The Bamboo Network

Topics: Cheung Kong Holdings, Management, Hong Kong Pages: 5 (1709 words) Published: October 14, 2008
The Bamboo Network Explained
What is the ‘bamboo network’?
The bamboo network refers to the conglomerates propelling Southeast Asian economies which started as small family businesses run by overseas Chinese. The businesses are managed by the family of the founder, and are run with strong Confucian values. The combined output of the 55 million overseas Chinese is equal to a good-sized country, or close to $600 billion. Chinese expatriate workers are integral to economic success in countries such as Singapore, Thailand, Malaysia, Indonesia, Taiwan, Hong Kong, the Philippines, and Vietnam. Most of these conglomerates are started by Chinese expatriates who move country and start out with little or no savings, work hard and earn enough to start their own businesses, and constantly reinvest to maximise their cash. Typically, a successful family will own many businesses spread over a number of countries. Control of the business is general passed from generation to generation, and since for the most part the receivers of the business have already had an active managerial role, the transitions tend to be quite smooth, as opposed to the western idea of a big takeover with sweeping changes and redundancies all round. Li Ka-Shing is a prime example of a Chinese expat in the bamboo network. Li’s father died when he was 15 so he dropped out of school and got a job labouring at a plastics company to support his family. He worked there for 16 hours per day. Eventually, he had saved enough money to start his own business, Cheung Kong Industries, which specialised in the manufacture of plastics. He then expanded the organisation into a leading real estate investment company, and eventually acquired Hutchison Whampoa, a company with the world’s biggest port and telecommunications operations, and Hong Kong Electric Holdings Limited. Li Ka-Shing’s son, Victor Li, serves as managing director and deputy chairman of Cheung Kong Holdings Limited. Y.C. Wang is another example, with his Formosa Plastics Group. Each of his 10 children holds an executive position in the family business, and his brother is president of Formosa Chemicals and Fibre. How are businesses within the bamboo network structured?

Most, if not all managerial positions within a company in the bamboo network will be filled by family members. This means that there is a significant amount of trust at the top of the company, as well as loyalty and flexibility. It also means that the top business executives are more likely to sit and have a conversation to plan company strategy or discuss issues rather than handing each other paperwork or arranging formal meetings. Instead of meetings with expensive lawyers and accountants in formal settings, there are conversations between friends and relatives. Kinship, dialect and common origin provide the basis for mutual trust in business transactions in the network, even when conducted at great distances. A common set of values exists in the bamboo network which includes hard work, conscientiousness, loyalty to superiors and trust among family and friends, which allow many of the bamboo network businesses to get around government-imposed barriers. The fact that minimal paperwork is involved also means that there is no paper trail, should there be any government investigations of the company. The bureaucracy embedded within most businesses in Western culture is much less prevalent in Chinese businesses, as the personal relationships the management team have with each other are very strong, and there is less of a hierarchical structure given the relationships are a lot closer. As mentioned before, the business will generally pass from one generation to the next, typically giving the sons preference over the daughters in terms of company leadership. The head of the family will be the chief decision maker, and any sensitive information will be on a strict need-to-know basis with regards to non-familiar subordinates. Trust is one of the most...

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