Piggyback Strategy: A Solution to Boost Internationalization of Small and Medium Enterprises in Indonesia

Abstract

Countries take advantage of globalization from foreign direct investment and the increase of export-import activities. Indonesia is in its incredible growth today and it has great opportunity to keep growing rapidly by expanding the market of its SMEs (Small and Medium Enterprises) into global market, the business entities which play major role in Indonesia economy are mostly SMEs. Unfortunately, the export of SMEs is still low due to some problems, lack of global marketing skill and export procedure information are some of the problems and it can be solved by piggyback marketing. There are two terms in piggybacking: rider and carrier, piggyback scheme provides
mutual benefits to both carrier and rider. Briefly, carrier will get new product line and rider can get learning opportunity to be independent and global exporter in the future. This conceptual paper was strengthened by single case study of PT Yori Masa Company which is based in Indonesia.

Full text

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PIGGYBACK STRATEGY
A SOLUTION TO BOOST INTERNATIONALIZATION OF SMALL AND
MEDIUM ENTERPRISES IN INDONESIA
ABSTRACT
Donny Susilo
Master of Business Administration, Asia University, Taichung, Taiwan
Countries take advantage of globalization from foreign direct investment and the increase of export-
import activities. Indonesia is in its incredible growth today and it has great opportunity to keep
growing rapidly by expanding the market of its SMEs (Small and Medium Enterprises) into global
market, the business entities which play major role in Indonesia economy are mostly SMEs.
Unfortunately, the export of SMEs is still low due to some problems, lack of global marketing skill
and export procedure information are some of the problems and it can be solved by piggyback
marketing. There are two terms in piggybacking: rider and carrier, piggyback scheme provides
mutual benefits to both carrier and rider. Briefly, carrier will get new product line and rider can get
learning opportunity to be independent and global exporter in the future. This conceptual paper was
strengthened by single case study of PT Yori Masa Company which is based in Indonesia.
Keywords: Piggyback, Carrier, Rider, Small and Medium Enterprises (SMEs), Indonesia
JEL Classification: M16
1.1 INTRODUCTION
Globalization is still debatable as the impact on country economy can be different based on the
unique characteristics of that country. Some people argue to obtain benefits from globalization while
the others claim that it will only ham their country. One particular reason why country wants to open
for globalization is also the advantage from foreign direct investment and the increase of export-
import activities. The degree of openness in most countries has increased, perhaps it will lead to the
incrementally increase export-import activities. Indonesia is one of the world economies that cannot
avoid globalization. It has insisted on the government to do market-oriented reform that can maintain
high and sustainable rates of exports necessary for strong economic growth. Globalization can give
positive impacts on economic growth of Indonesia, it can make opportunity for Indonesia’s company
to do export and earn more foreign exchange reserves. ASEAN, ACTA and other economic
communities has been reply to get the member ready for tighter competition in the global market,
there are some reason why internationalization is important to do by Indonesia business enterprises
which are: (1) Indonesia need foreign exchange to pay their import in case of commodity shortage,
(2) foreign exchange can help Indonesia to increase its gross domestic product, (3) foreign exchange
can maintain Indonesia currency value against other foreign currency in world market and the last, (4)
It can maintain mutual relationship between Indonesia and other countries in global economy

