Business Asia SPRING 2010

Gambling Kings of Asia:

An entrepreneurial story

Thaksinomics
Cybercrime in China

Winning in Asia
Staff List

PRESIDENT Jeremy Vasquez EDITORIAL

EDITOR-IN-CHIEF Pamela Hidajat So Young An
Suthinee Buranaphong
CHIEF ADMINISTRATIVE OFFICER Phoebe Yu Eric Ang Teck Chin
TREASURER Bethany Zhang Deborah Chian Peng Chong
EVENTS COORDINATORS Grace Chan Brandon Ho Teck Hon
Mary Forman Richardson Handjaja Kilis
Joshua Lyons Seo Hyun Kim
Nik Kumar
DESIGN Moqian Chen Jonathan Lau
Michael Hong Diya Li
Cerise Marcela Yun Qi Mok
Joseph Ning
COPY EDITORS Chelsea Dengel Edwina Regina
Richard Wei Sandy Tun
Richard Wei
BUSINESS ASSOCIATES Jessica Cheng Cathy Meng Xue
Wing Wai David Lam
Jill Da Eun Seong CONTRIBUTORS
Ju Song Julie Lam, University of Hong Kong
Bethany Zhang Andy Li, Chinese University of Hong Kong
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Asia Business Forum. We are an independent student organization located
at Cornell University who produced and is responsible for the content of LET US KNOW WHAT YOU THINK at
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Cover Art by: Moqian Chen
 5 |Editor’s Letter

GENERAL BUSINESS

7 | Rising Regionalization and the
Chiang Mai Initiative
by Richardson H. Kilis

10
A deeper look into the Chiang
Mai Initiatives

8 | India’s Renaissance: Golden

Pathway of the
Emerging Market
by Nik Kumar
India’s next steps after the INVESTING
financial crisis
18 | China’s Shroud of Secrecy is

Table of Contents
Not Friendly to Those Outside

10 | Toyota’s Crisis of Confidence

of it
by Jonathan Lau

Issue No. 3, Spring 2010

by So Young An
How Toyota lost sight of its Behind China’s
focus on quality economic success

12

| Japan: A New Government
Battles Old Challenges
by Joseph Ning 28 20
TECHNOLOGY
| Cybercrime in China
A look into Japan’s by Eric Ang
political system Information revolution has

13
altered the world, but what
| Thaksinomics: A Tool For does this mean for China?
Economic Improvement or

22
Political Power | The Chinese Epoch of
by Suthinee Buranaphong Online Shopping
Thaksinomics has led to by Julie Lam
phenomenal growth, but is China’s e-commerce boom led
it sustainable? by Taobao

16 | Watch Your Step: Hong Kong

Legaland Compliance Issues
for Businessmen ENTREPRENEURSHIP
and Employers
24 | The Gambling Kings of Asia

13
by Andy Li by Yun Qi Mok
Business law in Hong Kong The two people you never want
to gamble with

28


| Kai-Fu Lee
by Richard Wei
The man behind Microsoft
Research Asia and
Google China

28
24
| Top 10
by Richard Wei
The ten wealthiest people
in Asia
 REAL ESTATE CAREERS
32 | Hong Kong’s Real Estate
Market Recovery -
What’s Next?
48

| Investment Banking in
Hong Kong
by Christine Seo Hyun Kim
by Cathy Meng Xue A glimpse at finance internship
Post financial crisis situation for in Hong Kong
HK Real Estate Market

34

| Real Estate in Singapore
by Grace Chen
49 | The ‘Chimerican’ Partnership:
Knowing the Chinese
Counterpart

41
The impact of financial crisis by Christine Seo Hyun Kim
on Singapore real estate Understanding business context
in China

LIFESTYLE
Table of Contents

36


| Trivia of Southeast Asia, Part 1
by Brandon Ho & Yun Qi Mok
Facts about countries in South
Issue No. 3, Spring 2010

East Asia

38
38
| Outdoor Sports and Activities
in Indonesia
by Edwina Regina
What Indonesia’s nature offers

41


| The Art of Dim Sum
by Brandon Ho
The wonders of Dim Sum

INTERVIEWS
42 | China’s Peaceful Rise: An
Oxymoron in the Making?

48
by Deborah Cheong
An interview with Professor
Bush, the Director of the
Center for Northeast Asian
Policy Studies

44

| Implications of Cross Broder
Investment Activities
by Diya Li
An interview with
Professor Karolyi, a professor
in investment management

46 | Entrepreneurship in China,
Part 2: The Business

34
Environment
by Sandy Tun
An interview with Kevin
Mc Govern, an entrepreneur
in China
 will continue to prove its strength
Asia throughout the year. According
to the Chinese zodiac, 2010 is the year of the
golden tiger, which symbolizes courage and
fearless souls. And so in this issue, we continue
to focus on the major countries in Asia and
introduce you to ongoing developments in
other nations. We also cover the changing
business landscape in Asia that is affected
by new regulations, political issues, and the
financial downturn.

Editor’s Letter
Business Asia has successfully increased the
number and scope of our articles. Our mission
is to present articles written by student leaders at Cornell University and
other partnering universities to broaden students’ perspectives on business
issues in Asia. Business Asia continues to focus on global partnerships
with various universities to further our mission to promote awareness of
business issues in Asia to students. We owe the success of this issue to
our dedicated staff at Cornell University, our correspondents throughout
Beijing and Hong Kong, and our partners at the University of British
Columbia, Princeton University, Boston University, and Yale University.

Finally, we value your opinion as a reader. We would greatly appreciate

it if you can take a minute to fill out our readership survey available at
http://www.cubusinessasia.com, where you can also learn more about
our past issues and our organization. We are also actively looking for new
contributors and partners, and we welcome anyone who is interested to
email us at cornell.asia.business.forum@gmail.com.

Pamela Hidajat
Editor-In-Chief
 NE
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 General Business
the International Monetary Fund (IMF), which has been

Rising Regionalization criticized for its failure to bring immediate recovery in 1997.
In a 2001 interview with the Far Eastern Economic Review,
then Managing Director Horst Köhler expressed his support

and the Chiang Mai for the initiative and stated that regionalization complements
rather than opposes the IMF. He also saw the need for the
IMF to rethink its role in maintaining global financial stability

Initiative following the Asian crisis.

By Richardson H. Kilis, Cornell University
There has even been talk of establishing a similar
system for European countries, in light of Greece’s economic
woes. Although the IMF has not explicitly supported such
an arrangement due to the lack of specific proposals,
economists believe a hypothetical European Monetary Fund
will not compete with the IMF. They highlight the need to

O n March 24th, thirteen countries—ten members
of the Association of Southeast Asian Nations
(ASEAN), the People’s Republic of China, Japan,
and South Korea—moved one step closer toward regional
financial cooperation and stability. The Chiang Mai Initiative
Multilateralization Agreement, a currency swap arrangement
drawing from a foreign exchange reserves pool worth $120
billion USD, came into effect.
The Chiang Mai Initiative (CMI) was conceived
on the heels of the 1997 financial crisis that rocked Asia’s
economies. It was announced by the ASEAN+3 ministers of
finance in May 2000 during the annual meeting of the board
of governors of the Asian Development Bank (ADB). The
CMI called for an expansion of the existing ASEAN Swap
Arrangement as well as the establishment of a network of
bilateral swap and repurchase agreement facilities among
ASEAN and the three East Asian countries. By October
2009, it had grown to an intricate network of arrangements
worth $90 billion USD with an additional $2 billion USD
available exclusively within ASEAN.
Following talks of expansion, ministers of finance
manage problems on a case-by-case basis instead of applying
global governance.
Many feared that the 1997 financial crisis destroyed
any hope of regional cooperation in Asia. The multilateral
CMI disproves this sentiment with countries agreeing to
help one another recover from a liquidity crunch. It includes
new mechanisms for surveillance and monitoring to reassure
lenders. Despite the complex arrangements, no country has
drawn from the pool of foreign reserves, and the system has
yet to be tested.
Discussion on the benefits of regional cooperation
has grown louder over the past 20 years, according to the ADB
Managing Director Rajat Nag, but the breakthrough was
made with the acceptance that not all parties would benefit
equally. Opposition to regional groupings has softened over
the past several years, but economic integration in Asia still
has a long way to go because there is no such precedent in its
history. BA
Country Contribution (US Dollars)
Brunei Darussalam 30,000,000

and central bank chiefs of the participating countries agreed Cambodia 120,000,000
on December 28th to consolidate this loose network. The Indonesia 4,770,000,000
expanded multilateral arrangement entitles each participant Laos 30,000,000
to swap its local currency with the U.S. dollar for an amount Malaysia 4,770,000,000
up to its contribution multiplied by its respective purchasing
Myanmar (Burma) 60,000,000
multiplier.
Early critics questioned whether the CMI would Philippines 4,770,000,000
prevent another crisis or delay badly needed reform in Singapore 4,770,000,000
Asian economic systems. In an editorial following the Thailand 4,770,000,000
announcement, the Asia Times wrote, “The idea that the Vietnam 1,000,000,000
existence of a currency swap arrangement or the wider
People’s Republic of China 38,400,000,000
concept of an Asian monetary fund […] could have
Japan 38,400,000,000
prevented the Asian crisis or the worst of it, is both wrong
and politically noxious.” South Korea 19,200,000,000
The CMI almost certainly drew the attention of Source: Ministry of Finance, Japan

BUSINESS ASIA • Spring 2010 • 7

 General Business

India’s Renaissance:
Golden Pathway of the
Emerging Market
[By Nik Kumar, Cornell University]

India has propelled itself robustly forward during the last

decade, utilizing its booming economy to cultivate an attractive
environment for independent investors and foreign companies. As

Source: http://www.flickr.com/photos/humayunnapeerzaada/370031898/sizes/o/
Photograph by: Humayunn N A Peerzaada
one of the few markets not catastrophically affected by the recent
financial crisis, India is readying itself to push even further and
take on its problems of terrorism, lack of credit liquidity, and poor
infrastructure in an effort to become a true global superpower.

