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From Tin to Ali Baba's Gold: the Evolution of Chinese

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From Tin to Ali Baba's Gold: the Evolution of Chinese RESEARCH Since the colonial era, Chinese businesses in Malaysia have adapted to economic and political changes by evolving from tin-mining and rubber cultivation to commodity production, banking and finance, construction and property development, and industrial and advanced technology manufacturing. Simultaneously, intra-ethnic and Chinese family businesses have evolved into inter-ethnic and plural enterprises in order to adapt to government policies that favour indigenous people. With the onslaught of globalisation, Chinese entrepreneurs have transformed anew, proving once again that Chinese entrepreneurship is not static but dynamic. From tin to Ali Baba’s gold: the evolution of Chinese entrepreneurship in Malaysia Chin Yee Whah private business, further enhanced the market (Kuo 1991). track to public listing (Sin Chew Jit Poh 5 growth of Chinese businesses. Malaysian policy, Chinese response: the November 1995). The changes within these Tin men, rubber men, middle men: Chi- makings of the Ali-Baba alliance Equal partnership: ‘new wealth’ and the two ethnic societies, and high economic nese entrepreneurs under British rule In the 1960s, Chinese participation in the Following the racial riots of 13 May 1969, indispensable Bumiputera ‘technopre- growth, gave birth to the Sino-Bumiputera The Chinese dominated tin-mining in manufacturing sector mostly remained the Malaysian government implemented neur’ ‘equal’ partnership. As a result, Chinese Malaysia before Europeans introduced small-scale and focused on food, plastic, the New Economic Policy (NEP, 1971- Thus we can identify three types of Chi- entrepreneurship has become more plural dredging technology in the early 20th rubber and wood-based industries. Most 1990) ‘to reduce and eventually eliminate nese wealth. ‘Old wealth’ includes busi- in the post-NEP and post-NDP era. Even century. Subsequently, Chinese mining of these businessmen lacked the capital, the identification of race with economic nesses that developed into conglomerates though exclusive or intra-ethnic practices companies lost out to European joint- technical know-how and managerial skills function’. Its ultimate goals were ‘the before the NEP. ‘New wealth’ emerged in persist, Chinese business culture in Malay- stock companies with more sophisticated to compete with foreign interests. Moreo- emergence of a full-fledge Malay entrepre- the 1990s after businesses successfully sia is gradually breaking away from intra- technology and capital. Moreover, colonial ver, with limited government incentives neurial community within one generation’ conformed to the NEP. ‘Declining wealth’ ethnic partnerships. government discrimination and interven- and support, Chinese companies remained and increasing Bumiputera ownership of refers to those business groups that lacked tion favoured European companies over small and were often dependent on for- the corporate sector to 30% by 1990. In entrepreneurial drive when the second or Adapting to new challenges in the global Chinese firms (Jomo 1988). eign technology (Khor 1983:25). But their accordance with this affirmative action third generations took over and did not try, economy earlier success in rubber and tin allowed policy, ethnic quotas were introduced. or failed, to adapt successfully to the NEP, The economic liberalisation that began in In the early 1900s Chinese entrepreneurs them to diversify in the financial sector, Consequently, Bumiputeras were favoured and as a result either stagnated or declined 1986 signifies a gradual lifting of ICA regu- incorporated rubber-production into their thereby spurring additional industrial and in the awarding of government contracts, (Heng and Sieh 2000). lations. Since 1990, SMEs are no longer established gambier and pepper economic property development activities. Scores of tender, loans and credit. subject to the ICA stipulation of Bumi- networks. In the 1930s, following the devel- banks were incorporated in the 1960s, all At the corporate level, the new NEP-Malay putera equity participation. This change opment of rubber plantations and trading substantially controlled by Chinese with One of the controversial NEP regulations capitalist class is closely integrated with indirectly encouraged Chinese-dominant and the inter-war expansion of manufac- the exception of Bank Bumiputera (Hara was the 1975 Industrial Coordination Act Chinese ‘new wealth’ in various joint ven- SMEs to expand in terms of production turing, they established banks to address 1991, Tan 1982). In the absence of a strong (ICA). Firms with more than RM100,000 tures. Consequently, in the 1990s, the con- scale and revenue. Thus Chinese entre- the financial needs of Chinese