IIAS | IIAS Newsletter Online | No. 17 | Regions |East Asia

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01:15 March 1998
Brisbane, Australia

Report on Chinese Business Networks Workshop

On March 15, 1998, Chi-Kong Lai organized a workshop on Chinese business networks. Several important characteristics of networks were discussed, including their complexity; their international nature; their relationship with the State; their policy of co-operation; their relationship with indigenous groups; their native-place ties; their different categories; and their flexibility and fluidity. Although the role of networks in the current Asian economic crisis was not discussed, it can be argued that those involved in the networks have a better chance of survival.

By Chi-Kong Lai


The Head of Asian Languages and Asian Studies at the University of Queensland, Professor Kam Louie, opened the workshop with a brief description of his experience as an overseas Chinese in Australia. He expressed the hope that workshops such as this would help build up support groups among the underprivileged in the Chinese community as well as help our understanding of the network systems among the wealthy.

Carl Trocki (Queensland University of Technology), discussed the history of Chinese opium networks in Singapore. Throughout Asia, from the late nineteenth century to the early twentieth century, opium farming was the largest source of colonial government revenue and opium farmers were key figures in every society. The complex system of networks used by opium farmers involved: the 'kongsi' (companies made up of a large number of investors) secret societies (the enforcers who policed 'kongsi' security), and the elite (native leaders and colonial officials). Networks were established for the rich and powerful to exploit the labour of the poor who were paid in opium, to fuel their addiction.
Paul Ivory (Sunshine Coast University) discussed how Chinese organized crime also involved complex, inter-relational networks: the Han core of mainland China, Taiwan, and Hong Kong; the inner diaspora of neighbouring Asian nations; and the outer diaspora of overseas Chinese in Western countries. He commented on the huge upheaval in organized crime in the 1980s and 1990s, owing to the great influx of refugees and migrants to the outer diaspora. John Butcher (Griffith University) pointed out that both opium farming and organized crime networks involved at least some collaboration with the State. This is a valuable key in understanding how Chinese business networks can use the law for financial gain.
On the other hand, Sue Jackson (University of Queensland) gave a good example of the State's attempt to restrict network activity. The Malaysian government imposed a New Economic Policy in 1971 to undermine Chinese economic power. The result was a massive increase in state-owned, indigenously operated enterprises. The ploy ultimately failed because Chinese business networks simply joined forces and invested in a wider field of industries. She called this strategy 'co-operation before competition' and it seems to be an important factor in the successful survival of networks.
Liew Leong (Griffith University) raised the issue of the tentative relationship between the Chinese community and the indigenous elite. Chinese networks tend to be exclusive which may be seen as a positive or negative characteristic. Consequently, there seems to be an unwritten code of intra-group co-operation and inter-group competition, as exists between the Hakka and Hokien communities.
David Ip (University of Queensland) discussed how Chinese migrants used their family and social networks to emigrate. Migrants from the People's Republic of China were mostly highly-educated students who decided to stay in Australia after 1989, foregoing professional careers in China. They came to Australia with little money, few contacts, and no knowledge of the Brisbane area and could often find employment only as cleaners or factory workers. In contrast, the Taiwanese and Hong Kong Chinese were mostly business migrants with established native-place ties and were soon able to build up their businesses. Therefore Taiwanese and Hong Kong Chinese concentrated mainly on ethnic markets, whereas PRC migrants tended to join the mainstream Australian market. Older mainland Chinese migrants, who shared a similar background of traumatic experiences, gained a reputation as determined entrepreneurs, willing to try anything to succeed in their second chance for happiness.
David Schak (Griffith University) gave a critique Hamilton's work on networks in Chinese society. He argued that networks have been used by Western scholars to explain Asian economic success. This would be satisfactory if the term were used loosely to encompass all relationships involving transactions. However, in his study he found three different categories of networks: the family enterprises which were moral, kinship ties, friendship networks which had no hierarchy and were based mainly on trust, and enterprise group networks which were based on status and were exclusive and restricted. He believed that networks were transient, unpatterned, and fluid in nature. If this is so, the current crisis will not negate their effectiveness.
Sherman Cochran (Cornell University) questioned Schak's sharp distinction between hierarchical and egalitarian networks, believing that networks are too difficult to categorize. He highlighted the issue of 'native place' as culture capital, using as an example the success of Hong Kong entrepreneurs who used 'restaurant ties' to establish Chinese restaurants in London during the 1960s and 1970s. He pointed out that native-place ties appear to grow stronger outside China, which is another reason for their success.
In a nutshell the speakers showed how networks are complex and co-operative, national and international, exclusive and flexible. The Malaysian incident of 1971 reminds us that although economic setbacks occur, those involved in such networks are capable of survival. Thus, in the current Asian economic crisis, the positive characteristics of the Chinese business networks appear to suggest that the network system will continue to remain a competitive advantage.< hr width=100%>Dr Chi-Kong Lai (c.lai@mailbox.uq.edu.au) is the director of the Asian Business History Center of the University of Queensland in Brisbane Australia.

   IIAS | IIAS Newsletter Online | No. 17 | Regions |East Asia