New Asian Emperors

Southeast Asia has a population of more than half a billion, yet its economy is dominated by about 40 families, most of Overseas Chinese descent. Their conglomerates span sectors as diverse as real estate, telecommunications, hotels, industrial goods, computers and sugar plantations. New Asian Emperors shows how and why Overseas Chinese companies continue to dominate the region and have extended their reach in East Asia, despite the Asian financial and SARS crises of the past decade. The authors base their conclusions on in-depth structured interviews spanning a decade with the often elusive Overseas Chinese CEOs including Li Ka-shing, Stan Shih, Victor Fung, Stephen Riady and Sukanto Tanoto, as well as on the strategic information that their companies use.

The analysis of the New Asian Emperors’ present-day management techniques and practices draws on the history, culture and philosophical perspectives of the Overseas Chinese in Southeast Asia. In the midst of today’s global economic crisis, this book also takes a fresh look at the role and management practices of the Overseas Chinese as they continue to create some of Asia’s wealthiest and most successful companies.

New Asian Emperors explains:

• The sources and characteristics of Overseas Chinese management
• Whether Overseas Chinese management practices will spread in the same way that Japanese management did in the 1970s
• Whether Western management technologies have found themselves outmaneuvered in Asia’s post-crisis arena
• The Overseas Chinese managers’ strategies for the informational black hole of Southeast Asia and what Western managers can learn from them
• The New Asian Emperors’ unique strategic perspectives and management styles revealed through exclusive, in-depth interviews
• The implications for successfully co-operating and competing with the Overseas Chinese of Southeast Asia

New Asian Emperors offers key insights into the Overseas Chinese and the important role that cultural roots play in their dominance of Southeast Asian business.

Preface xi

Acknowledgments xiii

Part I: The Foundations of Understanding

Chapter 1: Introducing the Overseas Chinese of Southeast Asia 3

Patterns of Chinese Migration 6

The trader pattern 6

The coolie pattern 7

The sojourner pattern 7

The re-migrant pattern 7

Who Are the Overseas Chinese? 8

What Is a Network? 15

The Role of the Overseas Chinese in Southeast Asia 26

The Role of the Overseas Chinese Worldwide 30

Following Chapters 31

Chapter 2: Confucianism Plus: The Philosophical and Cultural Roots of the Overseas Chinese 33

Confucianism’s Influence on Chinese Trade and Economics 42

The Family 50

The Relationships and Ethical Behavior 54

Differing Ethical Concepts 57

Chapter 3: The Overseas Chinese Today: Not the Family Business, But the Family as a Business 61

What Is a Chinese Network? 62

Discontinuity 62

Hierarchical and dyadic ties 63

Uprightness 65

Contextual morality 67

Flexible boundaries 68

Historical and Environmental Effects on the Overseas Chinese Business Networks 68

Distinguishing Cultural Traits 79

Firm-related attributes 80

Loyalty-related attributes 82

Trust-related attributes 83

How Networks Permeate Formal Structures 85

Part II: The Foundations of Analysis

Chapter 4: Introduction to an Informational Void: The Black Hole of Southeast Asia 91

The Informational Black Hole of Southeast Asia 94

Operating in an Informational Black Hole 114

Hands-on experience 127

Transfer of knowledge 128

Qualitative information 130

Holistic information processing 132

Action-driven decision making 132

Emergent planning 133

Chapter 5: Strategic Management of the Overseas Chinese Business Groups: Deciphering Patterns 137

Tacit Knowledge and the Informational Black Hole 138

Strategic Planning and the Networks 141

Planning, classically 142

Developing core competencies 144

Crafting strategies 145

A Summary of Overseas Chinese Management Practices 148

The Overseas Chinese and crafting strategy 149

How the Overseas Chinese plan 151

The Overseas Chinese and their core competencies 158

Part III: The Implications for Business

Chapter 6: In the Aftermath of the Asian Crises: Revolution or Evolution? 169

The Path of Destruction 170

The 1997–1998 Asian financial crisis 170

The 2002–2004 SARS crisis 173

The Post-crises Evolution of Overseas Chinese

Business Groups 175

Competitive Advantages of the Overseas Chinese 180

Speed 182

Knowledge 183

Guanxi 185

Empowerment 188

Competitive Disadvantages of the Overseas Chinese 190

Home turf only 190

Susceptibility to blind-siding 192

Poor proprietary capabilities 193

x new asian emperors

Family limits 194

Lack of professionalization 196

Chapter 7: Competitive Implications of the Overseas Chinese: Doing Business with the New Asian Emperors 199

General Implications for Multinationals 200

Specific Implications for Multinationals 204

Strategic competitiveness 204

Human resource practices 206

Products and technology 209

Contract flexibility 211

Distribution 212

Promotion and pricing 213

Implications for Regional Governments 213

Implications for Researchers 219

Speculations About the Future 221

The Adaptive-Action Road Map 224

The road of knowledge 228

The road of speed 229

The road of action 229

The road of results 230

The road of relationships 230

The road of quality 232

The road of passion 232

The road of legacy 233

Bibliography 235

Appendix: List of Interviewees 245

Index 247

George T. Haley (PhD, University of Texas at Austin) is Professor of Marketing, University of New Haven and Founding Director, Center for International Industry Competitiveness. He has been faculty at ITESM-Monterrey (Mexico), National University of Singapore, Queensland University of Technology (Aus.), DePaul, Fordham, and Baruch College. He has presented seminars to managers/policymakers on four continents, including for the National Intelligence Council, and the United States International Trade Commission and testified before the US-China Economic and Security Review Commission. He has over 100 articles, presentations and books including The Chinese Tao of Business. He consults with several multinational companies and governments in Asia, Australia, Latin America and the USA and serves on the Boards of Directors of listed companies, manufacturing organizations and government agencies.

