VIEWS from ASIA Chinese Networks Chinese” in Southeast Asia at US$ 450 by Shiraishi Takashi Billion Or 125% of Mainland China’S GDP at the Time
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VIEWS FROM ASIA Chinese Networks Chinese” in Southeast Asia at US$ 450 By Shiraishi Takashi billion or 125% of mainland China’s GDP at the time. Furthermore, the liq- uid assets held by the “overseas Chinese” THE recent tsunami disaster reminds us regional economic integration. In 1980, were estimated at US$ 1.5 to 2 trillion that many of the affected countries not intra-regional trade within East Asia or nearly two-thirds of Japan’s assets. only occupy the same geographical space constituted 33.6%; by 1990, the figure It is often said that Chinese networks in the Indian Ocean, but were historical- had risen to 41.6%, and by 1995, two are built on their social systems. Formal ly part of the world built on and con- years before the Asian financial crisis, to overseas Chinese mutual aid associations nected through maritime trade. This 50.1%. We need only to compare the are organized according to clan, place of world encompassed the western part of above statistics to those of European ancestry or dialect groupings, and suppos- Southeast Asia, including what is now Union intra-regional trade (64.1% in edly function like banks through which southern Thailand, Malaysia, the west- 1995), and the North American Free members can borrow and lend money, ern part of Indonesia and Myanmar. In Trade Area (41.9%) to realize that the exchange information, recruit labor and fact, Southeast Asia was called “the land rate of integration in East Asia has accel- establish business connections. Chinese below the winds,” and it was an impor- erated significantly in the last two firms, financial networks and distribution tant area connecting the Indian Ocean decades. systems have successfully adapted to the and the South China Sea. Conventional wisdom holds that East vast changes that the region has experi- TThe maritime zones were primarily Asian integration is supported by exist- enced since 1945, in particular, the rise of created by long-distance trade. But ing Chinese networks capable of over- developmental states and the entry of for- those days are over. Now, investment coming political divisions and state eign multinational companies. Held and intra-firm trade led by Japanese and boundaries. From this perspective, the together by capital flows, joint ventures, Chinese businesses are spurring the so-called “overseas Chinese economy” – kinship ties, marriages, political alliances, regional integration of “East Asia.” conceived as stateless, network-based a common “culture” and business ethics, It is generally agreed that the expan- and non-official – ranked fourth in the Chinese networks act as crucial interme- sion and deepening of business networks world in terms of economic size in the diaries between bureaucrats, the military by both Chinese and Japanese firms early 1990s. In 1990, for example, The and politicians on the one hand and for- were the preeminent factors in de facto Economist put the “GDP” of the “overseas eign firms on the other. In sum, orthodoxy holds that the rise Photo: THE YOMIURI SHIMBUN of a Chinese “capitalist layer,” which was called “Greater China” in East Asia during the postwar period, is a product of the historical continuity and resilience of “overseas Chinese” business networks and the emergence of East Asia as a high-growth economic zone. There is no question that networks are important, but it is wrong to assume that these networks are just “there” or have been there for a long time or are simply reactivated given the right time and the right opportunities. It is also misleading to assume that these net- works are unproblematically “Chinese.” WE need to locate these networks in their proper contexts. For instance, the transnationalization of the Salim Group, the largest “Chinese” business conglom- erate in Suharto’s Indonesia, was led by Anthony Salim, son of the founder Liem Sioe Liong (Sudono Salim), who received Chinese-language training in Chinatown in Nagasaki elementary and junior high school, but 44 JAPAN SPOTLIGHT • March / April 2005 VIEWS FROM ASIA Photo: REUTERS • SUN also received instruction in Bahasa which sparked a curren- Indonesia in high school, and subse- cy crisis in 1983. quently studied Business Management In dealing with this at a British university. The top manager state of affairs, the of his Hong Kong operations is a Chinese government Filipino, while his business partners in decided on a policy Indonesia include pribumi or native aimed to retain British Indonesian friends from his university capital, and not only days. The Salim Group expanded its prevent