Insecurity and Chinese Business Networks The Case of The Chinese Chambers of Commerce in Malaysia, post-crisis of 1998 Presented by Albert M.H. CHENG WASEDA.

Insecurity and Chinese Business NetworksThe Case of The Chinese Chambers of Commerce in Malaysia, post-crisis of 1998

Presented by Albert M.H. CHENG WASEDA University © Nov 2012

How is relationship between Insecurity and the formation or sustenance of the Chinese Business Networks? Is there any relationship?

Empirical Background

In the past few decades, scholars and academics focused more on exploring (Pyatt, 1996; Holmlund and Tornroos, 1997) and understanding business relationships or networks (Ritter et. al., 2003) among immigrants like overseas Chinese particularly in East Asia and Southeast Asia. Moreover some discussions about the importance of social or business networks (Seufert et. al., 1999), overseas Chinese business and its networks, network or guanxi as an important resource (Pyatt, 1996; Tong & Yong, 1998; Peng, 2000; Chan et. el., 2002; Bandelj & Purg, 2006).

Accordingly, Gordon Redding (1993) in his book – “The spirit of Chinese Capitalism”, explains that there are three significant themes serve to summarize the impact of Chinese social history on its people. These three themes in Chinese capitalism are Paternalism, Personalism and Insecurity.

Max Weber - “The Protestant Ethic and the Spirit of Capitalism” (1905)

Gordon Redding“The Spirit of Chinese Capitalism”

(1993)

Theoretical Background

THE SPIRIT OF CHINESE CAPITALISM By Gordon Redding, 1993 THE SPIRIT OF CHINESE CAPITALISM By Gordon Redding, 1993

My Interest

Literature review

INSECURITY

-Negative perceptions on insecurity (crisis, risk, uncertainty etc.)-Positive notion of the public (some believe that insecurities are necessary for the better future)-Area: Ethnic groups (More on Jewish people in US and Europe), Theology, Religious and beliefs (Taoism, Confucian, Buddhism, Hinduism, Islam, Christianity etc.)-Philosophy (For instance, “禍兮福所倚，福兮禍所伏” or, Danger is the next door to security, Misfortune may be a blessing in disguise）

CHINESE BUSINESS NETWORKS -Many scholarship researches have been done in different realms (sociology, humanities, economics, business, entrepreneurship etc.)-Area: Most of the papers on Overseas Chinese in Southeast Asia and East Asia, America & Europe-More paper on types of Chinese networks, however lacking research on the formation of networks (Redding, 1990)-Many case studies on Overseas Chinese business in Southeast Asia and East Asia, however less research on Chinese Chamber of Commerce (Chen, 2006)

The Formation and Substance of Chinese Business Networks in Malaysia (e.g. The Chinese Chambers of Commerce in Malaysia)

Figure above shows that the fundamental process of the network formation among businesses (Larson,1991). While beside the researches done by Redding 30 years ago in Hong Kong, while LIMITED research paper on the formation and sustenance of Chinese business networks.

Therefore, this paper will determine Redding’s theories on the formation and substance of Chinese business networks via The Chinese Chambers of Commerce in Malaysia. The variable of Insecurity will be adopted to test the relationship.

FormationFormation

SustenanceSustenance

MISTRUST

1) Abhorrence of being an Employee2) Satisfaction fro Ownership3) Lack of Alternatives

Constructing of dependable relations: 1) Chineseness Networking2) Lineage Connections3) Region-of-origin Connections

1) Minimal integrated society

2) Lack of institutional trust (e.g. law)

INSECURITYINSECURITY

URGE TO CONTROL

CHINESE BUSINESS NETWORKS

Determine the members of Chinese Chambers in

Malaysia regarding their Insecurity

conditions (Mistrust, Defensiveness, Urge to

Control etc.)

?

SELF-CONFIDENCE

Social Insecurities:1) Money Drive2) Deferred Gratification3) Education Drive

DEFENSIVENESS

To explain the relationship between

Insecurity and Chinese Business networks

The Chinese Chambers of Commerce

The Chinese Chambers of Commerce

Types of Social insecurity (Michael Leigh & Belinda Lip)Currently, several kinds of tension within Malaysian society. It is most probably because of the transitions in Malaysian society and politics respectively. Seven of the transition matters as below: 1)Identity2)Education and Language3)Role of Islam4)Economy5)UMNO Political Party6)Government7)Political Leadership

Typ

es o

f In

secu

rities

Types of Crisis (Lerbiger, 1997)1)Natural disaster2)Technological crisis3)Confrontation4)Malevolence5)Organizational Misdeeds6)Workplace violence7)Rumors8)Terrorist attacks/man-made disasters

Research QuestionDoes insecurity still a significant variable in the formation or sustenance of Chinese business networks in Malaysia?1)If yes, what kind of insecurity that Chinese business people feel?2)To what extent, Malaysian Chinese business people feel the insecurity?

Scope in Research1) Subject of research: Insecurity problems and Chinese business networks2) Unit of research: The Chinese Chambers of Commerce in Malaysia3) Area: Malaysia4) Time frame: Post-crisis of 1998

Originality1)Examine and understand the relationship between insecurity and Chinese business networks.2)Adopting members of the Chinese Chambers of Commerce in Malaysia in the study of insecurity and its Chinese network formations.3)Understand the sustenance of Chinese Chambers of Commerce in Malaysia as a hub of business networks among ethnic Chinese community

HypothesisIn general, insecurity (crisis, risk, uncertainty etc.) does produce some negative impacts on minority ethnic group in a country, like the ethnic Chinese group in Malaysia. However to some extent, insecurity might unify the community and stimulate the desires of control and ownership individually in business.

