BAMBOO NETWORK

INTRODUCTION1. The term "bamboo network", or the Chinese Commonwealth, is used to conceptualize connections between certain businesses operated by overseas Chinese in Southeast Asia. 2. It links the overseas Chinese community of Southeast Asia (Malaysia, Indonesia, Thailand, Vietnam, the Philippines, and Singapore) with the economies of Greater China (mainland China, Hong Kong, Macau, and Taiwan).3. Overseas Chinese companies have a prominent role in the private sector of Southeast Asia, and are usually managed as family businesses with a centralized bureaucracy.4. The Indian essayist Pankaj Mishra, writing in The New York Review of Books, dubbed the bamboo network as "the greatest Asian economic power outside of Japan."

STRUCTURE1. Chinese businesses in Southeast Asia are usually family owned and managed through a centralized bureaucracy.2. These firms are typically mid-sized corporations, rather than large conglomerates like those dominant in Japan. 3. Trade and financing is guided by family ties and personal relationships are prioritized over formal relationships. 4. This promotes commercial communication and a faster transfer of capital in a region where financial regulation and rule of law remain undeveloped.5. These relationships are based on the concept of guanxi, the Chinese term for the cultivation of personal relationships.6. Much of the business activity of the bamboo network is centered in the major cities of the region, including Hong Kong and Taipei in the Greater China region and Jakarta, Singapore, Bangkok, Kuala Lumpur, Ho Chi Minh City, and Manila in Southeast Asia.

HISTORY1. The origins of the bamboo network can be traced to the 16th century, when Chinese migrants from southern China settled in Indonesia, Thailand, and other Southeast Asian countries.2. They founded at least one well-documented republic as a tributary state of Qing China — the Lanfang Republic that lasted from 1777 to 1884. 3. Chinese populations in the region saw a rapid increase following the Communist victory in the Chinese Civil War in 1949, which forced many refugees to emigrate outside of China.4. The bamboo network has been heavily influenced by Confucianism, a philosophy developed by Confucius in the 5th century BC that promotes filial piety and pragmatism.

1997 ASIAN FINANCIAL CRISIS

1. Governments affected by the 1997 Asian financial crisis introduced laws regulating insider trading, weakening the influence of the bamboo network.

2. After the crisis, business relationships were more frequently based on contracts, rather than the trust and family ties of the traditional bamboo network

21ST CENTURY1. Following the Chinese economic reforms initiated by Deng Xiaoping during the 1980s, businesses owned by the Chinese diaspora began to develop ties with companies based in mainland China. 2. Bamboo network businesses invested heavily in China, influenced by existing cultural and language affinities.3. China's transformation into a global economic power in the 21st century has led to a reversal in this relationship. Seeking to reduce its reliance on United States Treasury securities, the Chinese government shifted its focus to foreign investments. 4. Protectionism in the United States has made it difficult for Chinese companies to acquire American assets, strengthening the role of the bamboo network as one of the major recipients of Chinese investments

WHAT ACTUALY IS BAMBOO NETWORK?1. The bamboo network refers to the conglomerates

propelling Southeast Asian economies which started as small family businesses run by overseas Chinese.

2. The businesses are managed by the family of the founder, and are run with strong Confucian values.

3. The combined output of the 55 million overseas Chinese is equal to a good-sized country, or close to $600 billion.

4. Chinese expatriate workers are integral to economic success in countries such as Singapore, Thailand, Malaysia, Indonesia, Taiwan, Hong Kong, the Philippines, and Vietnam.

WHAT ACTUALY IS BAMBOO NETWORK?1. Most of these conglomerates are started by

Chinese expatriates who move country and start out with little or no savings, work hard and earn enough to start their own businesses, and constantly reinvest to maximise their cash.

2. Typically, a successful family will own many businesses spread over a number of countries.

3. Control of the business is general passed from generation to generation, and since for the most part the receivers of the business have already had an active managerial role, the transitions tend to be quite smooth, as opposed to the western idea of a big takeover with sweeping changes and redundancies all round.

EXAMPLE OF BAMBOO NETWORKLi Ka-Shing is a prime example of a Chinese expat in the bamboo network. Li’s father died when he was 15 so he dropped out of school and got a job labouring at a plastics company to support his family. He worked there for 16 hours per day. Eventually, he had saved enough money to start his own business, Cheung Kong Industries, which specialised in the manufacture of plastics. He then expanded the organisation into a leading real estate investment company, and eventually acquired Hutchison Whampoa, a company with the world’s biggest port and telecommunications operations, and Hong Kong Electric Holdings Limited. Li Ka-Shing’s son, Victor Li, serves as managing director and deputy chairman of Cheung Kong Holdings Limited.Y.C. Wang is another example, with his Formosa Plastics Group. Each of his 10 children holds an executive position in the family business, and his brother is president of Formosa Chemicals and Fibre.

