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Tuesday, Feb. 29, 2000

Asia's real entrepreneurs shine

Special to The Japan Times
THE NEW ASIAN CORPORATION: Managing for the Future in Post-Crisis Asia, by Michael Hamlin. Jossey-Bass, 1999, $21.95.

There are few more compelling subjects than the future of the Asian corporation.

Are these once-legendary -- and feared -- titans poised for growth, or permanently wounded by the impact of the protracted Asian contagion?

Michael A. Hamlin attempts to answer this question. In doing so, he raises several fundamental issues. He explores pre-1997 conditions and looks back highlighting both business and governmental policies -- on conditions leading to the dramatic economic upheaval. As seen through Hamlin's eyes, there were clear signs that urgent reforms were required to propel Asia past its low-wage manufacturing phase.

That the crisis occurred and remains with us has only accelerated thinking on the part of iconoclasts and prescient forecasters. Mirroring economic savant Paul Krugman's thesis, they have admonished Asian corporate leaders to abandon models such as family-held conglomerates and reliance on cozy personal relationships.

Unlike other books and treatises examining the era, this volume describes flaws in once-prevalent business systems. Calamity was inevitable, because major forces re-casting business everywhere -- globalization, macroeconomic changes, and pressures brought about by economic liberalization -- made anticompetitive practices (and companies) vulnerable.

"Competition for intellectual and economic resources," argues Hamlin, plus "the eclipse of the privileged banking sector and the convergence of national development strategies" all created a new business climate throughout high-growth Asia.

Most of the book is devoted to the contagion's aftermath. Several private firms have been able to seize new opportunities. These are the cluster that looked inward for causes of the July 1997 calamity and quickly assessed strategies for renewal. From Kyushu to Kuala Lumpur, the book shows examples of men and women who tossed aside textbooks and put theory into practice. Borders Books in Singapore, the Shangri-La hotel group, Petron Oil (recently privatized in the Philippines) are a few of the companies that recognize there is a new formula for growth.

That formula, explains Hamlin, is based on better utilization of human resources, on upgrading workforce skills, and on building an infrastructure for high technology. The latter is of greatest concern in most Asia-Pacific countries: Engineering education lags in even the most stalwart "Tigers" and would-be Tigers. Furthermore, insists the author, the Asia-Pacific region is in for a culture shock as it becomes increasingly cosmopolitan -- and forced to accept different ideas and cultures.

Readers will glean analyses of the traditional characteristics of commerce and trade in Asia. For example, the role of "guanxi" (connections) will remain a factor, but its impact is already evaporating. Mergers and corporate plans based on strategic decisions, not merely on attempts to boost market share, will become more prevalent.

Efforts by national economic development boards to harness indigenous strengths will be increasingly important. The region's business milieu will change significantly. According to the author, the value of regional e-commerce mail is likely to reach $30 billion by the end of 2001.

Pockets of true entrepreneurship had existed before, and will return. The region's more dynamic corporations will at last develop identities.

As Hamlin notes, this has been the growth region and it is where the most calamitous collapse and financial shock occurred. Yet, few would disagree with the contention that the region is a pivot for worldwide growth, for the Pacific Rim has the resources, manpower, institutional strengths and capital to grow.

Many commentators have ignored the down sides evident to those living in the region: the aging population, political uncertainties, lack of innovation and a social contract coming under strain.

Hamlin, an experienced business reporter based in Manila and managing director of TeamAsia, has contributed to columns in The Far Eastern Economic Review. He offers readers a well-paced narrative that is chock-full of anecdotes. The book is important because the region's intelligentsia ponders free-trade policies, the WTO environment, high-tech's continued juggernaut, and new distribution and production techniques.

The Asian style will not vanish, nor should it: An increasingly assertive region is inevitable as geopolitical shifts reverberate in the next decade. Dismantling distinct sets of corporate cultures will not be easy. Asia must adapt to change, but that is a challenge many in the region appear to handle well.

The newer generation of corporate decision-makers, recovering from protracted recession, are charting a future course. They ponder their values, institutions and intrasocietal relationships. As Hamlin correctly notes "Asia" is hardly a monolith, but a multitude of cultures, attitudes, practices and perspectives. There is no single business model today, and climbing, phoenix-like out of the morass of the past two years, new models will proliferate.

Regardless of their ability to cope with the macroeconomic transition, Asian-based corporations will be at the center of the great transformations sweeping the region.

Julian Weiss, international communications fellow at The Heritage Foundation, a Washington-based think tank, will publish his fifth book, "Tiger's Roar: Asia's Recovery and its Impact," later this year.

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