Southeast Asian Studies, Vol. 25, No.3, December 1987 The Problem of Continuity in Chinese Businesses in Southeast Asia Kunio YOSHIHARA* Chinese businesses and Chinese business- I Introduction men. Southeast Asia is more narrowly de­ If we follow Fernand Braudel's clas­ fined in this paper than usual. Since I sification, the economy can be divided want to focus on the problem of busi­ into three sectors: capitalism, the mar­ ness continuity in the past several dec­ ket economy, and the subsistence econ­ ades, I cover only the area where capital­ omy [Braudel 1979: introduction]. The ism exists today as it did earlier-­ meaning of the third sector would be which is the ASEAN region. It is some­ self-explanatory: goods are produced for times maintained that capitalism exists the producer's own consumption. In the in Burma since private property exists market economy and capitalism, how­ there, but since no concentration of cap­ ever, economic activities are undertaken ital exists in the Burmese private sec­ for the market; the difference between tor, I regard that it does not have capi­ the two is that in the former economic talism. activities are small-scale and utilize only The subject I want to treat is the fac­ a small amount of capital, while in the tors affecting the continuity of Chinese latter a large amount of capital is used businesses. Businesses rise and fall, in and the scale of operation is large. Cap­ the developed countries as well as in italism is then the sector in which the Southeast Asia. It is neither interesting role of capital is pronounced. nor very meaningful to repeat the rea­ Chinese businesses in this paper are sons given for the developed countries, not just any types of business owned so I want to focus on those which are and operated by the Chinese. I want to either unique to the region or more treat only those in which substantial cap­ pronounced there. ital is involved, that is, those in capi­ My focus is on Chinese businesses talism. They may be called capitalist rather than on business families. This dis­ institutions, and the people who own tinction is not very meaningful under them can be called capitalists, but here some circumstances, but it needs to be they are usually called, respectively, made, for a business can have a longer life than a family. For example, a family * alJj(~ t:~, The Center for Southeast Asian Studies, Kyoto University may decline, but the business it set 412 -112- K. YOSHIHARA: The Problem of Continuity in Chinese Businesses in Southeast Asia up can continue its life under a different appeared. Around that time, Southeast ownership. Asia became more substantively inte­ Businesses discussed in the paper were grated into the global economic network, either set up or acquired by previously as the result of the Industrial Revolu­ obscure businessmen and subsequently tion in the West, development of steam­ became large concerns, or were large ships, and the opening of the Suez Ca­ already at the time when they were set nal. The region became a market for up. In the former case, their business the West's manufactured goods and a life (for the purpose of this paper) be­ supplier of raw materials and tropical gan when they became large concerns. food products. To sustain and develop Since a large mass of small business es­ this pattern of integration, Western cap­ tablishments exists under capitalism, ital came in, but mainly on a large some businesses may have operated long scale, so there was need for someone to before they became large establishments, develop the market economy sector. For but the number of years when they the reasons of work ethic, know-how, were operating In the market economy and/or networks, the Chinese came to is not counted. dominate this sector. So, the plural eco­ nomic structure emerged: the Western merchants dominating in capitalism, the II Genesis and Expansion Chinese in the market economy, and the Although the Southeast Asian econ­ indigenous in the subsistence economy. omy had a market sector in pre-colonial The Chinese, however, did not stay in times, it seems that it was underdevel­ the market economy sector for long: oped compared with that in India and some began moving into capitalism. To China.1) Then it expanded somewhat in date precisely when this began is some­ the first two centuries of the colonial what difficult. Yap Ah Loy's tin mines period, but it was only after the mid In Kuala Lumpur employed several 19th century that its growth accelerated thousand people. His business may qual­ and a well-developed market economy ify as the first Chinese capitalistic insti­ tution in the region, but the reason he I) The market economy