Networking in Asia, the West (2)

By Peter Verhezen

This is the second of two articles exploring the concept of networking in Asian and Western communities.

JAKARTA (JP): The practice of networking based on trust has been described by Bob Widyahartono in an Aug. 25, 1997 article in this paper as a fundamental component of long-term economic growth in Asia. However, Asian collusion practices resulting from an excessive reliance on nonbusiness-oriented networks have not been in the interest of long-term economic growth.

Widyahartono also claims in his article that networking based on a personal trust in somehow unique to Asia.

It would be highly beneficial for the cultures of the East and the West to learn from one another. However, pointing out discrepancies between so-called unique Asian values and the West definitely does not serve the purpose of mutual understanding.

According to some studies in Asia, real leaders are expected to be trustworthy and honest. It is this honesty, rather than networking, that is a major characteristic for successful leaders.

Next to honesty, Asian leaders are expected to be forward looking, inspiring, competent, fair-minded, supportive, broad- minded and intelligent as they guide Asian companies into the next century -- a century in which businesses and governments will more than likely continue to face the process of globalization.

Therefore, mutual understanding will become paramount for political and economic growth.

As the world becomes more interconnected, trust in the business and political arena will consequently play a more important role -- independent of the so-called "unique Asian values" or "Western imperialistic tendencies".

In such a global community, economic and political players will have to abide by some common rules. Therefore, generating and maintaining trust with one another should be prioritized in the quest for long-term growth.

Trust can be established in the business and political world by displaying three fundamental characteristics of behavior: achieving results when a commitment is made, acting with integrity and demonstrating concern.

In a business context, trust is always tied to the need to deliver on commitments -- beginning with the commitment to create sufficient profits and shareholder return.

Jack Welch of General Electric has noted: "In the end you and your associates have to create an atmosphere where customers want what you're delivering or all speeches about loyalty and trust won't mean a thing." Strong business fundamentals are therefore a foundation of trust in the business world.

People trust those who are honest in what they say and do. Integrity is thus a measure of personal consistency, and is key to building and sustaining trust.

The level of distrust within many large firms can be traced to the failure of leadership to provide a coherent sense of direction.

Integrity is the degree to which individuals, teams and organizations fully embody the core values they hold to be the most important. Pepsi's chief executive officer expresses it very clearly: "People do business with those they trust, which is based in large part on integrity".

Trust goes beyond results and integrity. Responsiveness to the needs of others is an equally important component. In a fiercely competitive environment, tensions between economic or political success and the basic needs of people become more pronounced. Trusted companies are those who show concern for their employees, or in the case of a nation, their citizens.

Prof. Francis Fukuyama observes that "all human beings believe they have a certain inherent worth of dignity. When that worth is not recognized adequately by others, they feel anger; when they don't live up to others' evaluation, they feel shame; and when they are evaluated appropriately, they feel pride. The desire for recognition is an extraordinary powerful part of the human psyche".

The current financial crisis in ASEAN countries demonstrates the world's developing economic interconnectedness, especially in financial markets. Mutual trust is becoming even more important for the improvement of each nation's welfare. But once confidence -- or trust -- in a regional market evaporates, stock markets immediately lose their attraction. ASEAN countries have been learning this hard lesson over the past few months.

Abiding by the common rules of the global business and political community is one of the main factors to establishing and maintaining trust internationally.

Financial markets are self-regulating and are widely considered as one of the only free markets in the world, since capital is flown borderlessly from one market to another.

Investors in financial markets -- like George Soros -- have recently come under fire for "disrupting" the market. But pointing fingers at these speculators is like shooting the messenger. ASEAN countries might find it hard to accept the message and may reject the role international capital has to play in their emerging markets. But in the end, economic markets with the best prospects and performance will attract the most investment sources.

Speculation could be positively interpreted as a regulatory market force to bring the market back into a perceived equilibrium. Once a near-equilibrium point is established, there is a trust in the fundamentals of the respective economy as a consequence of sound macro-economic policies -- in this case expressed in a new currency rate.

Most economists agree that exchange rates should reflect economic fundamentals and that excessive volatility and significant deviation from fundamentals is undesirable.

Accountability and openness create trust and likely bring stability which in themselves are major factors for growth.

It is not so much democracy -- which is rather the result of a certain economic welfare and stability -- but political and economic stability on which investment expectations can be based that fuels continuous growth.

If investors feel that the economic fundamentals are not in line anymore with expectations, one can easily predict the economic reaction in the financial markets.

Prudent economic policies, to keep economic fundamentals on the right track, include controlling inflation, limiting overspending (seen in huge budget deficits, and sometimes related imports) and improving the efficiency of the economy.

Any closed economy which does not follow international economic standards has to endure the financial consequences of that policy. Consistency and accountability about economic objectives may help to establish trust.

To deny the causes of the current Asian economic turmoil -- which came about due to huge public and private outstanding debts -- would likely lead to continuous economic speculation over a perceived complacent inaction. From an economic point of view, the currency crisis is a wake-up call to bring bad financing, unbalanced budgets and unrealistic projects under control.

Business networking can help in economic growth, but more important is the accountability of a market, its economy and the leaders monitoring the macro-economy of the country. Trust generated through a display of honesty and accountability forms the basis of every family or organization whether it is Western or Asian. Networking without trust is meaningless in both the West and Asia.

It is true indeed that in absence of trust, the reliance on kinship is the easiest way to provide a needed network in business. It is easier to control "community members" than members of other "tribes". However, strong economic fundamentals are more easily realized should businesses and governments be able to transcend such a "tribal" system and utilize a trust that goes beyond that of the family or closely-tied group.

Proclaiming so-called unique Asian values in an internationalized or globalized business environment does more harm than good.

Every culture is so unique that it is hard to generalize and to speak of unique Asian values or Western values. The French think quite differently from the Americans, Dutch or Germans (though all are Western cultures).

The Chinese from mainland China could hardly be compared with Malaysians or Philippines in their values (though they are all Asian). Trying to elevate one cultural characteristic such as networking to explain the difference in social qualities sounds quite unscientific if not dogmatic.

The recent turbulence in Indonesia and Bosnia have shown that living together is not an easy matter. The world's different cultures should learn from each other instead of proclaiming false strengths and pure philosophies.

"Unity in diversity" is a worthy philosophy because it values the uniqueness of every community or culture and at the same time tries to unite diversity in some basic mutual understanding.

Self understanding and awareness of the uniqueness of other cultures might be the starting point for better communication and reduction of international conflict.

These basic values of understanding and trust could be the basis of a more peaceful and prosperous world.

The writer is the managing partner of Cimad Pacific Consultants Ltd.