Usha C. V. Haley (PhD, New York University) is Asia Programs Fellow, Ash Institute for Democratic Governance and Innovation, Harvard Kennedy School, Harvard University and Research Associate at the Economic Policy Institute in Washington, DC. She has been Professor at the University of New Haven and prior at University of Tennessee-Knoxville, New Jersey Institute of Technology, Australian National University, National University of Singapore and ITESM-Monterrey, Mexico. She has more than 150 publications, presentations and books including Multinational Corporations in Political Environments and The Chinese Tao of Business. She has testified before the Congressionally mandated US-China Economic and Security Review Commission and the Committee on Ways and Means, and presented before the US International Trade Commission. She serves on several corporate and government boards.

Chin Tiong Tan (PhD, Pennsylvania State University) is the Deputy President of Singapore Management University. He was a founding member of SMU and was its Provost from 1999 to 2008. He is active in management development and consulting. He designed and taught in many executive programs around the world, and is a regular speaker in the US, Europe, Australia, New Zealand, Asia and South Africa. He was the Academic Advisor to Singapore Airline's Management Development Centre for more than 15 years. He is on the Boards of Directors of several listed companies and served as strategic and business advisor to many organizations. He is the co-author of Marketing Management: An Asian Perspective, 5th Edition, 2009, Prentice Hall (with Philip Kotler).

Southeast Asia has a population of more than half a billion, yet its economy is dominated by about 40 families, most of Overseas Chinese descent. Their conglomerates span sectors as diverse as real estate, telecommunications, hotels, industrial goods, computers and sugar plantations. New Asian Emperors shows how and why Overseas Chinese companies continue to dominate the region and have extended their reach in East Asia, despite the Asian financial and SARS crises of the past decade. The authors base their conclusions on in-depth structured interviews spanning a decade with the often elusive Overseas Chinese CEOs including Li Ka-shing, Stan Shih, Victor Fung, Stephen Riady and Sukanto Tanoto, as well as on the strategic information that their companies use.

The analysis of the New Asian Emperors' present-day management techniques and practices draws on the history, culture and philosophical perspectives of the Overseas Chinese in Southeast Asia. In the midst of today's global economic crisis, this book also takes a fresh look at the role and management practices of the Overseas Chinese as they continue to create some of Asia's wealthiest and most successful companies.

New Asian Emperors explains:

• The sources and characteristics of Overseas Chinese management;
• Whether Overseas Chinese management practices will spread in the same way that Japanese management did in the 1970s;
• Whether Western management technologies have found themselves outmaneuvered in Asia's post-crisis arena;
• The Overseas Chinese manager's strategies for the informational black hole o southeast Asia and what Western managers can learn from them;
• The New Asian Emperor's unique strategic perspectives and management styles revealed through exclusive, in-depth interviews;
• The implications for successfully co-operating and competing with the Overseas Chinese of Southeast Asia.

New Asian Emperors offers key insights into the Overseas Chinese and the important role that cultural roots play in their dominance of Southeast Asian business.

"This book is very timely as it examines in a serious but readable manner both the strengths and weaknesses of the Overseas Chinese business community, and provides a framework for understanding how this vibrant community will resurrect itself from the current crisis. Most books on the Overseas Chinese business community have veered between the extremes: either gushing with adulation, or portraying them as a semi-conspiracy. This book takes a balanced and holistic view, and waves in the ethical and cultural traits of the Overseas Chinese with their management practices." - Ho Kwon Ping

"Westerners have long assumed that there is one right way to organize and conduct large-scale business on a foundation of rationality, individuality and impersonality. this excellent traits on the business philosophies and practices o the powerful Overseas Chinese cannot fail to open Western minds to whole new ways of business thinking. This book is a must read for any business that wants to succeed in Asia. The authors have presents a masterly picture of how business is done by the Overseas Chinese. Many practices of multinationals need to be altered if they are to complete with, or work with, the Overseas Chinese. - Philip Kotler

"The Overseas Chinese represent what is arguably one of the most important economic and financial groups in the world, whose actions in the Pacific Rim and in other parts of the world have had profound effects on economic development, financial stability and instability, and the evolution of a wide range of industries in a global economic context. They also represent what is often a controversial economic and political force in countries dominated by other ethnic groups. This book provides a thoroughly authoritative and balanced assessment of the Overseas Chinese in terms of their roots, the role of family structures, management practices, and approaches to dealing with Overseas Chinese business groups - which themselves will have to evolve rapidly in the years ahead if they are to succeed as true multinational enterprises.." - Ingo Walter