Why Hong Kong
and Southeast Asia
Can't Compete Globally
But Make A Few Families Extremely Rich
A review of
Asian Godfathers: Money and Power in Hong Kong and South-East Asia
by Joe Studwell
|One of the clichés about Hong Kong is the very low level of envy the city’s semi-Third World masses and middle classes exhibit towards their ultra-rich fellow-citizens, the tycoons. The traditional explanation is that the common man wants to be a tycoon himself one day. After all, the tycoons started out with nothing. They built up their business empires through hard work, calculated daring and entrepreneurial flair. And let’s not forget the role played by their Chinese cultural heritage. It is a pattern repeated throughout Southeast Asia, whose economic miracle of the last half-century owes much to the efforts and vision of several dozen outstanding overseas Chinese families.
Joe Studwell takes an axe to these myths. With few exceptions, the tycoons did not start out with nothing; most were born with silver chopsticks in mouths or married into money. Claiming humble origins is important to the Godfathers, however, because it helps legitimise their accumulation of vast wealth. And they need to do that because there was little or no competitive business acumen involved. Politicians handed them opportunities for wealth acquisition on a plate in the form of monopolies, concessions, privileged access to capital, protectionism and other forms of economic unfairness. Studwell describes how they didn’t create wealth so much as skim it off the region’s economies, which were growing on the global competitiveness of multinationals exporting from the region and the small local entrepreneurs who supplied them. And they are not all Chinese: the Godfathers include native Malays and Thais, Southern Asians, Jews and Brits.
This book essentially states the case for political reform in Hong Kong and Southeast Asia. The political systems that bestow great privileges upon certain business clans date back to Western colonialism and even earlier inward migrations into the region from other parts of Asia – from Persians in the Siamese court four centuries ago to the compradors of 100 years ago. Not for nothing do the region’s economies today look slightly feudal.
Today, Studwell argues, the lopsided commercial playing fields that keep the tycoons massively rich sap Southeast Asia of global competitiveness. Unlike more or less democratic Japan, South Korea or Taiwan, Hong Kong and Southeast Asia fail to produce world-class brands. Their huge conglomerates have been built on fortunes gained without a struggle from land, gambling, distribution, resources and other monopolies or cartels. Using these guaranteed sources of cash, they have expanded – not always wisely – into other areas (utilities in Hong Kong, for example) where political influence and financial might make up for lack of innovation, discernible strategy or other competitive edges. The result is a suffocating economic environment where opportunities are reserved to a favoured few and, as a result, a growing gap between rich and poor belies official boasts about per-capita GDPs – and we know where that can lead.
Studwell blames the exclusionary political structures, not the tycoons. The Godfathers are simply doing what comes naturally to them. (Who among us can put his hand on his heart and swear that they have never fantasised about being a member of the Hong Kong property cartel, making a 60 percent profit margin without lifting a finger?) But even if the tycoons are a symptom rather than a cause of this rot, they are undeniably illuminating, not to say fascinating.
Strictly speaking, the gory details of the Godfathers’ backgrounds and private lives need not be in this book. Studwell could have presented a convincing critique of the region’s political and economic structures without including specifics about the corruption, the insider trading, the ripping off of minority shareholders, the chief slaves, the gwailo running dogs, the late-morning massages, the mistresses, the golf, the vanity, the bullying, the toadying, the evangelical Christianity and other colourful glimpses into this bizarre world. But what better way to digest dry politics and economics than with generous portions of juicy dirt? And, thanks to considerable research into these people’s personal affairs, he presents compelling evidence that bolsters his core thesis. Some of the politicians and tycoons mentioned in Asian Godfathers are known to be slightly thin-skinned and prone to vengeance. So Studwell – a husband and father – let a lawyer go through the manuscript with a view to avoiding bankruptcy, jail or who knows what else. But for the most part, he names names. He will not be received with open arms in some quarters of Asia’s ruling elites after publishing this, but a warm welcome for the book from readers would deservedly make up for that.
Disclosure and a shameless plug: Joe Studwell is an occasional drinking buddy and trader of gossip with this reviewer, whose own book, We Deserve Better: Hong Kong Since 1997, published around the same time, is arguably quite complementary to Asian Godfathers in that it chronicles the Godfather system in Hong Kong since the city’s return to China. Joe believes Hong Kong represents the region’s best hope of the sort of reform that would give Southeast Asia a fairer and more competitive economic system. If We Deserve Better is right, the region is in for a long wait.
In a similar vein: A review of Uneasy Partners – The Conflict Between Public Interest and Private Profit in Hong Kong by Leo Goodstadt and Land and the Ruling Class in Hong Kong by Alice Poon