Business-in-Thailand - Information on doing business in Thailand

"The New Asian Emperors" is one of the most easily available books about the way the Overseas Chinese conduct business in South East Asia, and why they are as successful as they are. In a nutshell, the main factors of their success (in the business school jargon called "competitive advantages") are: (1) a network that provides reliable, informal information in an environment where information is hard to come by, (2) a strong work-ethic and mercantile mind-set, (3) high savings rates combined with the tendency to re-invest savings, (4) a short-term profit outlook with highly liquid assets, (5) an intuitive decision-making style well adapted to the "informational void" of Asia.

I think this book gives a lot of helpful suggestions as to why the Overseas Chinese dominate the economies of countries as diverse as Thailand, Malaysia, Indonesia, the Philippines, and Singapore, even though the Overseas Chinese are minorities in each of these countries except Singapore. Two things in particular make them more successful than most indigenous entrepreneurs: their work ethic and the way they cope with the lack of information. "Overseas Chinese, especially those in Southeast Asia, left China as coolies to work for Chinese and European traders, plantation owners, governments and semi-governmental authorities. They worked hard, lived extremely frugally and saved money until they could strike out on their own [...]. Once the[y] gained some degree of prosperity, they often moved into property-related businesses, and then into any business deemed profitable." Developing countries often have weak legal systems, lax enforcement of the law, changing policies of the government and a fast-changing economic environment with few reliable available data. Successful Overseas Chinese maneuver in this hazardous business climate by forming close networks of peers, tapping government information by all means available (to put it politely), by acting fast on qualitative rather than quantitative information, and by following-up small successes with more substantial investments in the same area. They don't "go boldly where no-one has gone before"; their success is based on their preference for familiar, regional business ventures.

The book also provides information about the weaknesses of the classical family businesses of the Overseas Chinese: their lack of formal organization, their decision-making focus on the patriarch, their local strength and inexperience in the international arena, the lack of resources devoted to brand development - to name just a few.

While it is informative, the book still needs some serious editorial work. Headlines that should refer to the ensuing paragraphs are sometimes out of context, the text is repetitious in various instances, and the part about the cultural roots of the Overseas Chinese is at times vacuous. What, for example do we learn from a sentence like "Taoism focuses on the paradoxical duality of all nature, and gaining an understanding of nature through knowledge of that duality and its implications"? If I replace "Taoism" by "Christianity", "duality" by "Trinity", and "nature" by "God", the sentence reads: "Christianity focuses on the paradoxical Trinity of God, and gaining an understanding of God through knowledge of that Trinity and its implications." This is a sentence that correctly describes one facet of Christianity, but does it help our understanding of Christianity? You guessed the answer.

The weakest part of the book is the section about the philosophical and cultural roots of the Overseas Chinese. It is called "Confucianism +" with the "+" standing for Buddhism and Taoism. While Confucianism plays an important role for the work-ethic of the Overseas Chinese, its tenets could as well have hindered the Overseas Chinese from being economically successful. Confucianism is essentially a philosophy for rulers and bureaucrats, and it looks down on the profit motives of merchants who tend to be wary of bureaucrats and their taxation power. It exalts peasants (who stay in their place, can be taxed easily and forced to serve in the army), and it delegates the unruly and evasive merchants to the lowest class in the Confucian system. In this respect, a few explanations are required as to why the stay-at-home Confucian Chinese did not prosper and the Overseas Confucian Chinese did.

As an economist I was duly impressed by one quote of an Overseas Chinese tycoon who said to his son: "'Remember that you are responsible to your ancestors, not just to yourself. Our ancestors are not honored by compromise; they are honored by responsible behavior and hard work.'" This quote reminded me very much of Max Weber's thesis in his seminal work "The Protestant Ethic and the Spirit of Capitalism" (1904/05). Weber, a German economist and the father of sociology as a science, showed that the Protestant ethic was one of the necessary - but not sufficient - elements for the development of Capitalism in modern nations. Something similar seems to be going on among the Overseas Chinese. It seems that the "practical" Confucian ethic embraced by the Overseas Chinese is, at least in certain respects, quite similar to the Protestant ethic that fuelled the development of a capitalist society. Unfortunately, the book does not elaborate on this subject.