchasing and selling to global production, Chinese global enterprises are formed in this process. Such enterprises make up a large part of ICBC's clients; hence ICBC's following them to go out in fact has extended its advantages in domestic market to its competition in the global market. By unremittingly enhancing its capabilities, ICBC provide the "going out" Chinese enterprises with cross-border financial services.

Merger & Acquisition: the First Step toward Entering Indonesia

According to statistics, Indonesia has approved the setting up of more than 700 Chinese-funded enterprises by the end of 2008, and the committed investment volume has reached 10 billion U.S. dollars. As ICBC regards its overseas development as strategic, it does not make financial investment, but prefers to hold and manage the financial institutions it has acquired, with a regional emphasis on the emerging markets.

Under guidance of this strategic view, ICBC identified Halim Bank of Indonesia as its acquisition target. Indonesia is an important country in South Asia, with its population and economic output ahead of others, and is the most significant emerging market in this area. As Indonesia is abundant in resources and owns a huge market, the economies between Indonesia and China are complementary to a great extent. In recent years, Sino-Indonesian economic and trade relations have been increasingly close. The import and export volume between the two countries reached 31.5 billion U.S dollars in 2008, and China has become the third largest importer and fourth largest exporter of Indonesia. Considering these situations, ICBC has been actively seeking for an opportunity to enter the Indonesia market. Yet until 2007, ICBC had remained a strange name to most Indonesian people.

All this changed when ICBC made the decision to acquire Halim Bank Indonesia. Halim Bank is a local bank licensed to trade foreign exchange, and has 12 outlets which cover the major cities and regions of Indonesia such as Jakarta, Surabaya and Bandung. Though of a relatively small size, Halim Bank is noted for its prudence in management, and was selected by the central bank of Indonesia as "Bank with an Excellent Performance", enjoying a sound reputation in the local banking industry. The moderate size, prudent management style and strong profit-making ability of Halim Bank have clearly fitted ICBC's demands, and immediately became the primary target of ICBC after it decided to enter the Indonesian market through acquisition. However, to successfully complete the merger and acquisition, not only did a strategic perspective be required, but also the negotiation skills. Since April, 2005, ICBC had entered into contact with Halim Bank, exploring the possibility of merger; yet how to fix the merger price became a serious challenge for ICBC, for the price premiums in several acquisitions of Indonesian banks by foreign-funded banks had been rather high. Facing this situation, ICBC, based on its acquisition strategies, adhered to win-win cooperation between the two partners; highlighting the long-term development, and thus seized the initiative in the negotiations, and finally acquired the operational qualification in the Indonesia market with rich financial resources and opportunities with a reasonable price and an appropriate way of investment.

On Dec. 30, 2006, ICBC and Halim Bank finally signed the equity transfer agreement, successfully acquiring 90% of Halim Bank's shares at a price of about 22 million U.S. dollars. Immediately after this Halim Bank's name was changed to PT Bank ICBC INDONESIA, its business starting on Nov. 12, 2009. At the end of the year, the mainstream media in Indonesia International Daily News selected the opening of PT Bank ICBC INDONESIA as one of the top ten news about the Sino-Indonesian strategic partnership in 2007. Since then, ICBC has been frequently covered by local major media and stayed in the public attention, formally taking its root in Indonesia and becoming the largest Chinese-funded bank there.

Integration: Assimilation and Localization

It is only the first step for a successful merger and acquisition to close the transaction and overcome obstacles to market entry. Related studies have indicated that 70% of merger and acquisition failures are due to poor integration. For ICBC, it is undoubtedly a huge challenge to integrate a bank with distinct operational model and culture when it was still new in the local market.

To promote integration, ICBC had, before the acquisition of Halim Bank, made a nationwide selection of capable employees to work in Indonesia. After the merger and acquisition, ICBC also formed an expert team and a preparation team to send to Indonesia and work on integration. Yet an emergent problem came up immediately after the integration work began -- the Indonesian and Chinese employees cannot communicate with each other. As Halim Bank is a mainly local bank, there is few staff who can speak English, not to mention Chinese; the Chinese and Indonesian staff can only depend on interpreters to communicate. To fix the problem, the management of PT Bank ICBC INDONESIA started to urge the Chinese employees to study Indonesian; on the other hand, the Chinese and Indonesian employees invented several signs for their familiar financial terms, using them to understand each other and to learn English and Indonesian. In addition, Yuan Bin and his colleagues put much thought into helping Chinese employees fit in the new environment. "Start from the eating habit. When we first arrived in Indonesia, many Chinese staff were not used to the local work meals, thus would bring food from home; at meal time, Chinese and Indonesian employees would eat separately. I saw this and thought this would only hamper their integration, so I immediately required all Chinese employees have meals with local employees. Having lunch together actually creates a good opportunity for Chinese and Indonesian employees to communicate with each other. With more communication, they will naturally integrate; and when they go back to work, they can work together, and despite the difference in nationalities, feel they are all members of PT Bank ICBC INDONESIA." Yuan Bin said.