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On the other hand, Indonesia is in its incredible growth today. It is recognized as one of emerging
market with stable economic growth. Already the 16th largest economy in the world, Indonesia is
potential to be the 7th biggest by 2030. (Oberman et al, 2012:13) Indonesia economy grew at 5,18
percent in 2rd quarter (Indonesia Investment.com, 2016). In order to keep powering its growth, it is
wise to increase export and earn from other emerging markets. In Indonesia, export activities are fully
supported by government through the establishment of National Export Development Institution,
domestic industry can obtain any information related to export there.
The contribution of SMEs to employment and GDP is very magnificent. SMEs contribute to
employment more than 94 percent of national employment. 118 million of 125 million employees in
Indonesia now are from Small and Medium Enterprise sector. Small and Medium Enterprise sector
also contributes to 57 percent or Gross Domestic Product (GDP), said by member of National
Industry and Economic Committee, Irfan (2016) Nevertheless, in going to international market,
SMEs in Indonesia also faces some barriers such as competition, long duration of export document
process, product quality, export barrier from country destinations, low capability in high production,
delay in transportation, communication barrier, government agencies that presume become barrier,
lack of international market knowledge, barrier of entering international market, export administrative
procedures, inefficient production cost, unofficial fee in export documents processing, incapable to
supply product in time, lack of knowledge in transaction method, limitation of destination country,
time limitation in cargo, and delay of shipping (Siringoringo et al, 2009).
Unfortunately, Small and Medium Enterprises (SMEs) which dominate the contribution to Gross
Domestic Product (GDP) in Indonesia do not still have high capacity to get into global market. When
it comes to export, Small and Medium Enterprises in Indonesia contribute only a small part of
Indonesia export. Based on data form DJPEN, the export value of the country during the year 2014
reached at US $ 179 billion, US $ 145.9 billion came from non-oil sector and there, SMEs contribute
only 16 percent of all total value of non-oil exports, or about US $ 23 billion. Today, Indonesia’s
SMEs solve the problem of global marketing by utilizing third party, the majority of those who do
export, they do not export directly, but indirectly through intermediaries such as traders, exporting
companies, or trading houses (Tambunan, 2011). However, the solution has many weaknesses.
Firstly, it will not let Indonesian SMEs to be mature and independent, so they will have to spend on
commission cost forever and the SMEs has no chance to get learning about global market. Secondly,
it is rare to find the third party who is experienced in all kind of product line, so they need to analyze
the potential market and it does not take a short time. Based on those factors, a new innovative export
strategy called piggyback strategy has been offered especially to small and medium enterprise which
is still low capacity in reaching the global market, piggyback strategy is kind of distribution channel
which is newly introduced but very popular in other countries. It can bring company to cost efficiency
and independence and finally export market-oriented company.
Small and Medium Enterprises have been important and prioritized issue for Indonesia Government
especially due to its domination in Indonesia economy structure but until now, the research about
internationalization of it is still lacking. This paper is to help Indonesia SMEs to develop and finally

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become a great driver for economic development and so it can be learned by other countries within
ASEAN and even Africa countries by introducing a new international market entry strategy for
Indonesia SMEs, in more detail the purposes this research are (1) to introduce the concept and
literature review about piggyback strategy, (2) to gain a better understanding of piggybacking as a
method of international market entry, (3) to provide information on the term and agreement and
provide knowledge of how the cooperation can be made and (4) to provide information about the best
practice of piggybacking in other developed countries. While the benefits of this research are (1) it
can help Indonesia SMEs to reach cost efficiency and independence, (2) it can help Indonesia SMEs
to be export market-oriented company, (3) it can enrich literature review about piggybacking and
developed by further study in larger scope such as SMEs in ASEAN countries and (4) piggyback can
empower SMEs wherever they are to create more employment and lead Indonesian to better income
equality.
2.1
LITERATURE REVIEW
2.1.1
Piggyback Definition
Piggyback is one of indirect export practice. In piggybacking exporting, one manufacturer uses its
overseas distribution to sell another company’s product along with its own (Terpstra & Saranthy,
2000). Piggybacking is considered as an early form of strategic alliance where firms join together
voluntarily, usually with no equity ties, to reach some objectives together that they cannot reach
efficiently by themselves (Terpstra & Yu, 1990). There are two terms in piggybacking process;
carrier and rider. It is described by Terpstra and Yu (1990); the carrier is usually a large firm with
highly reputed international business and experience, and the carrier should have widespread
production and distribution facilities in several countries. In general, the carrier performs the
marketing and distribution strategy while rider is the supplier of the basic products. According to
Jeannet and Hennessey (1995), the rider is piggybacking its products on the shoulders of the
established company.
When a new product line is needed by firm to satisfy their customer, they have alternative to acquire
the necessary products outside by piggybacking. This option can be attractive for big companies to be
a carrier because they obtain the new product faster. It is also a low cost solution to get product
because carrier does not have to invest in H&D, production facilities or market testing for the new
product. (Hollendsen, 1998). Piggybacking is one alternative route for the rider using an export
company to carry its product to foreign market, established export and distribution facilities and
shared expenses is offered by piggyback (Terpstra & Sarathy, 2000). When the rider’s products are
distributed by another producer, some important benefits can be obtained by the rider as compared
with using a regular distribution (Terpstra & Yu, 1990). This strategy can be help to export all kind of
products include textile, industrial and electrical machinery and equipment, chemical, consumer soft
goods and books (Albaum et al, 1994).
2.1.2
Small and Medium Enterprises in Indonesia
According to Small and Medium Enterprise Indonesia Act no 20 in 2008, the classification of micro,
small and medium enterprises are as follow:

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Table 1: Classification of Enterprises in Indonesia
No
Description
Criteria (in rupiah)
Asset
Income
1
Micro Enterprises
Maximum 50 million
Maximum 300 million
2
Small Enterprises
>50 million – 500 million
>300 million – 2.5 billion
3
Medium Enterprises
>500 million – 10 billion
>2.5 billion – 50 billion
4
Larger Enterprises
>10 billion
>50 billion
Source: MSME Act No 20, 2008
SMEs contribute substantially on the Indonesian economy and ASEAN. Until now, about 96 % of
businesses in ASEAN are classified as Micro, Small, and Medium Enterprises (SMEs) with
contributions to the gross domestic product (GDP) of about 30% to 57%; and it absorbs a workforce
of around 50% up to 95%. While in Indonesia, SMEs accounted for 99.98% unit effort with
contribution to GDP national average of 57% of national GDP; and it absorbs about 94% of all
domestic workers. Within this framework, the role of SMEs is essential as a key driver for creation
jobs and economic growth, both at the regional and national level. (Ashariyadi, 2016)
One of the advantages of Indonesia SMEs is durability when it faced crisis situation. In Indonesia,
SMEs had proven able to survive in global economic crisis and be a lifesaver for Indonesia economy
in the 1997 financial crisis and 2008 global economic crisis. It was caused by the flexibility of SMEs
the adjustment to production process, they were able to thrive with their own capital, and did not rely
on foreign debt. SMEs are also often linked the alleviation of the economic and social problems, such
as high poverty rate, high unemployment, inequality of income distribution, as well as uneven
development.
The existences of SMEs are expected to contribute positively and significantly to efforts of tackling
those problems. The success of SMEs effort has the greatest number and quite dominant in the
economy, it will greatly affect the achievement in order to compete in ASEAN Economic
Community. Moreover, SMEs with strong foundation does not only ensure the success of economic
integration, but also social welfare for the entire Indonesia people.
2.1.3
Process of Piggybacking
According to Cateora (1996), the decision process for potential piggyback distribution determines if
some pointes has been fulfilled: (1) The product is complementary to the product line and contributes
to it, (2) The product matches the sales and distribution chain, (3) There is enough mark-up to cover
efforts, (4) The product will be accepted by the market and be sold in adequate volume.

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Figure 1. Chain of Distribution for Piggyback
Source: Albaum et al, 1994
As illustrated in the model above created by Albaum et al (1994), four alternative ways are offered to
handle the distribution of the product when using piggyback operations. The amount of steps and
middle hands used in the distribution chain are different in these four alternatives. Terms of sale,
promotional arrangements, and market coverage are some important points that must be discussed to
protect the carrier and rider when deciding about the piggybacking arrangement (Terpstra & Sarathy,
2000).
Term of sale
The carrier can make compensation in form of commission and it can both acts as an agent or
alternatively buys the product as an independent distributor (Terpstra & Saranthy, 2000). Since the
carrier may need to help customers with support and feedback operations, the carrier will insist that
the rider’s products are somewhat similar to their own products in piggybacking, (Hollensen, 1998).
Cateora (1996) refers to that the largest volume of piggyback business is handled on an ownership
purchase-resale arrangement. The large portion of the piggyback arrangements is undertaken when a
firm wants to expand its product line or keep its distributional chains active over low seasons.
Promotional arrangement
Branding policies are variable in piggybacking. The choice of branding is mainly on how important
the brand name is to the product and how well established it is (Terpstra & Sarathy, 2000).
Differences may occur concerning which company name the product should be sold under. Some use
private labels or manufacturers name while some are using the name of the best-known corporation
(Albaum et al, 1994).