8 • BUSINESS ASIA • Spring 2010

S
ince the world entered the 21st century, India has
blossomed as an emerging market and put itself
at the forefront of business leaders, investors, and
foreign corporations. While American markets
lost a fifth of their value in the last decade, the Indian
Sensex index leaped 240% in the same period. Today, as a
prominent member of the influential BRIC (Brazil, China,
India, and Russia), the nation has turned its economy into
a dynamic one that threatens the economic supremacy of
the Western elite. Allan Conway, head of emerging markets
at Schrodes, the money management company in London,
likens India’s rise to postwar Japan. In addition, Jeff Immelt,
General Electric’s Chairman and CEO stated that “India
has never offered us more potential than it does today. If we
❝ India has never offered us more potential than it
does today. If we can grow at the same pace as the
Indian economy, we can be a great company. ❞
can grow at the same pace as the Indian economy, we can
be a great company.” Notably, since 2002, India’s economy
has grown by eight to nine percent per year on average.
The country’s financial system has become less regulated,
allowing India to become a more established and integrated
member of the global economy.
As India looks to build itself internally, it still faces
several obstacles that it needs to iron out. As Mark Mobius
puts it, “India’s emerging market has room to run, but the
beginning could be bumpy.” Currently, over-regulation in
the financial markets, while significantly less than previous
levels, is still prominent. India’s import duty tax is prohibitive,
adding almost 45 to 55 percent to the price of goods. In
addition, securitization is limited and there is notably a very
small and illiquid corporate debt market. Banks in India
are generally hesitant to give out too much credit, with
approximately half of depositors’ cash being constrained
in government-issued bonds. While these characteristics
are a dent in India’s hopes for growth and expansion, they
have also proved to be a shield of protection against the
worst of the global financial crisis. The nation had very
little exposure to complex structured products, and thus
the financial sector had essentially been protected from the
Collateralized Debt Obligation (CDO) subprime disaster.
Another problem facing the nation is the lackluster
market for corporate debt. As a result, companies have
relied intensively on foreign capital and equity issuance.
As a result, a lot of “hot” money has flowed into the
Indian stock market, making private equity a large source
of funding outside of stock markets. Although the crisis
has had a limited impact, profits have decreased rapidly,
exporters have been affected, and industrial sectors such
as automotive, cement, and real estate have contracted
severely. In addition, banks are becoming even tighter on
their credit and lending even less.
Jeff Immelt
Chariman and CEO of General Electric
In an effort to combat this, the Reserve Bank of India has
engaged in a series of actions to free up the market and inject
liquidity, but what really needs to be done is to make sure
that liquidity moves toward the private industry. As foreign
capital dries up, the government needs to heavily invest in
infrastructure development to rejuvenate the economy. In
addition, to encourage banks to fund infrastructure demand,
the government needs to provide appropriate guarantees to
cover the credit risk of large projects. This will encourage
banks to lend to corporations again and restart the cash
flow cycle.
India’s Renaissance to an economic power has been
spectacular, and to continue down the golden pathway the
government needs to lift the nation out of its infrastructure
doldrum that is weighing the country down. Once credit
eases and liquidity flows in India, the economy of this
Asian Tiger will continue the journey to glory. Today, India’s
emerging market could be likened to its native elephant,
slow and lumbering getting to its feet, but once up and
standing strong, its economy and consumption appetite will
be voracious. BA
BUSINESS ASIA • Spring 2010 • 9
 General Business
Toyota’s Crisis
of Confidence
[By So Young An, Cornell University]
T
he second largest manufacturer of automobiles,
Toyota, is now facing its biggest crisis yet.
As soon as it overthrew General Motors to
reach the throne of the largest automobile
manufacturer, Toyota had to make an embarrassing recall
of 437,000 hybrid cars worldwide due to a faulty brake
system. The recall left Toyota with a humiliating black
mark on its image. Many consumers still feel betrayed
by Toyota, and this loss of faith has impacted Toyota
10 • BUSINESS ASIA • Spring 2010
Source: http://www.flickr.com/photos/davidvillarreal/4408803083/sizes/o/
Photograph by: David Villarreal Fernández
sales. Now, Toyota is experiencing the largest recall
in automotive history, and it seems that this crisis will
not stop anytime soon. As of February 2009, Moody’s
Investors Service confirmed it had placed the Aa1 senior
unsecured long-term rating of Toyota under review for a
possible downgrade.
In order to restore the company’s image and
rescue its credit from the abyss of distrust, Toyota needs to
rectify its mistakes. It suspended the sale of eight popular
models, including Corolla, for potential safety problems.
The company said that it would provide free alternative
transportation nationwide to owners while their recalled
cars were being repaired. Furthermore, Akio Toyoda, the
president of Toyota Motor Corp., held a news conference,
offering a “heartfelt apology” to customers. Mr. Toyoda
said that he and the company would establish “a special
global quality committee” and have advice from outside
experts to re-exam and re-evaluate everything in Toyota
that is related to consumer safety.
Why couldn’t Toyota see this problem before
launching the model into the market? If they had tested
their models enough, they could have been able to avoid
this huge crisis. The recall of the Prius model in particular
factory with a new workforce (due to stability concerns).
Any new Toyota factory would produce a model that was
already once built in an existing Toyota factory because
doing in this way minimized quality control variable.
Experts say that this “recall crisis” might be caused by
Toyota pursuing its new contradictory principle: unification
of components, localization and abrupt expansion.
Japanese press
named this recall the

“Watanabe’s curse, ”
has increased year by year since 2000 and the question of
fundamental safety has been lurking under the surface of

suggesting that there

consumerism since 2005. The question one may ask is:
what has been wrong with Toyota since 2000, and why is
it seemingly unfixable?
Experts say that one of the reasons can be
attributed to flawed entrepreneurship by Katsuaki
was a problem with
Watanabe, former president of Toyota. Japanese press
named this recall the “Watanabe’s curse,” suggesting that decreasing production
costs which Watanabe
there was a problem with decreasing production costs
which Watanabe had pursued for 10 years. It claimed that as

Watanabe accelerated a decrease in costs of components,
Toyota started neglecting the quality of cars and safety
checks. Yomiwuri Press also agreed with other Japanese
press, adding that Toyota in particular did not check
outsourced machine components cautiously enough; the
brake pedal, which was the major cause of the recall, was
outsourced in an area with less stringent quality control
procedure. In addition, Toyota Union said that forcing
the plan to decrease by 30% production costs every year,
caused them to neglect safety checks of cars. Although
Toyota became the largest automaker in 2008, it had, by
March 2009, the greatest deficit recorded in the company’s
history. As a result, Watanabe retired his position and Akio
Toyoda became the CEO of Toyota as of June 2009.
Another factor of this huge crisis was increasing
national and global productivity in a short period of time.
In the earlier part of this decade, Toyota noticed weakness
among its U.S. competitors and opportunities in emerging
markets like China and India. As a result, Toyota began a
headlong expansion spree around the world. During this
enormous expansion process, Toyota abandoned its own
principle, which is to never build a new product in a new
(former Toyota
President) had
pursued for 10 years.
While Toyota regards this recall as a severe
crisis, other manufacturers of automobiles view it as an
opportunity for them. Experts say that Honda took the
greatest advantage of Toyota’s recall crisis; increasing its
market share by 5%. General Motors meanwhile re-took
the place of the largest automaker and Hyundai’s market
share increased from 5.3% to 7.5% in the U.S. Unlike
other automakers, Hyundai’s market share in the U.S. was
relatively low and thus, Toyota’s recall woes are allowing
smaller companies such as Hyundai improve their brand
images and make this short-term increase in market share
as long-term as possible. BA