In solving the communication problems, ICBC, based on its business philosophy, management model and management systems, also started to reform the patriarchic management culture of Halim Bank and promoted it to be more modern and open. In a short period of time, ICBC has completed integration of resources and analysis of the operation process, set up new institutions, enhanced risk analysis and control, established a technological platform, promoting a rapid transformation from Halim Bank to PT Bank ICBC INDONESIA.

In the integration process, the experience of ICBC's management and ICBC's corporate culture have played a significant role. Till today the Chinese employees at PT Bank ICBC INDONESIA still vividly remember the first time they saw faces of their colleagues in Sishui branch via the video conferencing system. Evidently, the successful application of modern technologies by ICBC impressed the Indonesian employees greatly, and enhanced their confidence in their new employer. Another example was in credit management. Halim bank had previously run business in a quite traditional way and was only able to conduct mortgage credit business; whereas ICBC owns rich modern experience. Hence Yuan Bin introduced the whole credit management process from credit rating, credit granting, credit examination, approval and to post-lending management to PT Bank ICBC INDONESIA, amazing the local employees who through training quickly learned and accepted the new credit management system.

Integration does not mean a simply replication. Without the support of localization, advanced experience may fail to be applied in practice. In this respect, PT Bank ICBC INDONESIA has been paying great attention to shaping its local image from the very beginning, and actively sought to integrate into the local society. By promoting communication with local governments and regulatory bodies, VIP clients, local communities, and the new media, ICBC has sent out its sincere wish to root in the Indonesian market and serve the development of local economy.

In the localization of human resources, PT Bank ICBC INDONESIA has attached great importance to integrating eligible local employees into the management, and hiring professionals familiar with local clients to conduct product research and market expansion. Among the five directors in the top level of PT Bank ICBC INDONESIA, three are local Indonesians. Among the 338 employees, only twelve are sent from China and all the rest are local Indonesians

Indonesian culture, religion and customs differ greatly from China. In this context, the integration of local culture becomes especially important. Out of respect for the religious beliefs of local Muslim employees, PT Bank ICBC INDONESIA has set up a prayer room on each floor of its headquarters and each of its branches, facilitating the Muslim employees to play on time. When Muslim employees perform their five-time daily prayers, they will also be exempted from meetings or other work, which greatly touches the Muslim employees.

"By feeling for others, our respect for them is returned with their respect and support." Yuan Bin said. He remembered that after the Wenchuan earthquake in 2008, all Indonesian employees at PT Bank ICBC INDONESIA, though their salaries are relatively low, voluntarily donated for disaster relief. The value of their donation amounted to 20 million RP and represented their love and care for people at the disaster area. The Indonesian director of PT Bank ICBC INDONESIA, Mr. Jeff Eman, proposed to Yuan Bin to establish a "Free Channel for Love Remittance", providing a green channel for remittance to Sichuan. Within one month after this channel was opened, PT Bank ICBC INDONESIA had received more than one hundred donations, and transferred a total of over 500 thousand U.S. dollars to the Ministry of Civil Affairs, Red Cross Society of China, and China Charity Federation.

Through efforts, ICBC has successfully completed the integration work in only one year's time, producing a synergy effect. In the first full year (2008) after the merger, PT Bank ICBC INDONESIA has increased its profit by 2.01 million U.S. dollars, making a new record in profit-making of overseas institutions which had entered Indonesia. At the same time, businesses of PT Bank ICBC INDONESIA have experienced rapid growth. By the end of 2008, PT Bank ICBC INDONESIA has achieved a total asset of 140 million U.S. dollars, its rank rising by more than twenty. Local employees are not only happy for PT Bank ICBC INDONESIA's achievements, but also feel proud for being one of its members.

