New Asian Emperors:The Business Strategies Of The Overseas Chinese;
By George T. Haley, Usha C.V. Haley and Chin Tiong Tan;
Publisher: John Wiley & Sons;
Pages: 250; Price: $19.95
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It is rare to find an authentic book on the elusive Chinese overseas businessmen such as Li Ka-Shing, founder of Hutchison Whampoa; Stan Shih, founder of Acer; Victor Fung, chairman of Li & Fung Group; or Lee Shau-Kee of Henderson Land Development. It is rarer to find one written after meeting them, chronicling their strategies and the ‘networks’ they operate in. New Asian Emperors may be remembered for both these feats.
Despite what seems like a homogeneous Chinese ethnicity, the Chinese are, in fact, a vast collection of diverse people of different regions, culture and language. As a result, the networks that make them dominate the South-east Asian business landscape are also of different types. There are the clan type, the locality type, the dialect type, the guild type (by the craft practised) and the trust type (of working with each other for decades). Membership of one does not necessarily ensure membership of another network. The key to networks is Guanxi, a Mandarin term the authors describe as a “concept of trust, and the ability and knowledge of how to present uprightness to build relationships”.
Guanxi, they believe is the true competitive advantage of the overseas Chinese. The authors found that while the US business networks were relatively weak and represented only short-term interests, the overseas Chinese networks showed greater resilience. They found Asian economies to be “network-based”, while the US economy was “firm-based”. Yet, junior and middle-management executives rarely share secrets of their firms with outsiders.
A characteristic of Chinese businesses and businessmen that may surprise many westerners is how flexibility of contracts is an inalienable part of their custom. How Chinese debtors stopped repaying Bundesbank and argued that since the circumstances of business had changed, the terms of contract needed to be changed too — the reason being that traditional Confucian societies never stuck with the rule of law in contracts.
These networks developed as ethnic Chinese migrated from mainland China in search of better living standards — long before the Chinese began dominating the South-east Asian businesses out of Singapore, Hong Kong, Malaysia and Indonesia. The book is peppered with case studies on different business families, most of whom escaped from centuries of insular regimes that discouraged contact with the outside world and, in the process, grew closer to each other. As expected, most overseas Chinese businessmen have their roots in trading.
Empirical evidence suggests that as soon as they found their feet in trading, Chinese businessmen generally entered the realty business and then promptly entered any business they thought could earn them profits. This is why many big businesses are huge conglomerates dabbling in multiple areas. Their economic influence far outweighs their numbers in most of these geographies.
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George T. Haley is professor of marketing, University of New Haven and founding director of Center for International Industry Competitiveness. He has over 100 articles, presentations and books, including The Chinese Tao of Business.
Usha C.V. Haley is Asia Programs fellow, Ash Institute for Democratic Governance and Innovation, Harvard Kennedy School, and research associate at the Economic Policy Institute in Washington, DC.
Chin Tiong Tan is deputy president of Singapore Management University. He was a founding member of the university and was its Provost during 1999-2008.
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Now, as they begin to dominate several elements of the global business arena, they are under the scanner for every strategy and every move. As expected, one of their biggest criticisms is that despite a remarkable speed of decision-making, their competitiveness is too dependent on their home environment and does not leverage global capabilities. Even so, the competitiveness of most Chinese firms has improved dramatically in the past 5-10 years. But the authors believe their lack of competitiveness is still preventing the emergence of a Samsung or an LG from among these firms.
The most fascinating element of the book is the chapter on strategic management of the overseas Chinese that busts the myth that they do not do any strategic planning. Another area worth spending time over, and where the book suggests what MNCs must learn from the Chinese, is the continuity of management that Chinese businesses stand for vis-à-vis the rotational policy of MNCs. It holds several lessons for the Indian overseas business groups such as the L.N. Mittal empire, the Hindujas or the UB group. For instance, despite growing into conglomerates operating across several countries and continents, the Chinese management structure, unlike Japanese, Korean, US or European, is largely flat — which is the main reason why their decision-making is the speediest. Often, because the heads of several of the subsidiaries or divisions are trusted men.
The downsides of the book are the monotonous tables and the chapter on the aftermath of the Asian crisis. For the reader on the run, much of these can be raced through.
This review was published in the Businessworld Issue Dated 16-22 June 2009
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