business- Malay entrepreneurial class, Chinese con- in shareholder funds and more than 25 cept of interdependence and the practice preneurs not only adjusted to Malaysia’s men (Tan 1953, Tan 1982). All early Chi- tractors and developers played the most employees were required to employ a of complementing each other developed at changing environment but also to global nese banks were clan- and ethnic-based significant role in the construction and workforce that was 30% Malay and to the elite level. This new inter-ethnic corpo- capitalism, weathering the 1997 financial and possessed only limited amounts of property development of both private and reserve 30% of their equity for Malay inter- rate culture marks an important structural crisis through state assistance and their capital. state projects (Jesudason 1989, Lim 2004, ests. The ICA had its greatest effect on shift from Chinese family-based organi- own responses (Chin 2003). Although the Tan 2006). SME family-based businesses, but large sations to Sino-Bumiputera alliances crisis is over, advances in science and tech- Most Chinese manufacturing during the companies were not spared. The Chinese (Gomez 2003, Searle 1999, Heng and Sieh nology and the liberalisation of trade under inter-war years consisted of raw material- Mostly small-scale, but a few Chinese con- business community responded in five dif- 2000, Wazir 2000). the Asian Free Trade Area and World Trade processing that required simple technol- glomerates did emerge. For example, the ferent ways. Organisation (WTO) regimes present new ogy to produce rubber sheets, foodstuffs Kouk Group used capital accumulated in When the NEP officially came to an end challenges, particularly to SMEs, which such as breads, biscuits, sweets and bever- rubber, sugar, rice, tin and trading to build First, they shifted investment from the in 1990, the National Development Plan have yet to prove capable of withstanding ages, building materials and metal goods, large manufacturing plants, such as Malay- manufacturing sector to commerce, (NDP, 1991-2000) was implemented to global market demands and technologi- and to process tin ore (Huff 1994). Chinese sia’s first and largest sugar refinery, Malay- finance, construction, property develop- pursue the NEP’s ‘unachieved objectives’, cal change. In this advanced technologi- also monopolised rice mills in northern an Sugar, mainly through partnership with ment and other sectors that could gen- one of which was to advance the forma- cal age, Chinese Malaysian entrepreneurs Malaya (Wu 2003), and, by 1955, owned an foreign companies and the government. erate quick returns and were not subject tion of the ‘Bumiputera Commercial and continue to draw on their own resources estimated 80-90% of the two minor sec- Loy Hean Heong, who accumulated his to the ICA (Jesudason 1989; Hara 1991; Industrial Community’ (BCIC), a Malay – cultural values, acquired knowledge, tors of manufacturing and construction capital from speculating in rubber estates, Yasuda 1991). Second, large companies or Bumiputera entrepreneurial class. The accumulated experiences, skills and social (Wheelwright 1963). ventured into manufacturing by acquiring relocated their headquarters and shifted NDP aimed to transfer entrepreneurial network – to remain globally competitive. a fledging carbide company, an adhesive most of their capital abroad, resulting in skills to Bumiputeras at the micro-level by Their success has varied, but their adapta- Manufacturing activity, however, was tape and rubber band company and an ‘capital flight’. Third, those who stayed in encouraging joint ventures between them tion, like the change that makes it neces- small-scale owing to the British policy of aluminium foil lamination company (Jesu- Malaysia changed their business strategy and non-Bumiputera or foreign investors. sary, has been constant for a century. importing most manufactured goods and dason 1989). The Hong Leong group, to accommodate NEP requirements by Bumiputera ‘technopreneurs’ would then to Britain’s reluctance to promote large- originally from Singapore, also exerted a incorporating influential Bumiputeras and become active in technology-based indus- Dr. Chin Yee Whah is Senior Lecturer at scale industry alone. After the war, between strong presence in the manufacturing of integrating Bumiputera capital into their try (Malaysia 2000). Scores of formal Universiti Sains Malaysia. 1947 and 1957, most Chinese manufactur- construction materials (Tan 1982). In 1968 family-owned businesses (Gomez 1999, Sino-Bumiputera partnerships material- [email protected] ing remained in agriculture and commod- the late Loh Boon Siew, the sole distribu- Searle 1999). Fourth, scores of companies ised in the late 1990s. These new ‘strate- ity-processing such as rubber-milling, tor of Honda motorcycles and vehicles, maintained
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