Innovation: Enhancing its Development Momentum

After the successful integration, PT Bank ICBC INDONESIA accelerated its pace of market expansion and providing comprehensive financial services to its customers. Seizing a favorable opportunity, PT Bank ICBC INDONESIA held grand opening ceremonies in Jakarta and Surabaya; and by signing comprehensive cooperation agreements with local Chinese societies and Chinese groups, opened up marketing possibilities. However, with the expansion of its businesses, PT Bank ICBC INDONESIA realized that due to a lack of variety of products and distribution , and the backwardness of the technological platform, it had lost quite a number of business opportunities. To improve the situation, PT Bank ICBC INDONESIA, based on its thorough researches upon local markets, decided to adopt new development strategies to enhance its competiveness through innovation.

When promoting business innovation, PT Bank ICBC INDONESIA has placed its emphasis upon investment banking. Not only has it established an independent department of investment banking, but also has, beside the traditional businesses such as he such as providing syndicated loans, project financing, providing structural financing schemes and other debt market operations,  actively conducted reorganization of assets, mergers and acquisitions, financing, information inquiry, and consultancy for risk investments. In 2008, PT Bank ICBC INDONESIA assisted ICBC to complete the Indramayu Power Plant USD 592 Million Export Buyer's Credit Project, which was honored the "Annual Best Transaction" by worldly renowned magazines Trade Finance and Global Trade Review, and thus greatly enhanced the reputation of PT Bank ICBC INDONESIA in investment banking business. In addition, in 2008 PT Bank ICBC INDONESIA, serving as the financing counselor of Shanghai Electric Group Company, provided investment banking services for its investing in the power station project with a total capacity of 10 million kwh, earning 500 thousand U.S. dollars for completing its first investment banking assignment.

The innovation in IT system has also built up a firm foundation for the long-term development of PT Bank ICBC INDONESIA. The IT system PT Bank ICBC INDONESIA inherited has been used for twenty years, with no Internet connection between different outlets, and is characterized by backward design notions and low-level software and hardware. Its office and business operations did not realize complete automation, thus such operations as notes transfer and internal clearing still had to be conducted by people, which was not only a waste of human labor but also carried high risks. Since the establishment of PT Bank ICBC INDONESIA, it has immediately set out to train IT personnel, standardize the management processes, making new institutions, efficiently completing the establishment of management databases, computer rooms, networks and the automatic office system. On this basis, PT Bank ICBC INDONESIA further installed the FOVA banking system which has reached the internationally advanced level, significantly promoting the capabilities of PT Bank ICBC INDONESIA for business development and internal control.

The FOVA system adopted by PT Bank ICBC INDONESIA is the overseas edition of NOVA system which has been widely used by ICBC in China. To produce FOVA, PT Bank ICBC INDONESIA set p a team composed of the key personnel in each business line of Halim Bank and the Chinese technicians sent out by ICBC, which, by promoting close cooperation between Indonesian and Chinese experts, analyzing the design concepts for FOVA and its operational mechanism, and considering the local regulatory rules and banking practices, proposed how to modify NOVA to meet different demands. After this PT Bank ICBC INDONESIA also sent its local key personnel to receive training at ICBC's research and development center in China, who at the same time participated in discussion and confirmation of the requirements for FOVA, thus maximizing the chance that functions of FOVA would well meet the local needs in Indonesia and accommodate itself to the habits of Indonesian customers.

Since FOVA is a completely new system, PT Bank ICBC INDONESIA has encountered many difficulties in launching it. Data migration and successful system switch constitute basis for the application of FOVA, yet as the data structures and operation models differ greatly between the previous system and the new one, data migrate became extraordinarily difficult. "The greatest difficulty is not posed by lack of technology, but by the regulative commission. As the central bank of Indonesia required that in principle banks' data should not be migrated outward, and has never approved any bank to conduct similar operations; we chose to invite them to watch our demonstration of how FOVA operates. Our system fully manifests the convenience and safety modern technology can bring along, which greatly impressed them and won much praise, finally convincing them to agree upon our plan of data migration. They also agree that this technological innovation will not only benefit PT Bank ICBC INDONESIA, but also contribute to the technological development of the whole Indonesian banking industry." The vice manager of PT Bank ICBC INDONESIA, Chen Youbin said.