the flight of operations through joint ventures with Chinese capital but foreign multinationals, including expand it, while attract- Japanese and American companies. ing both overseas Hong Kong capital leads the Chinese economy By the 1980s, the ethnic Chinese Chinese and Taiwanese businesses were ready to go transnation- capital as well as American and European half was coursed through Hong Kong. al. The Salim Group set up a new com- capital. And in 1992, US$ 170 million of pany in Hong Kong called First Pacific. A former Chinese representative in Malaysian investment went directly to Between 1981 and 1983, the company Hong Kong, Xu Jiatun, remarked in his China, while US$ 500 million was invested heavily not in East Asia but in memoirs that this policy represented channeled through Hong Kong. America and Europe. During the same China’s attempt to persuade the Hong It should also be noted that the period, the Salim Group also established Kong Chinese class of “haves”– in par- Singaporean government tried its best to another company, KMP United Ventures ticular, the big capitalists – to remain in make Singapore an alternative hub in Pte Ltd, in Singapore. But only in 1985 Hong Kong. For this purpose, he relied those years. In 1989, the Singaporean did the Salim Group withdrew from on the Bank of China and mainland government attempted to “regionalize” America and Europe and began invest- Chinese firms to forge joint-ventures Singapore’s economy, with Lee Kuan ing in Singapore, as well as the and business tie-ups with Hong Kong’s Yew calling for the creation of a Philippines and Thailand (but not yet in tycoons and to solicit their commitment “Growth Triangle” consisting of China) via Hong Kong. to invest in China. He also personally Singapore, Indonesia’s Riau Province In the same manner, Robert Kuok of supported such business leaders as and West Sumatra and Malaysia’s Johore Malaysia went transnational with his Gordon Wu and Li Ka-Shing, and state. Salim’s increased investment in first investment in Hong Kong in the Southeast Asian tycoons like Sudono Singapore was perhaps a response to this late 1970s. Although he moved his Salim, Robert Kuok and Dhanin Singaporean initiative. But Singapore’s headquarters to Hong Kong in the early Chearavanont. effort to replace Hong Kong as a launch- 1980s, it was not until the 1990s that he But these business leaders were cautious pad for “overseas Chinese” investment in started to do major business with China. about their investments in the 1980s, and China flopped. As we all know, the The point is that these ethnic Chinese ventured into China only after Deng development of industrial estates in entrepreneurs did not transnationalize Xiaoping underlined China’s commit- Suzhou and Wuxi by Singaporean gov- their business operations because they ment to reform its economy during his ernment was a costly failure. were Chinese, but because they were cap- historic visit to Southern China in 1992. No doubt, the formation of “Greater italists. When post-Maoist China China” rested on the de facto economic opened its economy to foreign invest- WITH Hong Kong as a hub or launch- integration of China, Hong Kong, ment in 1979, it was not the ethnic pad, ethnic Chinese entrepreneurs creat- Macao, Taiwan and Southeast Asia. But Chinese in Southeast Asia or Hong Kong ed new networks, some of which it is not the case that “Chinese” business who rushed there in pursuit of business involved the reinvention of existing networks were simply reactivated and that opportunities by reactivating their busi- business ties. Multinational companies “Chineseness” was the essential ingredient ness networks based on clan or dialect as well as ethnic Chinese business groups of these networks’ success. New networks groupings, ancestral roots or, as Anthony in Southeast Asia set up joint investment and even new “Chinese businesses” have Salim ironically put it, “nostalgia.” firms in partnership with local Hong to be created, and far more important, The reason was simple; when the Kong tycoons. Salim, Kuok and have to be profitable. Chinese government announced its inten- Mochtar Riady (head of the Lippo tion to take back Hong Kong in 1997, Group) teamed up with Li Ka-Shing Shiraishi Takashi is a professor at the Hong Kong society was not just unsettled, and mainland Chinese firms to invest in Center for Southeast Asian Studies, Kyoto but deeply divided. Its uncertainty mani- China in a major way after 1992. Half University. He specializes in Asian studies fested itself in the increasing number of of Singaporean investment in China and international relations. out-migrants and substantial capital flight, went directly into China while the other JAPAN SPOTLIGHT • March / April 2005 45.