BUSINESS ASIA • Spring 2010 • 11

 General Business
Japan:
A New
Government
Battles Old
Challenges
By Joseph Ning, Cornell University
E ven before the general elections that took place
on August 30th, 2009, the popular speculation
was that the Liberal Democratic Party of Japan
(LDP), the party that had ruled almost continuously since
the 1950s, would lose to its rivals, the Democratic Party of
Japan (DPJ). Multiple factors such as continuous economic
stagnation, a declining fertility rate, a growing population
of elderly citizens, an inefficient and cumbersome
bureaucracy, and the perceived incompetence of the
LDP leader, Taro Aso, contributed to a new era of DPJ
governance. The DPJ, led by Yukio Hatoyama, came into
power on a sweeping mandate. In an election with what
was estimated to have a 70 percent voter turnout, the DPJ
was able to garner 308 out of 480 seats, while the LDP
only managed to win 119. Yet, even in the face of this
momentous victory, Hatoyama, now the Prime Minister
of Japan, acknowledged that there was much work to be
done for his party, which has only ruled for 11 months in
12 • BUSINESS ASIA • Spring 2010
the history of post-World War II Japan.
Indeed, the dramatic circumstances of the
DPJ’s rise to power seem to have set the exceedingly
high expectations which it has dashed in the succeeding
months. During the election, Hatoyama and the DPJ
promised Japanese citizens significant changes including
restructuring the aforementioned bureaucracy, cutting the
fuel tax, raising the minimum wage, and granting each family
a monthly 26,000 JPY ($300 USD) stipend for each child
it has. Given the massive debt the Japanese government
accumulated from stimulus spending incurred by the
previous LDP administration, the new DPJ government
was already hamstrung to a certain extent about the actions
it could take to address the economic crisis.
In recent months, the DPJ government has
taken certain steps to try to lift the world’s second largest
economy out of recession. Hatoyama’s government has
injected another massive 7.2 trillion JPY ($80 billion
USD) stimulus package into the economy in December
2009. It also provided incentives to consumers to buy
energy efficient automobiles and appliances. Although
encouraging signs have shown on the radar, including a
decrease in the unemployment rate, deflation remains
a severe problem for Japan. Economic growth has also
disappointed those in the financial sphere, as Japan’s
economy underperformed the expectations of analysts in
the fourth quarter of 2009. Hatoyama’s party has taken hits
in the polls because of this and multiple financial scandals
that the party endured late last year. As the DPJ actively
seeks to fulfill its other campaign promises, such as shifting
power to elected officials from entrenched bureaucrats,
the government will find it increasingly difficult as it
struggles to maintain a united front. It also remains to be
seen whether Hatoyama will be able to effectively address
the long standing issues of low fertility, the growing elderly
population, and increasing government debt. BA
Source: http://www.flickr.com/photos/redjoe/18870451/sizes/o/
Photograph by: Joe Jones
A van with speakers roams
around Tokyo blasting political
propaganda admist the
presidential election season
 General Business

Thaksinomics:
Source: http://meeh.deviantart.com/art/Square-Face-Dude-19969506

a Tool for
economic improvement
or political power
Art by: ~Meeh

By Suthinee Buranaphong, Cornell University

BUSINESS ASIA • Spring 2010 • 13
 I
n July 1997, the Asian Financial Crisis raised
fears of a worldwide economic downturn. The
crisis first started in Thailand when former Prime
Minister Chavalit Yongchaiyudh declared to float
the Thai baht because of the collapse in real estate
and mortgage markets. Due to the Thai government’s
inability to solve this financial crisis, re-election occurred
subsequently. Prime Minister Thaksin Shinawatra came
into power and promised the Thai citizens to rescue their
economy from the recession with his economic policy,
namely Thaksinomics.
Thaksinomics is a set of populist policies that
aims at rural people, particularly in agricultural sectors.
Thaksinomics policies are implemented to increase in
loans from banks to farmers and extend payback periods,
to encourage small and medium-sized enterprises by the
One Tambon One Product program, to subsidize fuel
cost, to create the 30 baht universal healthcare program,
to privatize state-owned enterprises, and to build
megaprojects for public infrastructure .
After these policies came into effect in 2001,
Thailand’s GDP growth in 2002 reached 5.3%, the
highest since 1996, followed by 7.1% in 2003 and 6.3%
in 2004. Whether Thaksinomics led to this dramatic
improvement has become a point of significant debate.
Supporters claim that by injecting money directly into
households, these policies encourage more demand of
internal goods, thus making the economy less vulnerable
to external shocks. They also point out that the Thaksin
administration repaid the debt payment incurred from
the Asian Financial Crisis to the IMF. On the contrary,
critics of Thaksinomics argue that these policies are
What Thaksin’s Supporters say:
...by injecting money directly
into households, these policies
encourage more demand of
internal goods, thus making
the economy less vulnerable to
external shocks
14 • BUSINESS ASIA • Spring 2010
simply the traditional Keynesian fiscal policies which
stimulate the economy only in the short-run while
ignoring long-term development. They also question
the slower GDP growth of 4.5% in 2005. From the
economic point of view, although Thaksinomics seems
to mark a decent step in growth rate, the policies are a
destructive mechanism on the economic structure in the
long-run.
First, consider the most principal policy in
Thaksinomics—increasing loans to farmers, villages,
and small and medium enterprises. The government
ordered state-owned banks to increase loans to low-
income population especially in agricultural sectors and
also issued four-year debt moratoriums for farmers. In
short run, this policy stimulated the demand side of
the economy by increasing the budget constraint of
households. The increase in spending was observed
quickly after the implementation of the policy, leading to
greater investment and aggregate output. As mentioned
earlier, from 2002 to 2004, the reported GDP growth
rates were 5.3%, 7.1% and 6.3% respectively. However,
problems arose when banks made loans without due
diligence to people who had little means of repaying
the loans. In addition, banks cannot infinitely make
extended loans. The newly issued loans accumulated
with previously loans increased the percentage of non-
performing loans (NPL). Moreover, this policy created
illusive consumption power that led to overspending.
People did not fully recognize that their purchasing
power was funded by borrowing future income . This
is why the GDP growth rate eventually dropped as
the increase in demand did not originate from actual
What Thaksin’s Critics say:
...these policies are simply the
traditional Keynesian fiscal policies
which stimulate the economy only
in the short-run while ignoring
long-term development

increases in income but the illusion of wealth created by
the government. The massive amount of NPLs would
later on become the government’s burden and low-
income people would suffer from debt repayment due to
overspending. In the long run, this policy led the economy
in the wrong direction.
The second factor is the One Tambon One Product
(OTOP) program, which stimulates the development of
rural small- and medium-sized enterprises. The policy
encourages each region to come up with its own products
based on locally available resources. The government will
help promote these products on the national level. This
program was aimed at generating more economic activity
for local villages so that they obtain steady sources of
income and become less vulnerable to volatile economic
situations. However, in reality, to sell OTOP products,
the rural businesses were tremendously dependent on the
international financial situation. Instead of strengthening
Source: http://www.flickr.com/photos/specialkrb/4447892576/sizes/o/
local economies, the OTOP program exposed them even
more to external shocks. Local villagers are influenced by
every sway of the demand in external markets, thus losing
their competitiveness.
The third point of concern is the government
subsidy on oil prices. In the beginning, this subsidy led
to an increase in investment and aggregate output due
to the lower oil prices. However, in long run, this policy
Photograph by: SpecialKRB
contributed to a huge deficit in government spending.
It failed to encourage real GDP growth because the
observed increase in output and production levels came
from temporary monetary injections from the government
in the form of transportation cost subsidies. Sooner or
The “red-shirt”
movement,
many of them
followers
of former
PM Thaksin
Shinawatra
and his
policies, show
their support
on the streets
later, the government would have to pay off this deficit
by raising tax revenue or by adding tariffs to oil prices.
From the perspective of politics, this policy can gather
popularity for the political party currently in power.
However, it makes little difference in real economic
variables.
Lastly, we must analyze the 30 baht universal
healthcare program. This program guarantees universal
healthcare coverage for only 30 baht ($0.75 USD) during
a visit at any state hospital. At first sight, it was hailed
as one of the most successful policies, shown by the
massive number of low-income people who can now
enjoy medical services. Nevertheless, as time passed, the
government did not hold enough revenue to subsidize
the state hospitals and left them to fund the services on
their own. The medication became sub-par and hospitals
began to denypeople with healthcare cards.
In conclusion, despite the statistical increase in
GDP from 2002 to 2004, this boost of adrenaline did not
represent real growth in the economy but rather short
term response to government intervention, or in other
words, expansionary Keynesian fiscal policy. Although
Thaksinomics can turn the tides in the next election by
winning over voters, it is incapable of making long-term
improvements to the economy. Furthermore, this policy
can become destructive towards Thailand’s sustainability
and growth as people become dependent on the
government’s care, raising doubts to whether Thaksin
Shinawatra enforced Thaksinomics to further his own
political power or to improve Thailand’s economy. BA
BUSINESS ASIA • Spring 2010 • 15
 General Business
Watch Your Step: Hong Kong has long been
hailed as one of the best
Hong Kong Legal business environments in
the world. How does the
and Compliance often cumbersome legal
Issues for and regulatory framework
operate in such a business
Businessmen and utopia? What minimum
requirements and assets are
Employers considered indispensible in
By Andy Li Yu Hin,
The Chinese University of Hong Kong this laissez-faire economy?