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Market coverage
Piggybacking is mainly used for products that are non-competitive but related, and complementary
and allied (Hollesen, 1998). The carrier firm may already have good coverage in many countries of a
region that is attractive to the rider (Terpstra & Yu, 1990). In terms of country coverage,
piggybacking offer one market or access to a global market (Terpstra & Sarathy, 2000). A
piggybacking arrangement for one country is usually utilized when a large target market is perceived.
In other case the rider wants to cover all foreign market by piggybacking with a multinational
enterprise (Terpstra & Yu, 1990).
Manufacturers that have good market coverage in the home country may look for similar operations
in foreign market or region of interests. This is called reciprocal piggybacking (Terpstra & Yu, 1990).
The piggybacking approach may also be applied to product coverage. The carrier may handle just one
or all of the rider’s products; however the carrier has a large part of the decision making (ibid).
Initiator of the piggybacking arrangement can be the government, when a government trade
promotion agency initiates a” foster firm” for inexperienced exporters. It can also be encouraged by
the private sector, when an industry group encourages members, which are successful in international
business, to seek opportunities for smaller and newer firms (De Burca et al, 2004).
2.1.4
Benefits with Piggyback
Rider benefit
Piggybacking provides an easy, low risk way for the rider company to begin export–marketing
operations. It is especially well suited for companies that are small, or that do not want to invest
extensively in foreign market (Albaum et al, 1994). The only criteria necessary for piggybacking
operation is to produce a quality product, and to find a firm willing to carry it. Therefore it is a choice
for companies with a limited exporting activities, limited resources and lack of international market
knowledge (Terpstra & Yu, 1990).
In piggybacking, the rider firm utilizes the market channels of the carrier firm instead of developing
own channel. Assuming that the rider is in early stage of internationalizing, it is not feasible to own
production facilities in a host country. Therefore the rider relies on piggybacking to take advantage of
the carrier’s knowledge of the host country or the carrier’s distribution system in the host country
(Terpstra & Yu, 1990). When committing to a partnership, the international firm can get well-needed
local know-how from the local partner (Gronroos, 1990). When discussing market knowledge,
indirect entry is the least risky of the internationalization strategy (Ibid). When piggybacking, the
rider can carefully observe how the carrier handles the transactions and learn from the carrier’s
experience. Eventually the rider is able to start own export transaction (Hollensen, 1998).
Piggybacking is a dynamic process for the rider, used as a transitional strategy where firms can build
on their international marketing expertise. The rider can switch to another mode to serve foreign
markets when collected enough international marketing expertise (Terpstra & Yu, 1990).
The rider, if choosing the right parent can gain advantages of sophisticated promotion tools and
association with a well-established brand reputation. This can result in increased sales (Terpstra &
Sarathy, 2000). Since the carrier firm may have good marketing coverage in many countries of a

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region, the rider can reach attractive markets without needing to face high entry barrier (Terpstra &
Yu, 1990). This gives the rider the ability to test foreign market with low cost (Ibid). So SMEs in
Indonesia are supposed to be riders to for the following benefits: (1) Piggyback export can give
opportunity to SMEs as rider to learn how to do direct export from the carrier’s experience that
company finally acquire capacity to do direct export, (2) The carrier is one company that has many
branches and overseas distributor channels to ensure that SMEs can increase their sales to maximize
the use of capacity. By capacity optimization, SMEs can get new financial resource to develop their
company globally, (3) SMEs can utilize the brand reputation of the carrier to easily find buyer in
global market, (4) SMEs can take advantage from carrier’s resource in testing market and
determining target market for their product which is complementary to each other, (5) SMEs can get
information of how they can make innovation of their product that can fulfill the need of each country
people in global market today, (6) The rider is part of carrier company, piggybacking is good
approach to attract global buyer because they avoid from using export agent, they will do their best to
avoid extra price or commission charged by export agent.
Carrier benefit
For the carrier, piggybacking option is one of the best ways to obtain a new product quickly. It
requires minimum investment and the products are received with maximum speed (Terpstra & Yu,
1990). It also allows the carrier to allocate resources to other purpose and projects (ibid). When a
company has a gap in its product line or excess capacity in its export operations, the necessary
products can be acquired outside with piggybacking. This alternative is attractive because the firm
can get access to products quickly since someone already has it (Hollosen, 1998). The cost are also
kept low because the carrier has no need to invest in H&D, production facilities and market testing
(Terpstra & Sarathy, 2000). Also when the carrier firm seeks for complimentary products to their own
product line, or when the carrier is in need of quick introduction of a new product to compete with
new competitors, piggybacking can be the best option (Terpstra amd Yu, 1990).
Since the rider provides a product already successful on domestic market, the probability for the
product to succeed on the foreign market is also high. The carrier gets access to a fully developed
product that has been commercially and technologically tested in the home market (Terpstra amd Yu,
1990). If the piggybacking partnership arrangements work out well, it is possible that the carrier
consider further commitment with the rider through a joint-venture relationship (Terpstra amd Yu,
2000). According to Albaum et al (1994), the piggyback rider is also risky from losing the control of
their products marketing abroad, but with good understanding and clear terms before the cooperation
begun, it can still be avoided.
Relationship between the rider and the carrier
The relationship between the rider and the carrier in piggybacking can be analyzed by defining
piggyback as one of indirect export process and global market entry strategy through cooperation. A
relationship-based entry can be the option if a considerable degree of cooperation is necessary in
order to achieve success. This is because resource commitment is usually modest in internationalism,
and both parties have a mutual stake in the outcome (De Burca et al, 2004). Partnerships are formed

