Ethnic Chinese Business In Asia: History, Culture And Business Enterprise

History, Culture and Business Enterprise

Ching-hwang Yen

• Publisher: WSPC
• Year: 2013
• eBook ISBN: 9789814578448
• Topic: Scienze biologiche
• Subtopic: Scienza generale

This unique volume provides a broad introduction to the ethnic Chinese business in Asia, with focus on the ethnic Chinese in East and Southeast Asia. The growing interest in ethnic Chinese business reflects its importance in these two regional economies, and its relations with China's economy — the world's new economic powerhouse. It examines the nature and characteristics of the ethnic Chinese business, such as business networks, family business and conglomerates, concepts of xinyong and guanxi, and entrepreneurship and management. It also examines the input of history and culture in the formation and operation of ethnic Chinese business. The second half of the book is devoted to detailed regional studies, covering the Chinese in Thailand, Malaysia and Singapore, Indonesia, the Philippines, Hong Kong and Taiwan. This book provides an excellent introduction for tertiary students in business schools, and for prospective businessmen who wish to do business with the Chinese in East and Southeast Asia.

Contents:

• The making of the Ethnic Chinese Communities in Southeast Asia
• Historical Roots of the Chinese and Ethnic Chinese Businesses
• The Rise of Modern Ethnic Chinese Business Enterprise
• Ethnic Chinese Family Business and Conglomerates
• The Concepts of Xinyong and Guanxi
• The Ethnic Chinese Businessmen and Entrepreneurship and Ethnic Chinese Management
• The Ethnic Chinese business in Thailand, Malaysia and Singapore, Indonesia, the Philippines, Hong Kong and Taiwan

Readership: Tertiary students in business schools and prospective businessmen who wish to do business with the Chinese in Asia.

Part 1
History and Culture of Ethnic
Chinese Business

Chapter 1

Introduction

The Scope of Study and the Definition of Ethnic Chinese

This book is not intended to study Chinese business in all parts of Asia. It covers mainly the business of the Chinese in Southeast Asia, Hong Kong and Taiwan. In short, it deals with the Chinese business in Asian region outside Mainland China. The justification for leaving the mainland out is because a great deal of business in China are still conducted not by private enterprise, but by state-owned or joint government-private enterprise. However, the rapid growth of private business in China requires a separate study.

For the convenience of this study, a general term, ‘Ethnic Chinese’ is adopted to include the Chinese in Southeast Asia, Hong Kong and Taiwan. This term is stretched to its maximum limits. It does not have any intention to deny China’s claim on the sovereignty of Taiwan, nor would it deny the fact that now Hong Kong is an integral part of China since July 1, 1997. ‘Ethnic Chinese’ is an ambiguous term which can mean different things to different people. Literally, the term means that ethnic Chinese who live overseas. It does not convey whether they are Chinese nationals or not. They could be the citizens of many of the Southeast Asian countries, or citizens of Australia, New Zealand, United States, Canada or other European countries. What this general term, ‘Ethnic Chinese’, has implied is the ethnicity of the person, he or she must be of Chinese descent which is distinguishable from other ethnic groups, possessing some Chinese cultural traits and customs. The Chinese term, ‘Huaren’, is the closest in meaning to the English term of ‘Ethnic Chinese’.

While the term ‘Overseas Chinese’ (Huaqiao) has a historical root back to 1890s and became more commonly accepted after the Revolution of 1911.¹ The word ‘Hua’ is the abbreviation of ‘Zhong Hua’ and indirectly refers to ‘Zhonghua minzu’ (commonly known as Chinese race); while the word ‘Qiao’ means ‘temporary residence’ which refers to the sojourner who resides temporarily overseas or places outside China.² It also implies that the person has an intention of returning to China. This Chinese term was loosely used to include all Ethnic Chinese outside China in the period between 1912 and 1949, and the Chinese government viewed and treated them as its subjects with moral and legal implications. However, the victory of Chinese Communism in 1949 and the emergence of independent states in Southeast Asia created a crisis of identity for the Chinese in Southeast Asia, and the majority of them opted for local citizenship in preference to Chinese citizenship.³ This had greatly changed the meaning and connotations of the term ‘Hua-ch’iao’. For those who held local citizenship and still identified themselves as ‘Huaqiao’ (Overseas Chinese) were suspected as disloyal to the new sovereign Southeast Asian states. Political sensitivity saw the term ‘Huaqiao’ gradually dropped from the usage in the Chinese communities in Southeast Asia except for those who were the citizens of the People’s Republic of China in mainland or the Republic of China in Taiwan.