Working within the Law
Your employee, whose job requires her to move and
arrange tables and chairs regularly, has just informed you that she
is pregnant. You, out of compassion, suggest that she temporarily
switch to another job with a lower level of physical demand, but
unfortunately you could be sued for discrimination against pregnancy
right away. However, employees are somehow not protected from
religious or sexual orientation discriminations.
Your employee has just made a serious mistake and he
was duly dismissed. To your surprise, your lawyers told you that
you should re-consider the dismissal because courts would weigh his
mistake against the negative impacts he will suffer as a result of the
dismissal. The judges can force you to withdraw the dismissal because
the employee would lose a substantial amount of long-term payment
due upon normal termination of the employment contract.
As the proverb says, “when in Rome, do as the
Romans do”. While most of the laws are in tune with
common sense, some of them are counter-intuitive. It
would be prudent for businessmen to pay attention to
minute details of the legal environment in which they plan
to trade in order to avoid legal complications. Lawyers’
advices are invaluable here. The most troublesome fields
tend to be employment and union laws, where different
jurisdictions have different views regarding the extent of
employees’ rights – usually at the expense of employers.
In Hong Kong, the employment law is written,
generally, in favour of employees. When we arrive at
a grey area, an employee’s legal position is usually be
privileged. The Labour Tribunal was set up to handle
employment disputes; employees can ask the government
for compensation due if their employers are unable to
pay their wages. Another notable feature in Hong Kong
is the lack of a statutory minimum wage level – which
might be a piece of good news to employers.
Dealing with the Taxman
Re-structuring a remuneration package to be more tax-
efficient? The taxman will chase after you in the name of deliberate
tax avoidance. Structuring such a tax-efficient package at the time
of employment? This time, you are perfectly within legal bounds.
Hong Kong has long been famous for its low tax
rates and simple, straight-forward taxation system. The
territorial concept is employed, which means that only
activities carried out within Hong Kong can be taxed. At
16.5%, the income tax for limited companies is certainly
conducive to investments, perhaps second only to tax
havens like the British Virgin Islands and Cayman Islands.
Then again, what is the fun of doing business if
you’re spending your energy following rules and regulations
all day long? The Hong Kong taxation framework allows

16 • BUSINESS ASIA • Spring 2010

you to use as many tax-efficient arrangements as possible,
provided that you adopt them right from the start. The
least you can do is taking $100,000 HKD ($12,888 USD)
out of annual profits as salary to take advantage of the
maximum personal salary tax allowance of the same
amount (for the fiscal year 2009-10). That’s $16,500 HKD
($2,127 USD) you take back from the taxman’s hands and
straight back into your pockets!
Meeting the Standards
You spotted a perfect opportunity in the Hong Kong
insurance market. You decided to abandon your bankrupt U.S.
Company and set up your business there as soon as possible to gain a
head start ahead of your competitors. When you apply for a license
at the Office of the Commissioner of Insurance, the guy replied,
“Insurance business? No problem! Cough up $10 million HKD in
capital, and find someone else to conduct your business. You failed the
‘Fit and Proper’ test for directors”.
While Hong Kong does not have strange laws,
like the prohibition of “naming a pig ‘Napoleon’” in
France, it does set a high entry requirement for two sets
of industries. The first is financial-related industries, most
notably banks, insurance companies, and money lenders.
The other set includes industries that would affect a large
number of consumers if they were to make a mistake.
Examples are education, food, and beverage industries.
In both cases, compliance requirements serve to protect
the interest of consumers.
Industries in Hong Kong have a tendency to
establish their own regulatory organizations. These
organizations set industry standards on quality and a
code of ethics. As the industries develop, regulatory
organizations generally become statutory bodies, thus
reinforcing the industry-specific compliance requirements.
Firms would have to meet the minimum requirements in
order to be granted a license to conduct business. Some
industries even have their own by-laws – more headaches
for executives, unfortunately. In the end, these shouldn’t
come as a surprise. After all, the regulatory requirements
are set by the industries themselves! BA
BUSINESS ASIA • Spring 2010 • 17
 Investing
China’s Shroud
of Secrecy is Not
Friendly to Those
Outside of It
By Jonathan Lau, Cornell University
E
ven before China emerged from the Great
Recession, investors had long been attracted
to the nation. China continued to grow and
significantly improve its economy; its GDP
grew by 8.7% last year. China has the tremendous growth
that provides huge opportunities for many firms, and it
does not have the political instability that other emerging
markets have. The statistics speak for themselves; China
now has three of the four largest banks by market
capitalization, and the two largest insurance companies.
China’s rise to prominence is quite apparent,
but what isn’t clear is how financial decisions are made
in this nation. The reason behind this is because China’s
18 • BUSINESS ASIA • Spring 2010
government, the Communist Party, and financial
Source: http://www.flickr.com/photos/zitona/3350210590/sizes/o/
Photograph by: » Zitona «
institutions are so entangled that it is difficult to determine
who really makes the final decisions. Consistent with how
the Communist Party operates, even attempts to speculate
government functions will put you in dangerous waters
with dubious secrecy laws. This is not to say that China
has not had incentive to make itself more transparent to
become more competitive in the global economy. On
the contrary, China’s State Administration of Foreign
Exchange recently announced that it would begin releasing
data on balance of payments on a quarterly, instead of on
a semi-annual basis, in an effort to make more economic
data available to global investors and policymakers.

Chinese officials employ a
similar approach in their
policy making; they want
to be ambiguous so that
they can use different
interpretations of what
they say, or in other words,
change their minds at will
However, the Chinese government loves to be ambiguous
and subtle, even if it means being deceptive. A small
example of this is the announcement made by Premier
Wen Jiabao in 2008 that China’s military budget would be
$60 billion, in stark contrast of Pentagon estimates of up
to $150 billion. According to The Economist, in light of the
news that Sichuan Tengzhong Heavy Industrial Machinery
Co. planned to buy out General Motor’s Hummer unit
last month, the Ministry of Commerce repeatedly told
reporters that it never received any “application” for the
deal, playing on its definition of “application.” Chinese
officials employ a similar approach in their policy making;
they want to be ambiguous so that they can use different
interpretations of what they say, or in other words,
change their minds at will. The only repercussions they
will face are criticisms and ridicule for being ambiguous
and unclear.
In the United States, investors pay undivided
attention to the Federal Reserve chairman, Ben Bernanke,
and the decisions he makes about the country’s monetary
policies. In China, there isn’t such a public figure that
investors can turn to. Along with ambiguous policies and
information, this is another contributing factor to the
existence of information asymmetry in China. Unequal
access to information provides those who have the
information an unfair advantage over those who do not.
However, this comparison is not fair to begin with since
China has never openly supported democracy.
On the other hand, there are some
important observations to be made. The close-
knit nature of China’s financial institutions
and government is somewhat related to
how the United States operate. High ranking
officials in the U.S. government have long
been criticized for having conflicting interests
that benefit industries from which they came,
instead of the overall economy. Known as
the revolving door in politics, this principle
states that highly influential individuals are
brought into government roles for a few years,
implement policies or petition for government
spending in such a way that is beneficial to
their industries, and return to their former
jobs once their service terms end. Prominent
examples include former Vice President Dick
Cheney, who came from the oilfield services
industry, former Treasury Secretary Henry
Paulson, and other high ranking executives who worked
at Goldman Sachs.
If the people who make financial decisions in
China are handpicked by the Communist Party itself,
as many of the country’s banking executives led careers
that were carefully managed and predetermined, then
will there be any conflicts of interest? They might not
have incentives to make conditions more favorable for
any one industry, but they can still benefit themselves.
Many examples serve as indirect proof. Chinese banks
can be described as pure utilities, since the government
takes an active role in making important credit decisions.
Because of this, a firm’s greatest asset in China is often
its ties to the government, which often determine its
success. When such importance is placed on government
relations, unfair play becomes a concern. China has long
been notorious for a place of insider trading, especially
between government officials and businesses
Coupled with the fact that China still does not
have the regulatory framework to ensure investor safety,
as companies still post false and misleading financial
statements, the average investor can only be cautious
when investing in China. The growth and investment
opportunities are certainly there, but it becomes much
harder to pinpoint true opportunities when they are
shrouded in secrecy. Perhaps the only conclusive thing
from China’s ambiguity is that those who can secure good
government ties will most likely benefit the most. BA
BUSINESS ASIA • Spring 2010 • 19
 Technology

and tearing down the barriers

of formerly reclusive countries
like China. Indeed, China’s
widespread adoption of the

