The New Expansion of Overseas Chinese Business Networks

No.022
January 1998
Senior Fellow Yan Zhu

1. Since the beginning of the 1990s, overseas Chinese business networks have grown considerably throughout East Asia, and their economic strength has become increasingly powerful. Overseas Chinese-run major corporate groups dominate almost all of the top-ranking corporate groups, and as a result of their development, Chinese businesspeople have accumulated immense wealth.
2. In response to changes in industrial structure, fundraising, and organizational structure brought on by the tremendous growth of the 1990s, the management strategies of overseas Chinese businesses have also adapted to the new, dynamic environment. Additionally, overseas Chinese businesses have conducted aggressive foreign investment throughout East Asia, and in China in particular, spurring diversification and multinationalization in their businesses. Furthermore, founded on a structure of personal connections, the capabilities of overseas Chinese business networks are growing stronger in various ways and enjoy information exchange and cooperative ventures between overseas Chinese-run businesses.
3. As a result of information exchange and a strong sense of trust, overseas Chinese businesses and their networks boast many strengths, including cheap transactions costs, easy risk-avoidance for multi-industry and multi-regional development, and prompt decision making resulting from family-run organizational structures. At the same time, however, there are also many restrictions. Family-run business organization means that such businesses lag behind in recruitment and information disclosure. Additionally, the concentration of overseas Chinese businesses in traditional industries means a lack of technological accumulation and development. Overseas Chinese businesses also face policy and social constraints as a result of the ethnic nature of their companies. In the future, overseas Chinese businesses will continue to develop, and a great number of these businesses will rise as major global players. Overseas Chinese business networks will also become increasingly open. Incidentally, while the Asian currency crisis has had a negative effect on overseas Chinese businesses, the crisis is also an opportunity for overseas Chinese businesses to grow even more.
4. Throughout East Asia, many Japanese and overseas Chinese companies are creating cooperative relationships in the form of cooperative locally based production, joint participation in large-scale projects, collaborative overseas investment, etc. In recent years, overseas Chinese companies have also made landfall in Japan through corporate buyouts, fundraising, local production in Japan, real-estate development, and other forms of business expansion. In the future, it will be necessary for Japanese businesses pushing into East Asia to further strengthen cooperative ties with overseas Chinese businesses. Furthermore, in order to revitalize the Japanese economy, Japan must actively introduce investment from overseas Chinese businesses and utilize overseas Chinese business networks.

More Informations

• Japanese
• Full text is not available inEnglish for this report. Please let us know the serial number of this report (022) to submit a request for translation.