Chinese Industries in Asia: Development, Management Characteristics, the Influence of the Currency Crisis and Prospects for the Future

No.39
December 1998
Senior Research Fellow Yan Zhu

1. The development of the Asian economies has shaped overseas Chinese corporate groups. As a result of their host countries' economic growth, structural transformations, governmental economic policies, and policies concerning ethnic Chinese businesses, these corporations have experienced tremendous growth. Today, Chinese business groups have a powerful presence and hold strong economic influence throughout almost all of Asia.
2. The development and growth of overseas Chinese corporate groups is related to their unique management characteristics. These characteristics include: (1) diversified management fields, (2) family-based business organization and structure, (3) the use of mergers, acquisitions, and capital markets, (4) the use of the so-called "Overseas Chinese Network", (5) close association with political power and the use of foreign capital, and (6) overseas investment and internationalization.
3. The strong development of overseas Chinese corporate groups has contributed not only to the development of Asian economies, but also to the sophistication of industrial structures and intraregional economic cooperation. However, overseas Chinese corporate groups in Asia have developed within an immature economic environment, they are characterized by both strengths and weaknesses.
4. The Asian financial crisis dealt a mighty blow to Chinese business groups. Amidst increased burdens of debt repayment and deteriorating business performance, Chinese business groups have taken various expeditious countermeasures, including selling off operations and subsidiaries, increasing funds through introducing foreign capital, reorganizing affiliated businesses around core operations, and returning to their base countries by selling off overseas operations. Furthermore, some groups are using the financial crisis as a chance to expand their operations. Through the financial crisis, Chinese business groups have a chance to learn many valuable lessons that will help them increase their future growth, such as emphasizing private funds, emphasizing hedging against risk, modernizing business management, and rationalizing industrial structure and regional distribution. If Chinese business groups can overcome the hardships of the financial crisis, they will be able to grow even more in the future.

CONTENTS

1. Formation and Development of Overseas Chinese Corporate Groups
2. Development and Management Characteristics of Overseas Chinese Corporate Groups
3. Role and Contribution of Overseas Chinese Corporate Groups
4. Impact of Asian Economic Crisis and Outlook for the Future

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