After the successful application of FOVA system, PT Bank ICBC INDONESIA can not only launch real-time clearing with ICBC headquarters, which enhances the efficiency of fund transfer, but also has profoundly changed the previous composition of the workforce, the operational processes, the internal control mechanism, the operational practices, the handling of business, and the customer service pattern, marking a revolutionary reform for the operations of local employees. "In the past, it needed many procedures and hands to complete an operation, but now with the new system, only one clerk can finish it. For example, before we adopted FOVA, it usually took twenty minutes to finish the receipt of an ordinary large-sum deposit; whereas now it takes only five minutes, with the efficiency increasing four times. I have not imagined that I can handle so many transactions in a day, more than what several people did previously. This gives me a strong sense of achievement." The Indonesian clerk Dian said.
　　　　　　　
Development: Bridging the Trade Exchanges between China and Indonesia

The Board President of ICBC Jiang Jianqing has always been concerned about the development of PT Bank ICBC INDONESIA, and had great expectations for it. "To follow the Chinese enterprises to go out has been part and parcel of ICBC's overseas development strategy. PT Bank ICBC INDONESIA, as a local corporate bank registered in Indonesia, enjoys the geographic advantage of locating in Indonesia and the ASEAN Free Trade Area. Supported by ICBC's capital, network and technological platform, it can fully address customer needs and provide financial service to traders between China and Indonesia, between China and ASEAN, to international investment corporations, financial institutions and personal clients." President Jiang said.

As is known, Sino-Indonesian economic relations have developed rapidly in recent years, and their ties have grown closer. In 2005 the bilateral trade volume was only 10 billion U.S. dollars; by 2008, this figure had reached 31.5 billion U.S. dollars, witnessing a fast growth. Since the establishment of PT Bank ICBC INDONESIA, it has taken the bilateral trader as its important target customer, and its settlement amount, starting from zero, rose to over 100 million U.S. dollars in one year's time. Meanwhile, more Chinese enterprises are going to invest in Indonesia. More than 700 projects in Indonesia are undertaken by Chinese enterprises at present. Among these enterprises, many large-scale enterprises such as China National Petroleum Corporation, China National Offshore Oil Corporation, Huawei, ZTE, State Power Corporation, Sinohydro Corporation, and Huadian Power International Corporation have become clients of PT Bank ICBC INDONESIA, and PT Bank ICBC INDONESIA have served their development in Indonesia . For example, PT Bank ICBC INDONESIA found Chinese partners for the nickel project and iron ore project in Indonesia, and actively supported the Indonesian State Power Corporation to export buyer's credit. Recently, PT Bank ICBC INDONESIA also assisted automobiles with a Chinese national brand to enter the Indonesian market, providing service to the Chinese enterprise in signing agreements with local sales and logistics agents. With the help of PT Bank ICBC INDONESIA, Chinese automobile managed to enter the Indonesian market more quickly and conveniently. 

In actively supporting Chinese enterprises to go out, PT Bank ICBC INDONESIA also endeavors to provide high-quality financial services to its local customers. Continuing to serve the small and medium-sized enterprises which were previously clients of Halim Bank; on the other hand, PT Bank ICBC INDONESIA emphasized developing VIP customers among enterprises which play a key role in important local industries. In a year's time, the customer structure of PT Bank ICBC INDONESIA changed to a great extent -- the previous top ten clients are ranked far behind, with the leading enterprises in different industries added into the customer list. "We have developed many loyal local clients. In September last year, the financial crisis caused many local banks to fail to finance for their corporate clients due to their own liquidity problems. A profitable local automobile corporation happened to be in urgent need for cash, yet most banks refused to offer loans, except us. To thank us for immediately providing them with loans, the Board President came to us in person to express their gratitude, and also invited us to do financial business with its subsidiary companies." The vice manager of PT Bank ICBC INDONESIA Chen Youbin said. PT Bank ICBC INDONESIA has also issued ICBC credit cards to many local residents who frequently visit China, who receive them with wide welcome. Using an international credit card of ICBC can save 3% to 5% commission fee and exchange rate loss for customers who usually go between China and Indonesia; they can also repay the credit card through PT Bank ICBC INDONESIA, making it very convenient to use. 

PT Bank ICBC INDONESIA has also played an important role in promoting Sino-Indonesian tourism and cultural exchanges. The number of Chinese tourists to Indonesia has surged in recent years, from 150 thousand in 2007 to 330 thousand in 2008. In April 2009, PT Bank ICBC INDONESIA signed a memorandum with the Ministry of Culture and Tourism of Indonesia, which has created more convenience for ICBC credit card holders to apply for Visas and to tour and consume in Indonesia. The Director for International Promotion of the Ministry of Culture and Tourism of the Republic of Indonesia, Prof. IG Pitana highly commended PT Bank ICBC INDONESIA for contributing to the development of Indonesian tourism. PT Bank ICBC INDONESIA hopes to serve as the economic, financial and cultural bridge which connect China and Indonesia, and as the herald to enhance friendship between people of the two countries. Yuan Bin said.