Research Method1) QuestionnairesDistribute the questionnaires among members of Chinese Chambers of Commerce with the objective of examine the reasons of their participation in the Chambers. Besides business opportunities, are there any factors on insecurity that exist.2) InterviewInterview will only be done on those respondents that found encountering insecurity problems.

Theoretical Approach1)Sociological Economy2)Economic Sociology3)Insecurity theory (Relation between insecurity and Chinese business networks – Gordon Redding, 1990)

References

Rank Name Net Worth (US$ m) Company Type of Business

1 Robert Kuok (88) 12,400 Kuok Group Diversified

2 Ananda Krishnan (73) 9,900 Maxis Telecom

3 Lee Kim Hua & Family (81) 6,500 Genting Group Casinos

4 Lee Shin Cheng (72) 5,200 IOI Group Palm oil

5 Teh Hong Piow (81) 5,000 Public Bank Banking

6 Quek Leng Chan (68) 4,200 Hong Leong Financial Group Diversified

7 Syed Mokhtar Al-Bukhary (60) 3,300 DHB-HICOM Diversified

8 Yeoh Tiong Lay (82) 2,600 YTL Group Diversified

9 Tiong Hiew King (77) 1,500 Rimbunan Hijau Group Timber / Palm oil

10 Vincent Tan (59) 1,200 Berjaya Group Diversified

11 Lee Oi Hian (61) & Lee Hau Hian (58) 1,100 Batu Kawan Diversified

12 Azman Hashim (72) 900 AmBank Group Finance

13 Shahril (51) & Shahriman Shamsuddin (43) 845 Sapura Group Oil & Gas

14 Mokhzani Mahathir (51) 685 Kencana Oil & Gas

15 Anthony Fernandes (47) 615 AirAsia Airlines

16 Lim Kok Thay (60) 605 Genting Group Casinos

17 Chen Lip Keong (64) 600 NagaWorld Casinos

18 Jeffrey Cheah (66) 580 Sunway Group Real estate

19 Kamarudin Meranum (50) 560 AirAsia Airlines

20 Lau Cho Kun (76) 525 Hap Seng Diversified

21 William H. J. Cheng (69) 520 Parkson Holdings Retail

22 Ninian Mogan Lourdenadin (58) 500 MBF Holdings Property / Retail

23 Goh Peng Ooi (57) 430 Silverlake Axis Software

24 G. Gnanalingam (57) 360 Westports Malaysia Ports

FO

RB

ES 2012 – M

alaysian Richest P

ersonsF

OR

BE

S 2012 – Malaysian R

ichest Persons

Mean Monthly Gross Household Income by ethnic group and by strata, 1970-2009 (Unit: Ringgit Malaysia, RM)

Ethnic Group 1970 1973 1976 1979 1984 1987 1990 1995 1999 2002 2004 2007 2009

Bumiputera 276 335 380 475 616 614 940 1600 1984 2376 2711 3156 3624

Chinese 632 739 866 906 1086 1012 1631 2895 3456 4279 4437 4853 5001

Indians 478 565 592 730 791 771 1209 2153 2702 3044 3456 3799 3986

Others 1304 1798 1395 1816 1775 2043 955 1274 1371 2165 2312 3651 3640

MALAYSIA 423 502 566 669 792 760 1167 2007 2472 3011 3249 3686 4204

Urban 687 789 913 942 1114 1039 1617 2596 3103 3652 3956 4356 4705

Rural 321 374 431 531 596 604 951 1300 1718 1729 1875 2283 2545Source: 7th Malaysia Plan Chapter 3:90; Mid-term 8th Malaysia Plan, Chapter 3 (1999-2002): 9th Malaysia Plan, Chapter 16;10th Malaysia Plan, Chapter 4; Calculation by Author for year 2009 (based on the 10th Malaysia Plan)

Ownership Group 1990 1995 1998 1999 2000 2005 2004 2006 2008

Bumiputera 19.3 20.6 19.4 19.1 18.9 18.7 18.9 19.4 21.9

Individual and Institution 14.2 18.6 17.7 17.4 17.2 17.1 17.2 17.7 18.9

Trust Agencies 5.1 2.0 1.7 1.7 1.7 1.6 1.7 1.7 2.0

Non-Bumiputera 46.8 43.4 41.1 40.3 41.3 43.2 40.6 43.9 36.7

Chinese 45.5 40.9 38.5 37.9 38.9 40.9 39.0 42.4 34.9 Indians 1.0 1.5 1.5 1.5 1.5 1.5 1.2 1.1 1.6 Others 0.3 1.0 1.0 0.9 0.9 0.8 0.4 0.4 0.1

Nominee Companies 8.5 8.3 7.7 7.9 8.5 9.2 8.0 6.6 3.5

Foreigners 25.4 27.7 31.8 32.7 31.3 28.9 32.5 30.1 37.9

Ownership of share by ethnic groups in Malaysia, 1990-2008

Source: Malaysia Plans; Data compiled by Albert M.H. CHENG, 2011