CyberCrime Internet has heralded a new age

of transparency and freedom
within its borders, with social
networking tools like Tencent’s

in China QQ leading the pack. However,

just as every rose has its
thorns, China’s disgruntled
By Eric Ang, Cornell University intellectual elites have been
taking advantage of this new-
found freedom for their own
nefarious purposes.
In January 2010, Google
China disclosed in a blog post
that it had detected a “highly
sophisticated and targeted
attack on [its] corporate
infrastructure originating from
China.” Google claimed that

T
this hacking attempt resulted
he information revolution of the past two in the loss of intellectual property from more than 33
decades has fundamentally changed the major multi-national corporations, including industry
world, enabling fast and instantaneous giants like Intel and Yahoo. More significantly, Google
exchange of information across the world asserted in the post written by Chief Legal Officer David

Hot Zone
(Source: Sophos)

China was one of the top countries from which malicious software and spam
spread in 2009

Top countries hosting malware on their Top countries relaying spam from their
servers, 2009 servers, 2009

USUS 15.7%
USUS 39.6% 15.7%
39.6%
China Brazil
Brazil 10.7%
China 14.7% 10.7%
14.7%
China
China 6.0%
Russia
Russia 6.3% 6.0%
6.3% India
Peru
Untitled 1 India 5.1%
Peru
Untitled 1 4.3% 5.1%
4.3% Turkey
Germany Turkey 4.7%
Germany 3.5% 4.7%
3.5% South Korea
South Korea South Korea 4.3%
2.7% 4.3%
South Korea 2.7%
2.5% Russia 3.5%
Turkey 2.5% Russia 3.5%
Turkey

20 • BUSINESS ASIA • Spring 2010

Drummond that a primary goal of the attackers was Despite China’s roaring economic success and
to access the Gmail accounts of Chinese human rights double digit GDP growths, the quality of life for the
activists. Google did not specifically accuse any source, average Chinese citizen may not be as high as it should be,
but it announced on January 12th, 2010 that it was “no due to the serious curtailment of freedom in all aspects
longer willing to continue censoring [its search] results on of life, especially in the online world. However, many of
Google.cn.” China’s intellectual elites have found ways to circumvent
In response to rising international pressure to the paternalistic state’s censorship and control of the
restrain cybercrime in China, Chinese officials have Internet. In doing so, these hackers have been labeled as
started to take action on hot-zones of cyber crime, hei-ke by the Chinese government, which translates literally
namely universities and online forums. The New York to “an evil person”.
Times reported that the hacking attempt on Google.cn Certainly, it is hard to condone the contributions
was traced to computers at China’s Shanghai Jiaotong that the talented hackers in China are making in the
University and Lanxiang Vocational School in Shandong realm of cyber-crime, but our condemnation of their
Province. actions must be weighed against the struggle that they are
On the 9th of February 2009, officials in Shanghai spearheading in order to achieve freedom of speech in
announced the bust of a major cyber-hacking ring, known the online world. The ideals of freedom which we hold
as Black Hawk Safety Net, which was labeled “the country’s so dear should extend into the online world just as the
largest distributor of tools used in malicious Internet Secretary of State, Hilary Clinton, remarked in her speech
attacks” by the state media. According to China’s Xinhua on Internet Freedom on January 21, 2010 that it was the
news agency, this online crime network generated around responsibility of the United States to “help ensure the free
$1 million from more than 12,000 subscribers. However, exchange of ideas, [an ideal that] goes back to the birth of
industry experts suspect that this move by Chinese our republic.” BA
officials served simply to placate the
rising chorus of voices calling for action
against cybercrime. Fundamentally, the Hacker Havens
enforcement action been taken by the (Source: Center for Strategic and International Studies)
Chinese government is but a tiny drop
in an endless, roiling sea. In a survey of
more than 600 information technology
Nations in Survey deemed to be
executives in 14 countries, China was of ‘most concern’ as source of
ranked 2nd in the world in terms of
the likelihood of being a cyber attack
cyberattacks
origin.
China’s online world resembles
a free-wheeling, anything-goes frontier US 36%
despite the Chinese government’s
state-run censorship system. Anything China 33%
from hacking software, which is
euphemistically named “training tools,” Russia 12%
to pornography can be easily gotten
U.K.
for a fee, despite China’s best efforts 5%
to clamp down on such trade, which it
France 2%
regards as an outrage of its Confucian
philosophy. China’s Internet censorship Germany 2%
policy is labeled as “pervasive” by the
OpenNet Initiative’s global Internet Other 10%
filtering map, the worst ranking used.

BUSINESS ASIA • Spring 2010 • 21

 Technology
The Chinese Epoch of
By Julie Lam, The University of Hong Kong
W
hile Google has become a verb for online
searching, Taobao has entered the Chinese
vocabulary as “online shopping”. With an
internet population of over 380 million growing at 18%
annually, China is poised to welcome the next e-commerce
boom. Taobao, which literally means treasure-hunting
in Chinese, is the largest shopping website in China
established by the Alibaba group in 2003. According
to latest figures, its membership count has reached 145
million, and its transaction volume of skyrocketed to
$99.96 billion RMB ($14.64 billion USD). How does
Taobao build its success upon a still developing Chinese
society?
22 • BUSINESS ASIA • Spring 2010
Online Shopping
Building Confidence
When eBay entered China, it expected to cultivate
and capture the China online shopping market easily.
Source: http://www.flickr.com/photos/sfllaw/380959080/sizes/o/
Photograph by: sfllaw
Instead, its payment system – PayPal, bank transfer, or
credit card payment – completely lost its sway in China
and dragged down the whole attempt to enter the market.
Jack Ma, the CEO of Alibaba, realized that
directly transferring payment to the sellers before the
confirmation of the receipt would not work in China.
Back in 2003, when Taobao was first established, online
shopping was still a growing trend in China. Transferring
money to online sellers that you never met looked exactly
like an online fraud to Chinese consumers. They didn’t
trust online sellers who can evaporate behind the screen
the moment you transfer money to their account. In short, delivery companies specializing in delivering goods for
the online shopping market was too immature for the sellers on Taobao. Other than providing a stable delivery
Chinese to trust online sellers. Buyers rejected to pay first channel, this drives down the market price. Delivery within
because of the risk; but sellers also rejected to ship the the border of China, excluding Taiwan, Hong Kong,
goods first for fear of buyers defaulting. and Macau, now costs only some 5 RMB ($0.73 USD)
Jack Ma found the balance by dividing the risk for the first kilogram and 1 RMB ($0.15 USD) for every
50/50. He established Alipay, a third party online payment subsequent kilogram of goods. The delivery merely takes
platform, and used it to process Taobao transactions. one or two days depending on the distance.
Sellers are obliged to ship the goods after buyers debit the
amount to their corresponding Alipay accounts. But the Adopting to the Chinese Market
amount will not be transferred to sellers’ accounts until The core ingredient in Jack Ma’s successful
the buyers’ receive the goods. formula is the ability to assimilate the model of eBay into
the context of Chinese culture. Shopping on eBay is an
Filling the Communication Gap individual activity that can be summarized in two steps.
The sense of insecurity in online shopping First, check the product introduction and feedbacks on
arose from the fact that the buyer cannot scrutinize the that specific product. Second, click the pay button or
commodity in person before clicking the pay button. The leave it. On the other hand, Taobao resembles an online
obvious solution is to facilitate communication between bustling market place. Besides going through the lengthy
the two parties who can exchange information about details and feedbacks of the products, buyers debate
the commodities, hence building consumer confidence. vigorously in the forums concerning the quality of specific
Embedding an instant messenger onto the website is products. They will also socialize with the online sellers on
undoubtedly the most plausible and effective option Aliwangwang for more information before paying. One
as it provides an instant platform for communication. side proclaims American simplicity and individuality, while
However, most online shopping websites, including eBay, the other imitates a Chinese community with emphasis on
reject this option as information exchange through instant human interaction. The experience of Taobao is a lesson
messengers is difficult to control. If users manage to settle on localization.
the payment privately through instant messengers, eBay’s
commission from online payment will disappear. From World Factory to International Brands
Jack Ma thought otherwise. He boldly introduced a The success of Taobao has a profound meaning
specialized instant messenger, Aliwangwang, in Taobao to to China. The growth equation of China has been acting
bridge the communication gap between sellers and buyers. as the world factory to cheaply produce goods for affluent
Besides enabling information exchange, conversation Western consumers. However, Taobao is enabling more
records in Aliwangwang also served as legal proof in case and more small- and medium-sized factories to take their
any disputes arise from the transaction. The immaturity first step in establishing their own brands. Knowledge and
of the online shopping industry in China turned out to be skills accumulated during their experience as manufacturers
an advantage for Taobao. Most users regard the security in the past decades plus the cost-effective online retail
provided by Alipay as indispensable. Consequently, private channel provided by Taobao enabled companies like 1%
settlement through instant messenger communication and Ando, shoes and clothing manufacturer-retailers,
is the least concern. According to many Taobao users, to sell their own products without a prohibitive capital
they prefer Taobao to eBay in China due to the former’s investment. Perhaps it is crazy to compare those local
provision of Aliwangwang. brands with world-renowned mega brands right now,
but let’s think of the costs cut by eliminating retailing
Logistics: Deliver It Cheap and Quick overheads. It is nearly impossible for Western companies
Shipment is another issue for online retailing. to compete with Chinese manufacturers in terms of
Fortunately, China has a well developed and cost-effective price. Taobao might have actually jump-started the era of
network for express delivery. The increasing popularity of Oriental leadership. BA
Taobao is accompanied by the rapid growth of express