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for a variety of different reasons; one of them is the entering of new international markets and is
particularly useful when entering a foreign market for the first time (Hollensen, 1998). The
partnership should be undertaken if appropriate controls are in place to secure the expansion with
relatively small investments (Czinkota & Ronkaimen, 2004).
According to Albaum et al (1995) a partnership has two sides, the technical and the emotional side.
The technical side addresses to the mechanism and contribution of each parties and the emotional side
is considered to be feeling of collective effort. Through the relationship business risk can be
minimized because management skills and experience from the local partner allows for an easier
adaptation to dangers of unfamiliar environments (ibid). According to Terpstra and Yu (1990), the
rider will need to rely on the carrier to sell its products and the carrier will need to rely on the rider to
provide new product. This mutual dependence strengthens the partnership relationship. Hollensen
(1998) states that the rider and carrier, when entering a partnership normally sign a contract for a
couple of years to provide for continuity in the commitment.
When piggybacking, firms join together voluntarily to reach objectives together that they cannot
reach efficiently by themselves. The relationship between the rider and the carrier is close, but it is
not formal like merger or joint venture (Terpstra & Yu, 1990). The agreements are more flexible than
traditional agreements with export management companies or web-Pomerene association (Terpstra &
Sarathy, 2000). Piggyback arrangements are important because they can offer an efficient economic
cooperation with benefits for both rider and carrier. But since piggybacking arrangements usually
have a limited lifecycle. It can transform to be more serious cooperation if the parties get benefit and
continuous profit. The parties can also agree to separate as conditions or company objective change.
(Terpstra & Yu,1990). When evaluating the piggyback arrangement, the carrier might find potential
advantages; the rider may be a good acquisition candidate of joint venture partner to build a stronger
relationship with (Terpstra & Yu, 2000).
Suggested Application for Indonesian SMEs
In order to empower these SMEs, it is necessary to apply piggyback marketing strategy. The concept
is quite simple to apply, it can make Indonesia SMEs become mature and independent to do their
export in the future. So piggyback marketing, aside of helping government to teach SMEs, it also
increase the competitiveness of SMEs through both global and domestic partnership in global market
competition. In order to find good partner for Indonesian SME, it can be big companies with
complementary products that have marketed their good with high reputation to the destinations of
Indonesia exports by SMEs. Some export markets available today are ASEAN members (22 %),
Japan (12,3%), China (10,9), America (10,8%) and others (Indonesia Eximbank, 2010). It is better if
the carriers are big companies lie in Indonesia so that government can easily protect and supervise the
relationship. In order to maximize profit, it is good to find partner which are located in the export
destination countries, they are more familiar with the market and they have already had fit strategy to
win in the competition.
Internet which now already becomes popular to get foreign buyer should also be utilized to find
partner for piggybacking. Internet has been easy to access and affordable for SMEs in Indonesia. This