The English term, ‘Ethnic Chinese’, has less political ramifications. It has been loosely used by journalists, politicians, scholars and businessmen in the West. It is a neutral term referring to a large group of ethnic Chinese of common Chinese ancestry, of sharing some common cultural roots, values and habits. Many of them may not even identify themselves as ‘Ethnic Chinese’, but for the convenience of examination of their business behavior and practices, this broad term is adopted.

Ethnic Chinese Business and Rapid Economic Development in East and Southeast Asia

The explanation of fast economic growth in East and Southeast Asia would never be complete if the role of Ethnic Chinese business is not examined. The mainstream scholars or Neo-Classical economists who were associated with the World Bank and Asian Development Bank explained the rise of economic power of the Four Little Dragons (Taiwan, South Korea, Hong Kong and Singapore) in terms of rapid economic development of world economy. They took a broad global view and postulated that regional economic development was part and parcel of the global whole, and the success of the Four Little Dragons was the natural result of the development of the world economy. Using the hypotheses of ‘Comparative Advantage’ and ‘Technological Ladder’, the Neo-Classical economists interpreted the economic miracle of the Four Little Dragons in terms of universalistic and institutional factors. They focused on the correct economic policies that were adopted by the governments of these countries that included market-oriented policies, export-driven strategy, wise use of foreign investment, and macroeconomic stability policies.⁴ These Neo-Classical economists tended to ignore and deny non-economic factors such as cultural, religious and social factors. They would have been least to accept that Confucianism had anything to do with the fast economic growth of the Four Little Dragons, but they could not deny the fact that three out of the Four Asian Little Dragons, Taiwan, Hong Kong and Singapore had predominant Ethnic Chinese communities. Taiwan and Hong Kong had 99% of ethnic Chinese in their population, while Ethnic Chinese constituted 80% of the Singapore population. These vast Ethnic Chinese population shared a common cultural root — Confucianism. Principal Confucian values such as group orientation, respect for authority, reciprocity and sense of obligation, and loyalty to the institutions, permeated the Ethnic Chinese communities in these countries.⁵ These cultural ingredients bonded the Ethnic Chinese societies together and give them strength like cement and mortar to a brick house. They also provided the countries in East Asia in their economic performance with a ‘competitive edge’, the term that was appropriately coined by Professors Roy Hofheinz, Jr., and Kent E. Calder in their influential book, The Eastasia Edge.⁶

The fallacy of the interpretation of the miracle of the Four Little Dragons by the Neo-Classical economists lies in their mechanical view of human societies and economic modernization. They tend to compartmentalize human society into many different segments mechanically linked together, and each segment acts quite independently with little to do with other segments. This is why they view economic success purely as the result of effective economic policies and strategies, and ignore socio-cultural and religious factors. Conversely, a more acceptable interpretation of the East Asian miracle should take a broader overview of the society which is an integrated organic whole. This interpretation should take into account of the economic and political factors as well as the cultural, religious and social factors. As what professor Ezra F. Vogel has pointed out in his book, The Four Little Dragons, that “industrialization requires high levels of co-ordination, precise timing, and predictability. To break into industrial competition in the middle of the twentieth century required even higher levels of co-ordination and teamwork, deeper understanding of science, technology, and management skills, and far greater knowledge of world markets than in the earlier eras”.⁷

Max Weber’s famous work, The Protestant Ethic and the Spirit of Capitalism, has cast so much influence in the West on the interpretation of the rise of modern Western Capitalism. Whether one agrees with Weber’s interpretation or not is beside the point, what is important is that he has drawn our attention to the intangible factors which have profound impact on economic process. Many Western scholars including a number of economists who are disagreed with the NeoClassical economists’ views would support Weber’s view that culture and values have an important role to play in the process of industrialization. Similarly, Confucianism which served as common cultural roots of East Asian and some Southeast Asian countries would also have a role to play in the rapid economic development of that region. What precise aspects of Confucianism contributed to the rapid economic growth are still under intensive study by scholars, and there is no need for us to go deeper into the issue now. But what is relevant to this study is about the relationship between Ethnic Chinese communities and Confucianism.

