Confucius and the Chinese way of doing business

14 March 2003

By Fiona Carruthers

Carrying out fieldwork research in the interior of Sarawak, Eastern Malaysia, in the late 1990s, anthropologist Yao Souchou was struck by the harsh remoteness in the township of Belaga on the muddy banks of the Rejang River.

Over quiet evenings, made loquacious by bottles of Guinness Stout and plates of wild boar in ginger sauce, Chinese traders who had come to make their fortunes told Yao of their bittersweet life in the jungle.
Their desire to give meaning to their existence in such a god-forsaken place is discussed by Yao, a senior lecturer in anthropology, in a new book. "The narrative of toil told and retold has risen out of the need to recast the doubt about their life's work, and to convince themselves that all their endurance and sacrifice has been worthwhile."

The qualities on display in this story have long been considered the secret to the success of ethnic Chinese abroad. It is the same narrative that has encouraged commentators like Herman Kahn and management gurus like Gordon Redding to romanticise Asian economies in Confucian societies - Japan, Korea, Taiwan, Hong Kong and Singapore - as something to both admire and fear. In the so-called Confucian Capitalism thesis, economic success of Chinese diaspora is attributed to Confucian virtues and the all important social relations (guanxi) and interpersonal trust (xingyong) operating in the business world.

But what is really going on with this narrative of joyless toil? Who stands to most benefit from it? Can the success of Chinese migrants abroad be attributed to Confucian heritage? How do the Chinese really conduct business? And what are lessons of their experiences for the West?

In Confucian Capitalism: discourse, practice and myth of Chinese enterprise (CurzonRoutledge 2002 $95), Yao unravels the Chinese line on the success of its migrants and of the Asian tiger economies.

"Again and again, Chinese characteristics are formulated by turning to Confucianism and other philosophies of ancient China," he writes. "These characteristics are made to explain the 'facts' of wealth and economic achievement of ethnic Chinese." He goes on to argue that this narrative "involves a great deal of fantasy invented by the business school gurus and the Chinese themselves. When we subject the proposition of Confucian capitalism to close scrutiny in the context of real business practices, many of these propositions simply fall apart."

In explaining how the Chinese diaspora functions, Yao terms the phenomenon "immigrant enterprise syndrome". Far more interesting than the tantalising idea of free-floating Confucian virtues, Yao examines how it is actually the anxiety of the immigrant experience that fuels and drives this group to sustained high levels of achievement. "When Confucian capitalism describes the world of hard work and sacrifice in the Chinese enterprise, it draws from and elaborates on the anxiety of the 'immigrant experience'," Yao writes. Organised around the family, Chinese enterprise abroad is much more than about making money. "It is an existential project that refashions people's life in the new country by striving to make good the loss of wealth and social status they previously enjoyed."

In an intriguing twist, Yao concludes with a warning for those intent on further romanticising the image of the dutiful hardworking Chinese migrant, driven by feelings of anxiety and insecurity. Yao suggests Confucian capitalism is nothing more than a fantasy for a 'new' form of economic activity, one that is more efficient, more profitable, less competitive and violent than those methods practised in the Western corporate world. The current Asian financial crisis is a timely opportunity to examine the costs and merits of post-Confucian economies, the 'magic' of Chinese enterprise - and to assess the reason why the remarkable growth of East Asian economies has also created casualties.

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