starts with market was able to organize such a large scale exchange, so its history is long. The ques­ tion is how developed it was in pre-colonial operation is that he was the head of a times, not whether it existed. At present, secret society who resorted to violence it is difficult to believe that it was well developed. As the market economy devel­ for the protection and expansion of his ops, the volume of transaction becomes business, so I am reluctant to consider large and the nature of business gets 2 complex. As a result, a large quantity of him as the first capitalist. ) But by the money is used, and the system of recording transaction (such as accounting) develops. At present, there is no evidence that there 2) Capitalism presupposes law and order, so was such development in the region cov­ a capitalist institution specializes in eco­ ered in this paper. nomic undertaking. Yap Ah Loy's business /' -113- 413 time of Chung Keng Kwee, law and or­ not take too long to master the neces­ der had been established by the British sary know~how.5) Processing was not too in Perak (the area of his operation), difficult to take over, either. This was though he used his position as the head of easiest in rice milling, whose technology a secret society for organizing tin min­ was relatively simple and in which there ing operations. His businesses qualifies was not much economy of scale.G) Rub­ better as a capitalist institution than ber processing was a little more compli­ Yap Ah Loy's.3) cated, but not much more.?) Sugar and The Chinese also moved into trading some other processing required large cap­ and processing on a large scale. Lim ital, but as capital became more abun­ Peng Siang's Ho Hong Group (Ma­ dant, the Chinese also moved into such laya), Oei Tiong Ham's Kian Gwan (In­ capital intensive processing (for exam­ donesia), and Chin Teng's Kim Seng ple, Kian Gwan). Lee (Thailand) were among the earliest More important, however, for the which broke into these fields.4) Once the growth of Chinese businesses In the flood gate opened, the Chinese began post independence period is the nation­ moving into capitalism in an increasing alistic policy of governments.8) Chinese number and on a larger scale. They ex­ businesses were not treated as full­ panded their interests in tin mining, fledged national capital in some countries, trading, and processing, and also diver­ but foreign businesses suffered more. sified into plantations, banking, insur­ Since the indigenous were not able to ance, shipping, and finally manufacturing. take over them, the Chinese filled the The growth of Chinese businesses has vacuum.9) In these countries, to increase not necessarily been smooth in the past the indigenous share in the economy, few decades, but Chinese capital has the government became an important come to dominate the capitalism of 5) For some of the problems the Chinese Southeast Asia. One reason is that what faced in banking, see Wilson [1972J. Western capital was doing was not ter­ 6) Modern rice milling was started by Western ribly difficult to imitate. There is not merchants, but they were soon phased out of this field, except East Asiatic Co. much high 'technology' involved in trad­ 7) The Chinese could not, however, start latex ing. Banking was more tricky, so some production until postwar years. Lee Kong burned their fingers badly, especially in Chian was one of its pioneers. 8) This can be seen most clearly in the rise foreign exchange operation, but it did of Chinese banking in the postwar period. In Malaysia, for example, British banks, ~ does not qualify as a capitalist institution, which used to dominate this field in the for the same reason vac does not. For prewar period, lost the dominant position the life of Yap Ah Loy, see Middlebrook to Chinese banks. [1951J. 9) For some time after Indonesia nationalized 3) For Chung Keng Kwee, see Godley [1981J. Dutch rubber plantations. Singapore pro­ 4) For the Ho Hong Group, see Song [1984J; cessed and marketed the rubber from these for Kian Gwan, Panglaykim and Palmer plantations. A large part of it seems to [1970J ; and for Chin Teng, Hong [1984J. have been smuggled out from Indonesia. 414 -114- K. YOSHIHARA: The Problem of Continuity in Chinese Businesses in Southeast Asia element of domestic capital, but in the much about Ko Teck Kin, Heah Joo private sector Chinese capital occupies Sian, and Tan Lak Sye in the rubber a more important position than indige­ circle of Singapore, but their businesses nous or foreign capital.lO) are also gone. In their place, there are many new ones. In Indonesia, all Chi­ III Discontinuity nese businesses are the creation of the past two decades.