Sun, May 07, 2000 - Page 18 News List

Asian Eclipse: Exploring the Dark Side of Business in Asia

Focusing on the power relations that have eluded Asians themselves, Backman speaks of the Confucian ideals that, though well-meaning, have lead to rampant corruption as well as economic meltdown

By Victor Fic  /  SPECIAL CONTRIBUTOR

An insightful adage states that a best friend dispenses "tough love." If so, then Michael Backman is surely one of Asia's best friends.

His sharp eyes perceive how several Asian economies became drunk on a sweet, but dangerous cocktail they giddily mixed, using corruption, family politics, lack of accountability, and flouted laws.

Consequently, Korea and Indonesia almost collapsed in the financial meltdown of 1997-98, and the region's superstar, Japan, remains in an economic and political stupor, neither passed out nor vigorous.

The author starts his tour d'horizon of Asia by analyzing Asian values. He is a realist who astutely assesses a subject that Asians themselves obfuscate. The latter often insist that they naturally love harmony and cooperation; these are manipulative bromides that many Westerners believe out of ignorance, good will or apathy. Rarely do Asians candidly focus on power relations, as Backman does.

The author begins by challenging the simplistic, yet somehow comforting notion that culture leads and politics follows. The Confucian emphasis on family, on high savings and on thrift, he states, derive from a society with poor legal structures, one in which the government ignores the frugal. He adds that while Asians rigidly honor social codes, they apply legal strictures situationally. It is amazing how many Westerners fail to grasp the implications of this. Even Backman understates it: What Westerners call hypocrisy or expediency, Asians call flexibility and adaptability. However, the Westerner usually cannot bend and ignore law, as his Asian counterpart can.

The author is right to state that Asians still see business as a zero-sum game, and that Confucian values simply do not dignify those outside the group. Therefore, the foreigner is dealt not with reciprocity, but through stratagems.

Backman eventually begins to analyze Asia's long drinking binge. Corruption flourishes in China and Indonesia partly because the civil servant is poorly paid. A higher form of corruption, namely copyright violations, can be astounding. In Indonesia, a merchandiser selling fake Pierre Cardin clothes tried to sue the real Pierre Cardin -- for selling the same clothes as the Indonesian. In addition, bankruptcy laws are, well, bankrupt in Thailand partly because it is better to keep losing money than to lose face. Precise auditing, insists Backman, is unAsian. It is better to shop around for an auditor who will come to a sympathetic assessment.

As for the business media, it cannot be a watchdog because it is kept a puppy by censorship, as in Indonesia; low wages, as in Southeast Asia; and control by corporate owners, as in Korea. Regarding the Korean and Japanese media, one might add that a reflexive nationalism, and outright bribery by special interests, often result in chauvinistic coverage of trade disputes. Corporate plutocracy wins and consumer democracy loses.

The result of all of the above is that the "lack of constraints on corporate Asia leaves it a law unto itself." The consequences span: banks keeling over in a sea of red ink; conglomerates marooned on the shoals of bloat; and stock markets that do not protect minority stockholders, or the little guy. In a tragic-comic chapter on polygamy in Southeast Asia, Backman reports that warring factions can develop around each mother (it is best to have girlfriends). A family feud weakened a firm in Thailand before headstrong family control decimated it.

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