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also need interfere for government to facilitate big industries both domestic and foreign one to meet
Indonesian SMEs. In this new paradigm, not only customers but also big industries with
complementary products are now beneficial for SMEs. Big industry will need the rider’s product
because the competitive advantage to provide one door solution and quality assurance for global
customer, global buyer will like to make business with supplier who can provide all they need
completely for the following reasons: (1) The buyer can propose to get discount if they make a big
order consist of various complimentary products, (2) The buyer doesn’t need to find anymore seller
as they will benefit from time and cost efficiency, (3) The buyer can get quality assurance from one
carrier, there is no risk to get unqualified product from diversification.
3.1
RESEARCH FRAMEWORK
3.1.1
Research Approach
Qualitative research is often used in relation with case studies where the aim is to obtain a better
understanding of the stated research problem through gaining thorough information about the subject
(Yin, 2003). Since the purpose of this study is to gain a better understanding of what are the
internationalization motivations for Indonesian SMEs, what are determinants when deciding entry
modes, how these determinants influence the entry mode choice and the interaction between
motivations and entry mode choice, qualitative approach, compared with quantitative approach, is a
more suitable research method to find out the answers to these research questions.
3.1.2
Research Design
Primary data is necessary for this study and these primary data is mainly collected by interview with
the management of an Indonesian SME. In addition, some secondary data from investigated
companies and old research works would also be used for this research. In order to do this research,
author will also apply single case study method. Single case design or single-subject design is a
design that relies on comparison of treatment effects on a single subject or group of single subjects.
Single-subject design is thought to be a direct result of Skinner’s research. This design is sensitive to
individual differences. It often involves using large number of participants in a study, however –
individuals in the study serve as their own control and therefore the design is called single-subject.
Single-subject design has a number of requirements such continuous assessment, baseline assessment
and variability in the data. Single-subject designs are quite popular because they are very flexible and
highlight individual differences in response to treatment/intervention. Single subject research design
is most often used in applied fields of psychology and education.
3.1.3
Sample Selection
For our study, the purpose is to gain a deeper understanding about the piggybacking process as a
method of internationalization for industrial firms. For this reason author chose a manufacturing
Indonesian firm. Author are conducting a single-case study, which implies the sample selection to be
of one company. Within the manufacturing business author chose PT Yori Masa Company as author
had some personal contacts within the company. Author knew that PT Yori Masa Company was
engaged in export operations.
3.1.4
Data Analysis

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Data analysis can be defined “as consisting of three concurrent flows of activity: data reduction, data
display, and conclusion drawing/verification”. The data reduction of the analysis helps the researcher
to make the data sharp, sorted, focused, discarded and organized to be able to draw and verify
conclusions. In this phase the researcher can do a within case analysis, where he compares the
findings with existing theories (Yin, 2003). After completion of within case analysis the conclusions
of the research are drawn. Each research question is re-posed and answered, based on the findings of
our study. In our case author analyzed the data to see patterns how these fitted with contemporary
research stated in our conceptual frame of references. Author did pick out what was relevant for our
research questions.
4.1
EMPIRICAL STUDY
4.1.1
General Overview of Company
PT. Yori Masa Company is one of rapidly growing small company which sells wooden floor, deck
with international quality both domestically and globally, This company has experienced exporting
their products to some big countries such as China, Australia, Poland, Malaysia and other big
countries in Europe. High quality in production process standard had by this company has resulted in
higher price compared to other competitor in domestic market, therefore this company focused on
global market very much. PT. Yori Masa Company headquarter is located at Setia Budi no. 48 Talise,
East Palu. The owner named Ricky Tjandra begun his operation in Pasuruan since March, 24 2010.
This company has specific operation in wooden construction material trading. At very first time, the
wood material was concentrated to jati but today this company no longer uses jati because it is rare to
find and they choose merbau as the substitute. My internship was done at Halmahera no. 30,
Pasuruan, one of the branches of PT. Yori Masa Company.
4.1.2
Data of Employees
The table below will explain in detail about the data of education level and gender of all workers in
PT. Yori Masa Company Pasuruan.
Table 2: Data of Employees
Classification of position
Gender
Level of Education
Male
Female
Total
SD
SLTP
SLT
A
AKD/P
T
1. Director
1
-
1
-
-
-
1
2. Administration staff
-
1
1
-
-
-
1
3. Head of Production
1
-
1
-
-
-
1
4. Finance staff
-
1
1
-
-
1
-
Total
43
2
45
9
10
23
3
Source: Primary Data (2012)
This company then in order to eliminate their barrier to direct export, this company has to add one
more intermediary so that they can have more parties who will help them to get orders. That new
intermediary must also bring other advantages to help PT. Yori Masa Company in line with its need