The Ethnic Chinese communities, particularly in the societies in Taiwan and Hong Kong, have deposited a great deal of Confucian values, and they are detectable in social practices. For instance, when I was attached to the University of Hong Kong in late 1980s, I was struck by a practice of ‘Xie Shi Yan’ (Dinner for Thanking Teachers) which was commonly found in Hong Kong and Taiwan. But it was seldom or not found in the Ethnic Chinese communities in Singapore and Malaysia. Under this practice, students towards the end of their study or graduation would host a dinner to thank teachers for their efforts, a token of appreciation and respect. This practice was obviously consistent with Confucian values of respect for teachers and the concept of reciprocity. In traditional China, teacher-student relationship was a key social relationship outside the Confucian five cardinal relationships (between emperor and ministers, between father and son, between husband and wife, between brothers, and between friends).⁸ Teacher-student relationship was based not just on monetary relationship: students paying fees while teacher making a living out of it, but there was also a moral dimension in it. The teacher not only took teaching as a job departing knowledge to students, but was also to guide and discipline the students to make them useful citizens of the society. He was morally obligated to set good examples for students to follow. On the other hands, students received knowledge as well as moral guidance from the teacher, and were grateful for what they had been taught. They were taught to be obedient and respectful and be appreciative of what they had learned from the teacher. A sense of mutual responsibility prevailed.

Apart from the fact that Ethnic Chinese communities deposited a great deal of Confucian values and practices, Ethnic Chinese are distinctively different from the indigenous communities in Southeast Asia and from the European communities in the West and Australia. Ethnic Chinese are generally the descendants of the Chinese immigrants from China. Immigrant mentality and harsh overseas environment drove many of them to be involved in business, and it was the business that offered them quick progress in upward social mobility.⁹ The possession of wealth gave them a golden pass to prestige, social status and position of power. At the same time, the European colonial administrations in Southeast Asia and Hong Kong did not provide opportunities for their descendants to climb the social ladder through bureaucracy. These two factors combined to account for the predominant position of Ethnic Chinese in business in Southeast Asia and Hong Kong. The predominance of Ethnic Chinese in business by itself has not explained adequately the important role of Ethnic Chinese in the economic development of East and Southeast Asia. We have to delve into the dynamism of the Ethnic Chinese business to explain their importance.

Ethnic Chinese traders in the 19th and early 20th centuries began to construct business system covering vast areas of coastal China, Hong Kong and major ports in the Southeast Asian region. With their distinctive Confucian values and clannish organizations, they were able to establish useful business networks in the region. They were able to adapt to the changing political and economic environments in the region as the result of European advancement in Asia. The first generation of Ethnic Chinese businessmen had successfully constructed their business system, including business networks, business behavior and ethics and business institutions. But this system was subjected constantly to the test because of keen competitions from European merchants who were advantaged by political patronage, modern economic institutions and unlimited capital. To survive the competition, Ethnic Chinese business in Southeast Asia and Hong Kong had to modernize and adopt Western institutions and practice. The key to this continuing process of reform and modernization of Ethnic Chinese business lay in the ability of Ethnic Chinese businessmen to bring up a new generation who were bilingual and were familiar with Confucian and Western cultures. Many of them had received both Chinese and Western educations, and had been constantly trying to mould the values and systems into a hybrid but a superior one. The results were similar to the Japanese and Korean business systems.¹⁰

A study in 1992 claimed that 50 million Ethnic Chinese in Southeast Asia, Hong Kong, Macau and Taiwan had generated an estimated GDP of approximately U.S. 450 billion, a figure almost on par with China’s GDP of approximately U.S. 500 billion of the same year which was generated by 1.1 billion people, more than twenty times of the Ethnic Chinese population.¹¹ This estimated figure might not reflect the whole truth, but it nevertheless demonstrated the important role played by the Ethnic Chinese in the countries mentioned.