HOW ARE BUSINESSES WITHIN THE BAMBOO NETWORK STRUCTURED?Most, if not all managerial positions within a company in the bamboo network will be filled by family members. This means that there is a significant amount of trust at the top of the company, as well as loyalty and flexibility. It also means that the top business executives are more likely to sit and have a conversation to plan company strategy or discuss issues rather than handing each other paperwork or arranging formal meetings. Instead of meetings with expensive lawyers and accountants in formal settings, there are conversations between friends and relatives. Kinship, dialect and common origin provide the basis for mutual trust in business transactions in the network, even when conducted at great distances.

HOW ARE BUSINESSES WITHIN THE BAMBOO NETWORK STRUCTURED?

A common set of values exists in the bamboo network which includes hard work, conscientiousness, loyalty to superiors and trust among family and friends, which allow many of the bamboo network businesses to get around government-imposed barriers. The fact that minimal paperwork is involved also means that there is no paper trail, should there be any government investigations of the company.The bureaucracy embedded within most businesses in Western culture is much less prevalent in Chinese businesses, as the personal relationships the management team have with each other are very strong, and there is less of a hierarchical structure given the relationships are a lot closer.As mentioned before, the business will generally pass from one generation to the next, typically giving the sons preference over the daughters in terms of company leadership. The head of the family will be the chief decision maker, and any sensitive information will be on a strict need-to-know basis with regards to non-familiar subordinates.

HOW ARE BUSINESSES WITHIN THE BAMBOO NETWORK STRUCTURED?

Trust is one of the most important factors in the bamboo network, and only employees who have worked with the employer for a long time will hold higher positions if they are not family members.

Because the leader of the company is generally the head of the family, he has the power in the business sense and in the social sense, which can be effective in maintaining control, since he will have more experience than his children and the responsibility they have to respect him in all spheres of life.

CONFUCIANISM IN BAMBOO NETWORKS1. “To live is to love others, to honour ones parents, to do what is right instead of doing what is advantage, to practice reciprocity, and to rule by moral example instead of by force and violence.” 2. This famous Confucius quote is useful in showing how Confucianism strongly affects business structure and the bamboo network. 3. As mentioned before, the businesses within the bamboo network are all family-managed. 4. These businesses also strongly believe in reciprocity, the core idea behind ‘guanxi’ relationships. 5. Finally, ruling by moral example is extremely important in the bamboo network, as one of the hallmarks of the bamboo network is trust, meaning the business must be operated in a way in which everyone feels comfortable.

POSITIVES OF BAMBOO NETWORK1. There are many advantages to the bamboo network model of operating a business. 2. The owners are the controlling managers, so they do not face issues with conflicting values or ideas in upper ranks. 3. This means that decisions can be reached a lot faster and with less time wasting, so managers can devote their attention to doing business and completing the tasks set before them. 4. Also, the fact that there is less paperwork and more of a personal nature means there are higher levels of trust, interaction and discussion. 5. Naturally, this means better idea formulation and consideration.

NEGETIVES OF BAMBOO NETWORKThe fact that the businesses in the bamboo network were started as very small, family run operations means that they are typically very low-tech in nature, and rely on hard work rather than technology to complete a task. They also have a very limited marketing capacity, because the bamboo network enterprises tend to only make products for other businesses to use, rather than products for consumer purchase. For example, many of the companies are involved in real estate, like hotels. They are good at making deals to sell the hotels to other businesses, but would be less efficient in running the hotel themselves simply due to the fact that they’d have to market it and put on a public face, something that is not typically required in their line of business.Possible issues with western trading

NEGETIVES OF BAMBOO NETWORK

Businesses from the West can compliment businesses in the bamboo network, as long as the two can acknowledge their different operating styles and values. For example, trying to turn a Chinese company into a bureaucratic Western-style business is bound to fail; just the same as trying to remove the hierarchical structure in an American business will not work. Western businesses do have something to offer those in the bamboo network by way of technical expertise, consumer marketing skills and the ability to manage large-production operations.The Chinese businesses have something to offer the West, in that typically businesses in the bamboo network have a low public profile, reducing the likelihood of becoming a target of public criticism or governmental action. Most of the companies serve as middlemen, making the product for someone else.

NEGETIVES OF BAMBOO NETWORKThe owners also tend to have connections in government, meaning they are privy to things that western companies are not.For example, Li Ka-shing’s son, Richard Li, started a company called PCCW. The company then won a controversial land deal, acquiring valuable waterfront real estate from the government without any public auction bids. Many in Hong Kong cried cronyism, as Hong Kong chief executive Tung Chee Hwa gave away the land to his new high-tech residential and commercial venture called Cyberport. The bamboo network enterprises do not produce or market any major consumer product, however, so they have little experience in managing large manufacturing operations.