Region's Chinese business clans still going strong
Region's Chinese business clans still going strong
By Lim Say Boon
SINGAPORE: "Gong xi fa cai" and its various dialect variations
(for Happy Chinese New Year) once again echoed across ballrooms
and halls packed with Southeast Asia's Chinese business elite
last week.
And while the "happiness" portion of the equation would have
been a matter of personal disposition, the wishes of "prosperity"
rolled off their tongues without as much conviction as they did
prior to the 1997 economic catastrophe.
Yes, there is a huge dose of sensationalism and a certain
amount of schadenfreude in Western observers' dismissive comments
about the so-called "bamboo network", post-Asian crisis.
The Southeast Asian ethnic Chinese remain a potent force in
business, one whose place in commerce and enterprise is not so
much assured as won every day (and, since the regional economic
crisis, won back) through dogged persistence, an almost
instinctive focus on education and excellence, and street smarts
cultivated through generations in business.
But there is no denying either that the wealth, power and
influence of many of ethnic-Chinese business clans have been
diminished throughout Southeast Asia over the past 3 1/2 years --
especially among the ranks of the second-tier tycoons -- and in
Indonesia and Thailand.
Further, the results of the battle to restore their former
financial and political standing have been patchy.
Indeed, in Indonesia, where the damage has been greatest, it
will take another generation for most of the affected business
families to restore their former wealth.
Beyond that, and perhaps most importantly, Southeast Asia's
Chinese business clans face the urgent challenges of the
globalisation juggernaut.
The rapid breakdown of national economic boundaries and the
abrupt entry of international (mostly Western) giants signaled a
challenge symbolically as powerful as the arrival of gunboats in
imperial China.
The dynastic nature of top management and decision-making
within Southeast Asia's Chinese business families will be
severely tested.
Interestingly enough, outside of Indonesia and Thailand, the
ranks of Southeast Asia's ethnic Chinese "super rich" have not
been affected noticeably by the regional economic crisis.
Even where they have been hurt, the damage has nowhere been as
great as the Western media had made it out to be.
I took a look back at the Southeast Asian ethnic Chinese names
on the Forbes "super rich" list circa mid-1996, and did a
"whatever happened to..." exercise.
From Singapore, the list included Ng Teng Fong (and son
Robert), Kwek Leng Beng and family, Khoo Teck Puat, the Lee
Family and Wee Cho Yaw.
Even if some observers thought Ng would have had a few anxious
moments during the Singapore property crash that followed the
regional economic crisis, the entire Singapore membership list
had emerged unscathed.
The same would have applied to Malaysia's ethnic Chinese
"super rich": Hong Leong Group's Quek Leng Chan, Robert Kuok,
timber magnate Tiong Hiew King, Genting Group's Lim Goh Tong, Yaw
Teck Seng, banker Teh Hong Piow and power and property tycoons
Yeoh Tiong Lay and family.
But in the wealth pecking order below the above superstars,
Malaysian tycoons have been and still are struggling with debt-
restructuring exercises.
From the Philippines, the list included Tan Yu, banker George
Ty, Andrew Gotianun, Lucio Tan, John Gokongwei, and retail king
Henry Sy.
This list had emerged largely intact. Indeed, it is still
reportedly "business as usual" even for Estrada supporter Lucio
Tan.
The damage on to the Thai ethnic Chinese tycoons was much
greater, as one would expect, given the financial damage done to
the baht. It had been said that before the crisis, approximately
50 ethnic Chinese families controlled most of Thailand's business
sector.
Prominent economist Ammar Siamwalla, of Thailand's Development
Research Institute, a Bangkok-based think-tank, was reported in
the Financial Times as saying: "Where there were 40 to 50 big-
business families in control, there are now only four or five."
But the devastation was nowhere near as great as that suffered
by the Indonesians.
The Indonesian list included the Wonowidjojo family of clove-
cigarette producer Gudang Garam fame, Sinar Mas group owners Eka
Tjipta Widjaja and family, Liem Sioe Liong and family of Salim
Group fame, the other kretek tycoon Putra Sampoerna, one-time
timber king Prayogo Pangestu, property developer Ciputra, Sjamsul
Nursalim of Gajah Tunggal fame and the Lippo Group's Riady
family.
Even in Indonesia, the survival rate among the "super rich" is
decent. Diminished, yes, but survivors nonetheless.
Possibly the hardest hit on the list were Prayogo Pangestu and
the Nursalim family.
The Salim Group has been forced to sell huge chunks of assets
to pay the state for funds lent to support its bank, Bank Central
Asia. And it is still haggling with the Indonesian government
over outstanding amounts claimed by the authorities.
But there is little doubt it remains a regional conglomerate
to be reckoned with.
The Widjaja family has suffered serious dilution of its stake
in its bank Bank International Indonesia, as a result of shares
issued to the Indonesian Bank Restructuring Agency to
recapitalize the bank.
But there is little doubt that the Widjajas, from the cash
flowing from their pulp and paper and plantations businesses,
will buy back the bank. And they have never been regarded as
anything less than the serious business force they were before
the crisis.
The Riady family underwent a similar experience and accepted
lower shareholdings in the restructuring of their group
interests. But they continue to be players of serious influence
in Indonesian business.
But beyond surviving crises, the unrelenting quest for
regional and global scale will test severely the ability of the
ethnic Chinese business families in coming years.
Accepting strategic alliances with global giants -- and
usually, that involves selling out a sizeable, or even a
controlling stake to the foreigners -- to access international
technology, management, products and markets will prove difficult
for family-run dynasties.
Some, like Thai Farmers Bank's Banyong Lamsam, may be content
to let the family quit the business. Others, such as UOB's Wee
Cho Yaw, may have other ideas.
And it is not a simple matter, either, of surviving by
accepting strategic alliances. That's a nice business-school term
for selling down or selling out.
The challenge is how the Chinese business dynasties engineer
their own survival as the entrepreneurial force they had been for
the best part of a century if they accept dilution to minority
status, playing passive partners to international corporations.
That is a difficult juggling act that will prove even more
challenging than surviving financial crises.
The writer is Director of OCBC Investment Research Pte
Limited. The views expressed in this article are his own.
-- The Straits Times/Asia News Network