The Rise of Ethnic Chinese Business in Asia

The rise of Ethnic Chinese business in Asia has aroused considerable interest among scholars, researchers, observers, journalists and politicians, and a range of explanations have been advanced to interpret its rise. They range from global, geo-political, structural, socio-economic, to historical, cultural and institutional interpretations. Although this book takes a multi-factorial and multi-disciplinary approach, its emphasis is on historical and cultural aspects which are reflected in the sub-title of the book. The author believes that Ethnic Chinese business cannot be studied in isolation. Apart from global, political and socio-economic factors which have direct bearing on the operation and growth of Ethnic Chinese business, the understanding of its characteristics and distinctiveness has to be set against the Chinese cultural and historical context. The integration of history, culture with economics and management is the attempt to produce a broad comprehensive book on Ethnic Chinese business.

The book is divided into three major parts looking at Ethnic Chinese business in three different dimensions: vertical and evolutionary, horizontal and structural, and regional. In the vertical and evolutional dimension, it begins with the formation of Ethnic Chinese communities, historical roots of Ethnic Chinese business, and the rise of modern Ethnic Chinese business enterprise. In the horizontal and structural dimension, it examines Ethnic Chinese family business and business conglomerates, the concepts of ‘xinyong’ and ‘guanxi’ and business networks, Ethnic Chinese businessmen and entrepreneurs, and Ethnic Chinese business management. In the regional dimension, it examines Ethnic Chinese business in Thailand, Singapore and Malaysia, Indonesia, the Philippines, Hong Kong and Taiwan.

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¹See Wang Gungwu, “The Origins of Hua-Ch’iao”, in Wang Gungwu, Community and Nation: China, Southeast Asia and Australia (St. Leonards, NSW., Australia, Allen & Unwin, 1992, New Edition), p. 1.

²Ibid., pp. 2–3.

³For discussion of changing identities of Southeast Asian Chinese, see Wang Gungwu, “The Study of Chinese Identities in Southeast Asia”, and Charles Hirschman, “Chinese Identities in Southeast Asia: Alternative Perspectives”, in Jennifer Cushman & Wang Gungwu (eds.), Changing Identities of the Southeast Asian Chinese since World War II (Hong Kong, Hong Kong University Press, 1988), pp. 1–21, 23–31. For the majority of the Chinese in Southeast Asia who would identify themselves as Southeast Asians, see Leo Suryadinata (ed.), Ethnic Chinese as Southeast Asians (Singapore, Institute of Southeast Asian Studies, 1997).

⁴See for instance, Gerald Tan, The Newly Industrializing Countries in Asia (Singpore, Times Academic Press, 1992), pp. 60–67.

⁵For discussion of this topic, see S. Gordon Redding, The Spirit of Chinese Capitalism (Berlin & New York, Walter de Gruyter, 1990), pp. 41–78; Yen Ching-hwang, “Modern Overseas Chinese Business Enterprise: A Preliminary Study”, in Yen Chinghwang, Studies in Modern Overseas Chinese History (Singapore, Times Academic Press, 1995), pp. 237–254.

⁶See Roy Hofheinz Jr. & Kent E. Calder, The Eastasia Edge (New York, Basic Books Inc. Publishers, 1982).

⁷See Ezra F. Vogel, The Four Little Dragons: The Spread of Industrialization in East Asia (Cambridge, Massachusetts, Harvard University Press, 1991).

⁸For a discussion of the relationships outside family system...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright
• Preface
• Contents
• Part I History and Culture of Ethnic Chinese Business
• Chapter 1 Introduction
• Chapter 2 The Making of Ethnic Chinese Communities
• Chapter 3 Historical Roots of Ethnic Chinese Business
• Chapter 4 The Rise of Modern Ethnic Chinese Business Enterprise
• Part II Structure and Functions of Ethnic Chinese Business
• Chapter 5 Ethnic Chinese Family Business and Business Conglomerates
• Chapter 6 Xinyong (Trust), Guanxi (Relationship), Business Networks and Ethnic Chinese Business
• Chapter 7 Ethnic Chinese Businessmen and Entrepreneurs
• Chapter 8 Ethnic Chinese Business Management
• Part III Regional Studies
• Chapter 9 Chinese Business in Thailand
• Chapter 10 Chinese Business in Singapore and Malaysia
• Chapter 11 Chinese Business in Indonesia
• Chapter 12 Chinese Business in the Philippines
• Chapter 13 Chinese Business in Hong Kong
• Chapter 14 Chinese Business in Taiwan
• Index