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ISSN (Online): 2454-8499
Impact Factor: 1.3599(GIF),
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to be direct exporter. One of the best practices helpful for this company is piggyback export. The
reason why this company applied piggyback export because there are benefits match to company
need:
1.
Piggyback export can give opportunity to PT. Yori Masa Company as rider to learn how to do
direct export from the carrier’s experience that company finally acquire capacity to do direct export.
2.
The carrier is one company that has many branches and overseas distributor channels to ensure that
PT. Yori Masa Company can increase their sales to maximize the use of capacity. By capacity
optimization, PT. Yori Masa Company can get new financial resource to develop their company
globally.
3.
PT. Yori Masa Company can utilize the brand reputation of the carrier to easily find buyer in
global market.
4.
PT. Yori Masa Company can take advantage from carrier’s resource in testing market and
determining target market for their product which is complementary to each other.
5.
PT. Yori Masa Company can get information of how they can make innovation of their product
that can fulfill the need of each country people in global market today.
The chain of distribution used will be one step distribution. It is the easiest way to execute
piggybacking since PT. Yori Masa Company as rider does not have to influence carrier to buy their
product, they do not sell to the carrier but sell through the carrier and it means that any company that
will be its partner does not have to be worried about the market demand of product of PT. Yori Masa
Company. The carrier will be very attracted with this kind of cooperation because it is riskless and
they can enrich their product line to increase their competitive advantage among their competitors.
The carrier of this piggyback export is Traditec. It is a worldwide orientated import and export
company in roofing materials. They stock over 2.5 million reclaimed clay and concrete roof tiles in
various colors, dimensions and types from Belgium, Holland/The Netherlands, France, Spain, Italy,
Germany, Great Brittan, Denmark, Sweden and Norway. With their own stock and partner network of
salvage and reclamation yards in Europe, USA and Australia They have a reclaimed solution for
almost every roofing enquiry.
They work with several factories which are able to replicate every roof tile imaginable. They also
offer a wide range of roofing accessories form tile clips, roofing screws, underlay, lead, bird
protectors, snow stops, ventilation tiles etc. Their entire product is proven by the highest quality
requirements to match building regulations and maintain the characteristics of historic and new
buildings. They service all enquiries with the best possible attention from 1 tile or special fitting to
thousands.
The reason why Traditec is suggested as the carrier of PT. Yori Masa Company:
□
Traditec has already had many branches all over the world to find buyer by their own marketing
strategy. It means that the carrier firm may already have good coverage in many countries.
□
Brand reputation of Traditec is already good in global market. It is easy to get global customer in
global market for them, PT. Yori Masa Company can learn from Traditec experience of how to build
brand reputation and distribution networks in global market for its preparation of being direct

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Vol. 4, Issue 6, June, 2018
ISSN (Online): 2454-8499
Impact Factor: 1.3599(GIF),
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10th June, 2018
Web: www.irjms.in
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exporter.
□
Traditec has product that is complementary to the product of PT. Yori Masa Company, in order to
complete their product line, they will like to corporate with PT. Yori Masa Company. Therefore any
commission that must be paid to Traditec will not be more expensive than the cost of using export
broker.
□
Traditec help PT. Yori Masa Company to get information about the need of many more countries
or region for flooring material and which country is the best target market for PT. Yori Masa
Company.
4.1.3
Work Agreement
Traditec is a partner because what PT. Yori Masa Company produces will add the product line of
Traditec, Traditec has only roof tile while consumer who want to build a house absolutely will need
more additional materials such as wooden flooring material, door etc. Traditec needs to secure their
customer from other supplier because other competitors can influence customer to switch from
Traditec to their shop by offering discount for mass various purchase in any building materials. That
is strong reason why Traditec will need PT. Yori Masa Company to complete their product line.
Traditec will need to come to factory in Pasuruan to check the quality of their new product line,
absolutely they will tell everything about how PT. Yori Masa Company can make innovation based
on the need of global market today, how Traditec does its global marketing effort and what countries
usually will need their product.
Traditec will take commission about 10$ /M³ in a sales for their distributor utilizations. If they do not
get order, they will not get any commission. Obviously that it is less risky for PT. Yori Masa
Company. Because their product will be complimentary to each other, their relationship can be
stronger after contract and PT. Yori Masa Company is a good acquisition partner of joint venture
partner to build a stronger relationship with.