BUSINESS ASIA • Spring 2010 • 23

 Entrepreneurship

The Gambling
Kings of Asia
By Yun Qi Mok, Cornell University

For at least half a century, two men ruled the

gaming industry of Asia from their thrones
in gambling paradises located in Genting and
Macau. Born into poverty in 1918 in Fujian,
China, Lim Goh Tong eventually amassed a
fortune of $4.2 billion USD, while Stanley Ho,
born in Hong Kong in 1921, rebuilt the fortune
of his clan to an estimated $9 billion USD.
These two great entrepreneurs, these two
famous Kings of Gambling, bet everything on
their wit and vision to craft empires, which
has undeniably changed and reshaped the
courses of their local economies.
Source: http://www.flickr.com/photos/strupler/3038756978/sizes/o/
Photograph by: nd.strupler

24 • BUSINESS ASIA • Spring 2010

Humble Beginnings
The cards dealt to Lim Goh Tong and Stanley Ho
were far from favorable, but like truly skilled gamblers,
they strove to pursue their own goals rather than wait
for fortune to fall into their laps. Lim grew up in a
village just after the collapse of the Qing Dynasty, a time
when China was being torn apart by foreign invaders
and local warlords. Political stability and peace were
unknown, and when Lim was 19, he joined the waves
of Chinese immigrants fleeing to Southeast Asia and
settled in Malaysia. He began to work as a carpenter, but
then ventured into the scrap metal and hardware trading
industries because the demand for heavy machinery after
the Japanese Occupation of Malaysia was enormous.
With such foresight, Lim embarked on his journey to
greater heights.
Unlike Lim who was born into poverty, Stanley
Ho was a shao ye, or “little master”, of the illustrious Ho
Tung family in Hong Kong, until he was thrust into
destitution when the family went bankrupt after the stock
market crash in 1934. He grew up pledging to become a
successful and rich man, a pledge which he ultimately kept.
He studied for two years at the University of Hong Kong
after receiving a scholarship, but had to flee to Macau
because of the invading Japanese forces. Working for a
Japanese import-export firm, he made his first fortunes
smuggling luxury goods into China during World War II.
According to Joe Studwell, author of Asian Godfathers:
Money and Power in Hong Kong and Southeast Asia, it was
then that Ho first gained his formidable reputation by
regaining control of his ship from a band of marauding
pirates. In 1943, he set up a kerosene and construction
business, which provided him the financial resources
necessary to build his real fortune.
The Casino Empires
As the story goes, Lim Goh Tong was enjoying
the crisp air of the Cameron Highlands one night in
1964, and conceived the idea of building a beautiful
casino resort on top of a mountain near Kuala Lumpur,
the capital of Malaysia. Research found the Ulu Kali
Mountains to be the ideal place to set up his resort,
despite it being an utterly remote locale. Wagering his
entire fortune on this dream, Lim began this monumental
task in the face of seemingly insurmountable odds of
success and disapproval from fellow businessmen, and
set up the Genting Highlands Berhad Company in 1965;
the road to his vast riches started with the construction
of what was to become the Genting Highlands Resort.
The project was finally completed in 1971, with him on
the brink of bankruptcy, with the opening of the resort’s
first hotel, and was heartily supported by Malaysia’s then
Prime Minister Tunku Abdul Rahman (as Lim’s project
was an effort to increase Malaysia’s tourism industry
without any government help). Because he dared where
no one else did, Lim became the sole holder of a casino
license in Malaysia.
Without any domestic competition, the resort
flourished, and in 2006 became the home of one of the
largest hotels in the world, the First World Hotel. Lim
catered his casinos to the local population by introducing
many Chinese games such as tai sai and pai gow instead
of western games which he believed his customers would
be unfamiliar with. Aside from providing table games,
Lim tried to create a place for children and families by
building vast theme parks, shopping plazas, and theatres,
not unlike the style of Las Vegas casinos. To make access
to the resorts more convenient, Lim spent over $73.8
million USD to build a series of roads and cable cars to
the resort. Lim did not stop with his business there, but
continued to diversify his empire by venturing into the
highly profitable plantation, power, oil, and gas industries.
By believing in what he called in his autobiography the
“power of conviction,” Lim built up his business step
by step, but unlike the traditional mercenary image of a
successful businessman, “avoid[ed] stepping on others’
toes and making enemies.” As former Malaysian Prime
Minister Mahatir Mohamad said, “even without the
advantages of higher education, [Lim] has proven that
nothing is impossible.”
Stanley Ho joined up with Hong Kong tycoon
Henry Fok, Yip Hon and Teddy Yip to win the bid for
Macau’s gaming monopoly by paying a colossal sum of
about $410,000 USD coupled with sweet promises to
the Macau government, then run by the Portuguese, to
promote tourism and develop Macau’s weak infrastructure.
Ho’s brainchild, the Sociedade de Turismo e Diversões de
Macao (STDM) was born in 1961 with the famous golden
Lisboa Casino at its helm. He also created the Shun Tak
Holdings Ltd. which was listed on Hong Kong’s Stock
Exchange, bought over the TurboJET, which brings
passengers between Hong Kong and Macau, took over
the Macau Jockey Club, launched Asia’s first football
and basketball lottery, and even an online casino website
called DrHo888.com (in Cantonese, the numbers 888 are
pronounced “faat faat faat,” which is synonymous to the
BUSINESS ASIA • Spring 2010 • 25
word meaning to prosper).
However, even Stanley Ho could not fight against
the momentous historical changes taking place between
the real political kings behind Macau, Portugal and China.
When Portugal finally handed Macau back to China in 1999,
Beijing began clamping down on what Frank Fahrenkopf,
president of the American Gaming Association, called
Ho’s “seedy” gambling businesses; by 2002, his forty
year monopoly in the gaming industry finally collapsed.
American investors, starting with Sheldon Adelson with
his glitzy $260 million USD Sands casino and $2.4 billion
USD Venetian casino on the Cotai strip, followed by Steve
Wynn and his $1 billion USD Wynn Macau casino, poured
into Macau, and they were determined to create a Las
Vegas of the East. Their casinos varied greatly from Ho’s
no-frills styled casinos, by including luxurious shopping
centers, first class restaurants, convention centers and
other forms of entertainment besides gaming, and this
novel concept did initially haul in great profits. However,
Ho was not fazed, and betting on his belief that Macau’s
gamblers were much more focused on actually gaming
than on the auxiliary entertainments provided by Las Vegas
styled casinos, Ho opened the Grand Lisboa, shaped like
a giant golden lotus, which cost $1 billion USD to build,
half the cost of Adelson’s Venetian casino.
When it came time for the showdown between
Ho and all his new competitors who include his own
children Lawrence and Pansy Ho, Ho swept them away,
controlling 30 percent of the gambling market, followed
by Adelson’s Sands which owned 22 percent of the
market in an estimate by Reuters in February 2010. In his
2009 Global Gaming Expo award acceptance speech, Ho
Pictures from
Left to Right:
Lim Goh Tong,
Stanley Ho
26 • BUSINESS ASIA • Spring 2010
remarked bluntly that “the success of one market model
cannot be repeated [in] another market.”
Unfortunately, his fame and rise to wealth, unlike
Lim Goh Tong’s path of steady hard work, has not
been without scandal. Openly polygamous, he has four
wives and seventeen children. Additionally, whisperings
of his underworld connections to Chinese triads have
surrounded his name for decades; prostitutes, shark
loaners, gangs, and drug dealers were known to lurk in
the shadows around his flamboyant and golden casinos,
especially during the regime of his monopoly. While
organized crime in Macau has disappeared on the surface
after China regained control of the ex-Portuguese colony,
there is little doubt that they continue their activities deep
underground, or, as the rumors say, in the VIP rooms of
the casinos. Despite the lack of evidence linking Ho to
these groups, Ho’s effort to expand his empire overseas
has been met with great difficulties; his bids for casinos in
Canada, Singapore, and even Australia were not approved
by the respective local governments. Nevertheless, Ho
believes that “what [he has] done over the years for Macau’s
gaming business and for the overall community, fulfilling
[his] obligations to society, [has been] a wonderful source
of happiness and satisfaction.”
s400/Genting+Lim+Goh+Tong.JPG, http://elitechoice.org/wp-content/uploads/2007/09/bronze-horse-headauction.jpg
Sources from left to right: http://2.bp.blogspot.com/_byWnUw6HNv8/SoUNf0W7_BI/AAAAAAAAAeA/24oPuu81VUU/
The Legacies
Lim Goh Tong passed away in 2007, leaving
behind an empire which nevertheless continues to grow.
Under the leadership of Lim Kok Thay, Lim Goh Tong’s
son, the Genting Group has expanded more than ever.
It forayed into the British gaming industry, and increased
its investment in London Clubs International which owns
 high end casinos throughout the world, and bought into
