Return to Home Page 1997 The Chinese Commonwealth: Implications for Marketers Abstract of Chinese Commonwealth The Chinese Commonwealth (otherwise referred to as the Chinese Web or Overseas Chinese) consist of companies formed by Chinese which are found outside of China and inside other countries, such as the United States, Thailand, Singapore, and Malaysia. These Chinese entrepreneurs work under the traditional set of familial, cultural, and relationship values. They help one another and protect each others businesses. Non-Chinese companies are now realizing the potential growth of this unofficial Chinese economy. This network was first formed by family relationships. However, foreign companies outside this web may find it easier to enter by linking themselves into joint ventures, marriages, political opportunities or just by having some common culture. This Chinese economy is growing approximately by 5% each year. These Chinese entrepreneurs are not cluttered in a single region.This manuscript examines the Chinese Commonwealth and its implications. Introduction Most of today's global economy evolves around North America, Europe, and Japan. But the Chinese Economy is growing slowly, on its way to becoming the fourth most powerful economy in the world. China's business environment consist of a global network of entrepreneurial relations that are influenced by the Confucian tradition. In ancient China, Chinese farmers would concentrate on surviving storms, droughts, and other natural disasters. Now the Chinese businessmen are concentrating in surviving the business world. The Chinese place high values on family savings, hard work, tangible goods, and obedience. These values lead the Chinese emigrants into businesses such as, real estates and shipping. But the control of these companies will remain in the family hands. Chinese entrepreneurs could benefit from relations with the West and foreign joint ventures. This paper focuses on the history of Chinese emigrants and how their so call 'Chinese web' came about and stresses their relationships from one business to another and the importance of this network to marketers all around the world. We will also comment on the future of the Chinese network and what implications this will have on international marketing. History of the Chinese Emigrants The Chinese Emigrants The first Chinese to ever leave China settled in South East Asia. These were ship crewmen who stayed with or without imperial's permission. These Chinese were traders sailing in ships built and marked from South China. The emigrants would rebuild their junks in cheap local woods or take advantage of favorable trading conditions and local demands for Chinese skills. Successful Chinese emigrants would send money home both for their families and village good work, like schools and new road constructions. Other emigrants were laborers who would sell themselves to slavery for as certain amount of years to pay for their passage into San Francisco, Hawaii, Australia, or South East Asia. Most ambitious young Chinese worked in towns and found friends and relatives who would help them to start in their own business or to help them assist in shops and perhaps their own import and export businesses (Overseas Chinese,chapter two, page 18). Most Chinese were prepared to work at low standards of living,to save money for their family who were left in China or to open new opportunities for themselves. Successful Chinese will start working at five in the morning until ten that night. They would not take any holidays off except for the Chinese new years. As Dr. William Skinner, who studied the Chinese communities, quoted ,"If you haven't come to help me to make money, then I will not talk to you (Mitchson.p.20)." Confucian Tradition These Chinese networks are based on a tradition that has been around for thousands of years; the Confucian tradition. These traditions are based on the importance of social order (Kao). The Confucian theory is concerned with how to establish a harmonious secular order in the man-centered world. According to this philosophy, man does not exist alone; all action is between man and man (Hu Shih,Chang Kuo, Kuan-hsi and Network Building, p.65). Comparing the Chinese social system with western ones, Liang Sou-ming states that the Chinese society is neither individual base nor society base, but relationship based. In a relation base social order the focus is not fixed on any particular individual, but on the particular nature of the relations between individuals who interact with each other. The focus is placed upon the relationship of the individuals and societies. (Hang Sou Ming;The Essential Features of Chinese Culture,p.94 ) Chinese Network The Chinese commonwealth is a group of small Chinese companies from all over the world affiliated with each other, protecting and taking care of each others businesses. They are also referred to as 'Greater China', or the 'Chinese Network'. The survival mentality and the Confucian tradition of patriarchal authority, form the values of a typical Chinese entrepreneur - one who seeks to control his own small dynasty. These so call life raft values are: l.Thrift ensures survival. 2.A high, even irrational, level of savings is desirable, regardless of immediate needs. 3.Hard work to the point of exhaustion is necessary to ward off the many hazards present in an unpredictable world. 4.The only people you can trust are family-- and a business enterprise is created as a familial life raft. 5.The judgment of an incompetent relative in the family business is more reliable than that of a competent stranger. 6.Obedience to patriarchal authority is essential to maintaining coherence and direction for the enterprise; 7.Investment must be based on kinship or clan affiliations ,not abstract principles. 8.Tangible goods, like real estate ,natural resources, and gold bars are preferable to intangibles like illiquid securities or intellectuals properties. 