INTERNATIONAL RESEARCH JOURNAL OF MULTIDISCIPLINARY
STUDIES
Vol. 4, Issue 6, June, 2018
ISSN (Online): 2454-8499
Impact Factor: 1.3599(GIF),
0.679(IIFS)
10th June, 2018
Web: www.irjms.in
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The distributors of Traditec
The Netherlands
+ 31 (0)164 75 14 00
www.dakkeramiek.nl
info@traditec.com
Italiana
Italiana@traditec.com
Belgie
+ 31 (0)164 75 14 00
www.dakkeramiek.nl
belgie@traditec.com
Nippon
Nippon@traditec.com
Luxemburg
+ 31 (0)164 75 14 00
Luxemburg@traditec.com
Norge
Norge@traditec.com
Australia
Autralia@traditec.com
Salṭanat ʻUmān
Oman@traditec.com
Austria
Austria@traditec.com
Qatar
Qatar@traditec.com
Canada
Canada@traditec.com
Al Mamlakah al Arabiyah
as Suudiyah
Saudi-Arabië@traditec.com
Danmark
Phone: 36 96 42 75
Danmark@traditec.com
Sverige
Phone: 08 559 26 303
Sverige@traditec.com
France
France@traditec.com
United-Kingdom
Phone: 33 0001 0192
Uk@traditec.com
Deutschland
www.traditec.de
Deutschland@traditec.com
United States of America
Phone: 518 620 1446
Usa@traditec.com

INTERNATIONAL RESEARCH JOURNAL OF MULTIDISCIPLINARY
STUDIES
Vol. 4, Issue 6, June, 2018
ISSN (Online): 2454-8499
Impact Factor: 1.3599(GIF),
0.679(IIFS)
10th June, 2018
Web: www.irjms.in
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5 CONCLUSION
Piggyback is very good marketing strategy for Indonesia SMEs to apply. It can help them to increase
their export by utilizing the distribution channel and promotion ability of bigger company. It is wise
to find global partner in the countries that have been Indonesia strategic partners in economic
communities. This strategic relationship will work because it offers mutual benefits for both carrier
and rider, carrier has to provide new product to complete their shop and satisfy their customers, while
rider can get more powerful managed distribution channel and lesson from its carrier which cooperate
as partner and not agent. By this concept, anyone can be a partner as long as the product is supporting
to each other, moreover it can be applied to big company with the same product but different segment
as experienced by PT Yori Masa Company.
There are some reasons why carrier is argued to be able to satisfy their customer better with
piggybacking, the reasons are (1) The buyer can propose to get discount if they make a big order
consist of various complimentary products, (2) The buyer doesn’t need to find anymore seller as they
will benefit from time and cost efficiency, (3) The buyer can get quality assurance from one carrier,
there is no risk to get unqualified product from diversification. Piggyback is easily implemented and
bring many benefits to stakeholders.
6.
RECOMMENDATION
There are some points to do by Government in Indonesia to succeed the implementation of
piggybacking. SMEs are weak of law protection and understanding although it is important for
piggybacking process. SMEs must be protected by law in their process of piggybacking, patent right
must be affordable and for SMEs to prevent irresponsible action of carrier from stealing the
innovation concept of SMEs product since they get their customer satisfied, in this case carrier may
terminate its partnership with rider suddenly. Government need to provide facilitate for SMEs to have
law protection through written agreement that must be requirement before piggybacking. This will
need government effort to socialize SMEs with law information.
Government must also provide mediation between SMEs and big companies from both domestic and
global MNC as SMEs has few networks of big companies though it is required to find partner that are
big, highly reputed and has strong distribution channel for piggybacking. Aside of that, one essential
thing to consider by government is the program to help SMEs standardize their products and comply
with international standard. This is rather difficult but with the help of carrier for the technology and
knowledge transfer, government can contribute to give loan for operation machinery funding and
training of production staffs, the capability of SMEs to comply with international standard will be
very important to the success of export by piggyback marketing.

INTERNATIONAL RESEARCH JOURNAL OF MULTIDISCIPLINARY
STUDIES
Vol. 4, Issue 6, June, 2018
ISSN (Online): 2454-8499
Impact Factor: 1.3599(GIF),
0.679(IIFS)
10th June, 2018
Web: www.irjms.in
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