Stanley Leisure which is Britain’s largest casino operator.
More significantly, the Genting Group which recently
acquired the right to build the first Casino in Singapore
(along with Las Vegas Sands) in 2006 with a $4.5 billion
USD investment, is opening the doors of the Resorts
World Sentosa on Sentosa island this year. The Genting
Group managed to win the bid because of their brilliant
proposal detailing the construction of the first Universal
Studios theme park in Southeast Asia. Despite the risks
and costs being enormous, the Genting Group continues
in the spirit of Lim Goh Tong, taking up challenges and
hopefully turning them into success stories.
Operating in Singapore will undoubtedly be
difficult, because of the restrictions the Singaporean
government places on the casinos. For example, as a
disincentive to gamble regularly, an entrance fee of $70
USD has to be paid by local Singaporeans. In addition,
families can request that addicted family members be
barred from the casino. According to Citigroup analyst
Dominic Noel-Johnson, initial expectations for Sentosa’s
gaming revenues are “far too high,” and even meeting
the Citigroup gaming revenue estimate of around $1.2
billion USD is already very difficult. Nevertheless, the
Genting Group’s Resorts World Casino will have created
thousands of jobs, and will definitely let the Singaporean
72157613654349464/, http://www.flickr.com/photos/lim_lik_wei/3288449800/sizes/o/in/set-72157613990963221/
government win by drawing visitors who will have
spillover effects on hotels and tourism.
Despite Stanley Ho’s somewhat murky business
Sources from left to right: http://www.flickr.com/photos/travlinman43/3297173552/sizes/o/in/set-
dealings, he has in his own way brought prosperity to
Macau, changing its poor business condition into one
that is named by the World Bank as a “high income
economy.” More than 50% of Macau’s GDP is derived
from the gaming, tourism, and hospitality industries,
and thousands of jobs are created from those industries.
Despite the 7.3% crash of Macau’s gaming revenue in
2008, 2009 saw Macau’s gaming scene hit the jackpot
with record revenues of $14.875 billion USD. As the
economy picks up over the next few years, the numbers
are only going to increase.
In addition to molding Macau’s economy, Ho
was able to use his vast fortune to buy and donate to the
Chinese government a Qing dynasty relic of a bronze
horse’s head, originally stolen during the burning and
destruction the Yuanmingyuan Park, the Old Summer
Palace in Beijing, by foreign invaders. As a firm believer
in the power of education, Ho has also set up several
scholarships in his name, including one in Pembroke
College, Oxford.
Conclusion
Both Lim Goh Tong and Stanley Ho were self-
made men, who achieved everything through belief in
themselves and hard work. As Lim once said, “once the
goals have been clearly defined, with the greatest amount
of determination and hard work, one can conclusively
realise one’s goals.” In a similar vein, Ho once commented,
“I’m not a gambler. People call me the casino king, but I
don’t play.” The two men who built their fortunes from
other people’s failures in gambling at casinos know best
that lady luck kisses only those who have worked their
lifetimes for her. BA
Pictures from
Left to Right:
Grand Lisboa
(originally
opened by
Stanley Ho),
Genting
Highlands
(originally
opened by Lim
Goh Tong)
BUSINESS ASIA • Spring 2010 • 27
 Entrepreneurship
The Founder
Two of the world’s most powerful corporations,
Microsoft and Google, went head-to-head in court for
this man and the impact he is making. In the golden age
of technological advancement, he worked with the likes
of Steve Jobs, Bill Gates, and Eric Schmidt. He was the
founder of Microsoft Research Asia and Google China.
His name is Kai-Fu Lee.
Perhaps, Lee’s was one of the most unfortunate
paths to stardom. Lee became the focal point of the PC
and Internet world in 2005 when Microsoft sued him
and Google over violation of their non-competition
agreement. The case was eventually settled confidentially
Kai-Fu Lee
By Richard Wei, Cornell University
and soon forgotten, but the name Kai-fu Lee had left
its mark. Lee has served four dedicated years at Google
China, and within this period of time, Google China has
surpassed expectations to reach a market share of 43% at
the end of 2009, second only to Baidu’s 56%.
The Departure from Google
Was this too good to be true for Google China?
Well, it was. What has stifled the existence of YouTube,
Facebook, and Twitter in China—the PRC’s Great
Firewall—strikes again. One of Google’s missions is to
provide its users with the most objective, unbiased results
through its engine, a mission more or less impossible
China. It soon became clear to Google officials and the
international community that changes had to be made in
response to the censorship. In September of 2009, Kai-fu
Lee made the sudden and surprising announcement that he
28 • BUSINESS ASIA • Spring 2010
will resign from Google China and pursue his own venture
in mainland China. His new company is Innovation Works.
The Angel Investor
You must be asking yourself right now, “What
exactly is Innovation Works?” The company name hardly
reveals a clue about its nature. In reality, the purpose
of Innovation Works (Chinese: 创新工厂) is similar
in technique to an incubator, in that it provides start-
up funding for young and promising entrepreneurs and
their companies. However, Innovation Works will not
provide indiscriminate funding to all arrays of companies.
Lee announced that the company shall focus in three
fields: “Internet, mobile Internet, and cloud computing
technology.”
Photograph Source: http://www.cs.cmu.edu/afs/.cs.cmu.edu/Web/copetas/kfl.jpg
What can make a man give up a senior executive
position in one of the fastest growing corporations in the
world? A puzzling question indeed. Regarding this, Lee
gives a brief explanation in an interview with Rob Hof
of BusinessWeek. Lee says that the timing is perfect for a
company like Innovation Works because of the absence
of “angels” and significant early-stage funding in China,
thus Innovation Works will fill this void. In his best-
seller Chinese biography, Making a World of Difference: the
Kai-fu Lee Story, Lee emphasizes his burning desire to aid
talents in China and that one of the motivating factors
comes from the work and attitude of his father, a Chinese
scholar and historian. Throughout his professional career,
Lee has held hundreds of public lectures for Chinese
university students. However, these reasons combined
 Kai-Fu Lee’s Statement as Founder of Innovation Works:
❝ We will develop an optimized model to match
entrepreneurs, engineers, ideas, and capital, leading to
improved success rate and time-to-market. ❞
Source: http://www.clariotech.com/en/article/106-304-1.aspx
still don’t seem to be enough to cause Lee to suddenly
move away from Google. It is unclear to whether the
recent friction between Google China and the Chinese
government regarding censorship contributed to Lee’s
decision, but Google’s surprising threat to exit China
just 4 months after Lee’s absence adds another layer of
mystery to the matter. Lee himself has not commented
on any connections between Google’s dilemma regarding
censorship and his departure. Nevertheless, the timing of
the series of events incites speculation.
Despite the lightning-paced startup, Innovation
Works has ample funding and its methods are under way.
Innovation Works has already raised $115 million USD
from the likes of co-founder of Youtube, Steve Chen
and WI Harper Group. With a succinct and purpose-
oriented website (see below), Innovation Works has
attracted 7,000 resumes on its first day. This astounding
achievement further reflects the potential and enthusiasm
of the entrepreneurial environment in China. Without a
doubt, Kai-Fu Lee’s personal popularity and involvement
with education in China played key roles in this venture.
The Innovation Works website also has a fully functioning
English version, which aims to better open up the new
company’s future to global investment. On the website,
one can find the passionate and daring mission statement,
“Innovation Works will pro-actively collect, analyze, and
prioritize projects in Internet, mobile computing, and
cloud computing targeted at the Greater China market,
and build ‘dream teams’ to execute the most promising
ideas.”
The future looks bright for Innovation Works, not
only because of its excellent timing and strong backing,
but also because of the enormous rate of growth of the
Chinese entrepreneurial environment. As a prototype
angel investor, Innovation Works will be warmly welcomed
and supported by the citizens. In addition, Kai-Fu Lee has
acquired extensive knowledge and experience regarding
both fast-paced technology and executive management.
His leadership and charisma will undoubtedly guide
Innovation Works in the right direction. If Lee’s efforts
keep up, his company will discover and cultivate talented
minds while helping them to become giants in the world
economy. BA
Chinese Website of
Innovation Works
(Source: http://www.
innovation-works.com)
BUSINESS ASIA • Spring 2010 • 29
 Entrepreneurship

Top 10
This page will promise you a list of some of the most
prominent and influential people in the business
world. We will put aside the common stereotype
By Richard Wei, of the “filthy rich” and take a firsthand look at the
Cornell University
Top 10 Wealthiest Businessmen in Asia in 2009.