9.Keep your bags packed at all times,day or night (Kao,p.25). Unlike the Japanese Keiretsu, the Chinese network is an open system for all Chinese entrepreneurs all over the world. They watch for each others businesses and help those who are in need. These Chinese entrepreneurs have a give - and - take relationship. The network is usually formed by joint ventures, weddings, political opportunities and common cultures. Ownership of the company are usually passed to relatives, regardless of their educational background or competency (the classic example is An Wang’s passing of his company, Wang Computers, to his mediocre son instead of professional managers—which ended in failure). Generation after generation, no matter in what culture they were brought up, every Chinese seeks control and security of their businesses. The first Chinese generation has a survival and Confucius mentality. Every business decision is made for the future of the family. Unlike the old generation, the younger generation are born in other countries outside of mainland China. They do not only carry the Chinese culture, but the one they were born in as well. This generation, especially if born in a western country, has a sense of individualism. Companies like Winbond,a high-tech company in Taiwan, which considers themselves to be a Chinese company , believes that you should respect your family and love ones but you have to set your mind on what is right for the company. D.Y. Yang,owner of Winbond, says, "A Chinese company depends less on data and more on intuition ,feelings,and people." But on the other hand , he also mentions, "Of course you have to respect the family business structure, but since this is a high tech company,individual contributions are important (Kao,p31)." Many of these Chinese investments outside the Chinese region are being handled by second and third generations. These Chinese -Americans, Thai-Chinese, etc., are built more on educational values and not pretty much on ancestral values. With their knowledge, they will progress even further more than what their fathers did. The Growth of the Commonwealth As the economy keeps growing so does the Chinese Commonwealth. With the expansion of the high technological industry and the political opening in China, the network is becoming bigger and stronger. Most importantly though, so are the Chinese communities all over the world. This rapid capital growth within the Chinese commonwealth are making them become guardians of smaller Chinese entrepreneurs. Billionaires are helping with the constructions of new highways and satellites. This has created a significant growth level of investments across the national borders. Chinese entrepreneurs have become the first and second most prominent source of foreign investments in countries such as, Thailand, the Philippines, and Vietnam (Kao,p32). This is of great significance for non-Chinese businesses around the world who wish to enter into these companies and may do so by getting into joint ventures. Until 1985, there has been approximately 840 joint ventures formed in China alone between foreign investors and Chinese organizations. So Chinese entrepreneurs do not let things like personal feelings towards a country get in the way of their business decisions. Management Implications Many of the new Chinese generation are now looking towards a common educational background than into the family business relationship. Although their views are different from their fathers, they still believe in using the Confucian tradition as well. This will not only change their management style, but it will also keep them from doing the same mistake their parents did. They will do what is right for the company. Relationship is of great importance. The Chinese will always keep an eye for each other. The Chinese network, both home and abroad, has a great impact on today's economy and market. Non-Chinese companies are trying to make their way in with joint ventures and partnership. Looking ahead, the Chinese economy and trades may well be over the Pacific in a couple of years.And as John Kao comments, "The evolution of a worldwide web of relatively small Chinese businesses bound by undeniable strong cultural links, offers a working model for the future. Marketing Implications Given the increase in capital and strength of the Chinese commonwealth, Chinese businessmen take full advantage of other markets. Because of their size and diversification, the Chinese commonwealth may take advantage of low -labor costs and product markets: Making shoes in Taiwan started in the 1950s as a low-cost commodity. Manufacturing industry that took advantage of the country's low labor costs and Confucian work ethics to produce cheap shoes. Gradually, manufacturers developed higher priced shoes and other products, and labor cost increased rapidly. Companies have now moved to China where their labor cost is low (Kao,p34). In may ways, the political opening of the Peoples Republic of China offers a big opportunity of low cost labor and untouched natural resources. With the help of the Chinese commonwealth, small Chinese entrepreneurs can take an advantage of the large market and trading opportunities that the network has to offer. The Chinese-base economy contain substantial amount of technology and manufacturing capability and an outstanding entrepreneurial (Weidenbaum,2/3/93). Non-Chinese companies may prepare themselves with the knowledge of the Chinese culture and business customs if they want to take advantage of the Chinese leading recovery in the market throughout the world. Future of the Commonwealth In 1991, the Chinese entrepreneurs held their first worldwide convention. Eight hundred companies showed up from 35 different countries. It is now that the Chinese recognize the strength of their economic power. The Chinese entrepreneurs are viewing the world today, their position in it,and how they may change it. Singapore's technological infrastructure and Hong Kong's trading market are growing with it. The majority of the Chinese small businesses still depend on the Chinese network. Besides the network is not only Chinese, but it has a large amount of potential partners who does not only have access of the Chinese market but has access of the global market as well. Although some Chinese are looking towards a new form of management, the Confucian tradition with its family, social, and cultural links will always be an example for the rest of world. References Berger, Peter L. (1994) “The gross national product and the gods,” Mckinsey Quarterly. (1): 97-110. 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