Responses of Chinese Diaspora Capitalism
The financial crisis that has struck many regions in Asia will be a testing ground and turning point for the Chinese diaspora. In recent years, their distinctive transnational connections, and flexible business style have been regarded by many scholars, including our own research as a significant current in global capitalism, not only in terms of knitting much of the region together, but also serving as mentor and bridge for the entry of mainland China onto the world stage. The current situation, however, will call for a close analysis of the roles and experiences of different capitalist currents active in the region. It will also elicit new strategies and changes of direction to consolidate their strengths and minimize their weaknesses. Most of all, the current crisis will provide us with a timely opportunity to re-evaluate our findings from our earlier research.By David Ip
The present research project is a continuation of our previous study, documented in The Chinese Diaspora and Mainland China: an emerging economic synergy (Macmillan and St Martin's Press, 1996). In the earlier study, we have indicated that there are considerable advantages to diaspora Chinese business in the use of trust-based, long-term relationships and networks. In view of the current crisis, we are now prepared to ask how far does the reliance on networks involve counter-productive forms of corruption? In crisis, is there more or less reliance on such relationships? How far have networks been crucial to survival, success, and new beginnings since the crisis?Similarly, if Chinese networks were shown to have been capable of lying dormant, as sleepers, for a generation or longer, able to be revived and extended when needed, is the crisis a result of an overextension or overreliance on such networking? Do such revived networks remain operative in crisis, or can they retire into a dormant state when contraction occurs? In our earlier study, continuities were found between the ways large and small firms operate, utilizing rapid mobility between them. Small firms fostered the long-term ambitions to become large ones and large ones preserved the family control and flexibility of small ones. More often than not growth involved the multiplication of small units rather than the expansion of a large bureaucratic structure, so that family holdings had an inherent capacity for fission and downscaling as well as for growth. We would like to investigate how effective such flexibility has been in responses to the financial crisis and whether large or small firms have responded the more successfully.
Transnationalism
In our previous research we found that low debt-ratios and reliance on personal sources of capital for private family firms were traditionally the hallmarks of Chinese capitalism. In the last decade, however, stock market floatation and substantial indebtedness have risen. Given the current situation, we would be interested to discover if these recent changes in capital- raising strategies contributed to the crisis and whether such strategies have been re-evaluated in the light of the crisis. We observed that one distinctive strength of the diaspora Chinese was the capacity of even small and medium family businesses to operate transnationally, often through personal networks, even in areas of risk and uncertainty. In the current unsustainable situation, further questions need to be raised. For example, how far has transnationalism been a source of unsustainable risk? Did the crisis impact differently on those more or less transnationalized? How far is it a resource for recovery? Are entrepreneurs responding to the crisis by extending or contracting transnational operations? Has the crisis increased or decreased the autonomy and bargaining power of diaspora firms vis-à-vis transnational corporations? Our previous research found that in times of prosperity, one distinctive business strategy employed in Chinese business involved opportunistic diversification which encouraged and gave free play to entrepreneurial qualities. Under the present conditions of economic adversity, the question changes to whether diversification (vertical as well as horizontal) has become a source of weakness. Has diversification or, alternatively, contraction to the core activity been an effective recovery strategy? More specifically, we also observed in our last study that diaspora Chinese capitalism had shown itself well able to shift its central focus from one sector to another. As the situation in Hong Kong indicated, it shifted from trade to manufacturing then to finance and distribution as well as into property speculation. As the current crisis continues to unfold, it seems that there are two kinds of capitalist spirit at work, one based on rational productivism and the other on gambling and speculation. An important question is, will the crisis lead to a revised balance between rational calculation and speculative risk taking? Shifting to focus on the role of diaspora Chinese in China's economic transformation, we suggested that the opportunities offered by an open-door China were shown to have enabled the diaspora investors to revive, extend and use networks there and to establish a synergy with development in the localities. Given the current economic conditions in China, it would be cogent to explore the post-crisis relationship between opportunity in China and networking revival and extension. That is, what effect on the disapora business will China's own post-crisis responses have, including post-crisis moves to recentralize control over the localities by Beijing?
Longitudinal study
Overall, these questions will form the core of our research project. Our research is planned to replicate our earlier study, which was conducted between 1992-1995, in a new context with a focus on the impact of the crisis on the regional activities of diaspora Chinese capitalists and their strategic responses to it. However, our projected research also intends to extend the previous study to include newly emerging key players, that is to expand the study to disapora economic activities around the East Asian region as a whole by including Singapore as part of our research location. Our previous study included three main elements and it is our intention to repeat them here to make it into a longitudinal study. A media search for the transnational activities of the 75 leading ethnic Chinese business families in the region will be brought up to date by using similar methods to those we applied before, but focusing primarily on analysing how they have been affected by the crisis, and with a particular focus on those which have changed or lost their leading positions. Attempts will be made to contact and re-interview a substantial number of the some forty ethnic Chinese entrepreneurs we interviewed in Hong Kong and Australia. However, we shall also do our best to conduct new interviews with entrepreneurs in Taiwan and Singapore who are engaged in transnational activities (thirty in each). Finally, an attempt to re-survey the managers (or owner/managers) of six hundred foreign invested firms in six different parts of coastal China, including Dongguan, Guangzhou in Guangdong province, Xiamen and Chuanzhou in Fujian Province, Suzhou and Naning in Jiejiang Province, will be initiated. This will be carried out by research institutes and social scientists commissioned in China to do this work. The chief investigators of this research are Dr Constance Lever-Tracy and Noel Tracy from Flinders University, South Australia, Dr David Ip from the University of Queensland. Associated investigators are Dr Wen-thuen Wang from the Chung-hua Institution in Taipei, and Dr Zhu Wenhui from the China Business Centre at the Hong Kong Polytechnic University.
Dr David Ip was a senior visiting fellow under the Qiaoxiang Ties Programme, stationed at the IIAS Amsterdam Branch Office, 1 January - 15 February 1999.
For more information contact
Dr David Ip
Department of Anthropology & Sociology
The University of Queensland
Brisbane, Australia 4072
Tel.: +61-7-3365 3309
Fax: +61-7-3365 1544
E-mail: d.ip@mailbox.uq.edu.au
Dr Constance Lever-Tracy
Department of Sociology
Flinders University of South Australia
GPO Box 2100
Adelaide, South Australia 5001
Australia
Tel.: +61-8-8201 2264
Fax: +61-8-8201 3521
E-mail: socl.n.ss@psy1.ssn.flinders.edu.au
Noel Tracy
Department of Political Science
Flinders University of South Australia
GPO Box 2100
Adelaide, South Australia 5001
Australia