Net worth: $19.5 billion

Citizenship: India
1: Mukesh Ambani

Age: 52
Fortune: Inherited
Industry: Petrochemicals
Occupation: Chairman of Reliance Industries

Ambani is the overseer of India’s most valuable company by market share, Reliance Industries. Having
been a part of Reliance since 1981, he initiated Reliance’s backward integration strategy from textiles into
petrochemicals, and further into oil exploration and production.

Net worth: $19.3 billion

Citizenship: India
2: Lakshmi Mittal

Age: 59
Fortune: Inherited
Industry: Steel
Occupation: Chairman & CEO of ArcelorMittal

Mittal started out working in his family’s steelmaking business. Due to differences with his family members,
he branched out and took over the international operations of Mittal Steel. In 2006, the merger between
Arcelor and Mittal made this man the head of the largest steel company in the world.

Net worth: $16.2 billion

Citizenship: Hong Kong
Age: 81
3: Li Ka-shing

Fortune: Entrepreneurship
Industry: Real Estate, Retail, Ports, Plastics Manufacturing
Occupation: Chairman of Cheung Kong Holdings and
Hutchinson Whampoa Ltd.

Li, according to Forbes, is ranked the sixteenth richest person in the world and the wealthiest person of
East Asian descent. With his crown jewels, Hutchinson Whampoa Ltd. and Cheung Kong Holdings, he
is by far the world’s largest container terminal operator.

30 • BUSINESS ASIA • Spring 2010

 4: Kwok Brothers
Net worth: $10.5 billion
Citizenship: Hong Kong
Age: Raymond Kwok, 58; Thomas
Kwok, 59; Walter Kwok, 60
Fortune: Inherited
Industries: Real Estate
Occupation: Sun Hung Kai Properties
From their father, these three brothers inherited Sun Hung
Kai Properties, one of the largest real estate businesses in
Hong Kong and all of Asia.
7: Sunil Mittal
Net worth: $7.7 billion
Citizenship: India
Age: 52
Fortune: Entrepreneurship
Industry: Telecommunications
Occupation: Chairman of Bharti Airtel
It may seem surprising that our seventh place finisher is the
first electronics billionaire on our list. Though his fortune
does not rank at the very top, Sunil Mittal’s control over
India’s largest mobile phone service is not to be trifled with.

8: Tadashi Yanai
5: Anil Ambani Net worth: $6.0 billion
Net worth: $10.1 billion Citizenship: Japan
Citizenship: India Age: 61
Age: 50 Fortune: Entrepreneurship
Fortune: Inherited Industry: Clothing retail
Industry: Diversified Occupation: President of Fast Retailing
Occupation: Chairman of Anil Dhirubhai Ambani Group Our eighth billionaire comes from Japan, a country that has
traditionally been the economic leader in East Asia. The fact
The brother of Mukesh Ambani and the third wealthiest that Japan’s wealthiest man ranks only eighth in the continent
person in India, Anil Ambani is undoubtedly one of the may indicate a comparatively more even distribution of
most influential people in the Asian business world. wealth in Japan than in other Asian nations.

6: Lee Shau-Kee 9: Azim Premji

Net worth: $9.0 billion Net worth: $5.7 billion
Citizenship: Hong Kong Citizenship: India
Age: 82 Age: 64
Fortune: Entrepreneurship Fortune: Inherited
Industry: Real Estate Industry: Software
Occupation: Chairman of Henderson Occupation: Chairman of Wipro Technologies Ltd.
Land Development, Company Ltd., Hong Kong and China
Gas Company Ltd., and Miramar Hotel and Investment Residing in the tech-savvy Bangalore, it is no doubt that our
ninth-place billionaire controls Wipro, one of the largest
Hailed as “Hong Kong’s Buffet”, Lee Shau-Kee has a stake software companies in India. Wipro was originally a vegetable
in several of the largest firms in Hong Kong. Although his oil trading firm, but when Azim took over upon his father’s
wealth shrunk by almost half in 2009, he still landed himself death, he revolutionized the company and eventually entered
among Asia’s business giants. the technology sector.
Net worth: $5.6 billion Another set of brothers is here
Citizenship: India to wrap up our Top 10 list. They
10: Shashi &
Ravi Ruia

Age: 65 are in charge of managing one of

Fortune: Inherited
Industry: Steel, Energy,
communications, shipping
Occupation: Essar Group
India’s largest conglomerates, the
Essar Group, which has holdings
in multiple sectors, including
steel, energy, communication, and
construction.

BUSINESS ASIA • Spring 2010 • 31

 Real Estate
Hong Kong’s Real Estate
Market Recovery –
What’s next?
By Cathy Meng Xue, Cornell University
A
s of 2009, Hong Kong has the fifth most
expensive property market in the world,
next to Monte Carlo, Moscow, London, and
Tokyo. Hong Kong’s housing market was
severely affected by the global financial crisis. However,
after falling 18% in real terms (after adjusting for inflation)
from June to December 2008, residential price index rose
by 21% from 2008’s low point to August 2009, according
to the Ratings and Valuation Department. Hong Kong
Island, Kowloon, and the New Territories all saw strong
price increases in the first two quarters of 2009. Price
gains for luxury property have surpassed 40%.
Factors that have contributed to Hong Kong real
estate market’s recovery include a strong increase in buyers
from mainland China, the Hong Kong government’s
stimulus packages, and low interest rates.
The Chinese government implemented a
stimulus package amounting to 4 trillion RMB ($585
billion USD) in November 2008, reviving the Chinese
housing market and prompting a surge of mainland
buying in Hong Kong. As much as 40% of the current
new-home buyers come from mainland China, according
to the Wall Street Journal. Newspaper reports of luxury
properties sold to mainland Chinese at staggering prices
32 • BUSINESS ASIA • Spring 2010
are now commonplace.
Heavy intervention by the Hong Kong
government also helped – stimulus measures in May
2009 included $2 billion HKD ($256 million USD) for
the housing sector. Policies include that two months’
worth of rent for public housing will be paid by the
Source: http://interfacelift.com/wallpaper_beta/Df6a5a21/01638_darkknight_2560x1600.jpg
Photograph by: kwongyue
government; tenants paying additional rent will only pay
the basic rent; for non-elderly tenants, the government
will pay two-thirds of the rent.
The government also strengthened support for
the mortgage market. From September 2008 to March
2009, the Hong Kong Monetary Authority (HKMA)
increased liquidity assistance to banks including longer
borrowings from the discount window and foreign
exchange swaps and increased the maturity time of the
debts in the discount window from one to three months.
The HKMA also implemented measures that caused the
best lending rate – the basis for mortgage interest rates –
to fall to 5% in September 2009 from 5.25% in October
2008, which benefited borrowers. To stimulate borrowing
in the mortgage market, the Hong Kong Mortgage
Corporation (HKMC) issued, in October 2009, a Fixed
Adjustable Rate Mortgage program which enabled
 A view of the Hong Kong skyline from the Victoria Harbor
borrowers to lock in a predetermined interest rate within
an agreed period.
Due to the stimulus packages, Hong Kong’s
financial system remained liquid, confidence in the
economy and the real estate sector was sustained, and
borrowing and purchase were encouraged. Loans for
house purchase increased and transactions rose 10.6%
from January to August 2009, as compared with the same
period of the previous year.
Shortly after the real estate recovery, worries of
overheating began to surface. Since 2002, the government,
who owns all land in Hong Kong, has tightly limited
the supply of new land for housing purposes. In 2008,
completed dwellings decreased by 16.1%. The tight supply
Sources from left to right: http://www.flickr.com/photos/davelau/674275112/sizes/o/,
of new houses arguably contributed to the rise in property
prices. In the luxury market, the price-to-rental ratio, an
important yardstick to gauge whether housing is over-
priced, is 42% higher than that during the 1997-peak and
122% above its 1982-2009 historical average. Likewise, in
http://www.flickr.com/photos/trodel/3598488389/sizes/o/
the mass market, the latest reading is not only back to the
1997-peak, but also 53% higher than its historical average.
Moreover, the price-to-income ratio, another useful
indicator, is also significantly higher than that of the 1997-
peak as well as its historical average.
The above signs of over-pricing have incurred
concerns that low interest rates, high liquidity, and a tight
supply of new apartments can fuel irrational exuberance.
The rise in price is expected to continue, at least for the
near future. A housing bubble may be forming, which
usually means a sharp rise in property prices, generating
A panoramic view of Hong Kong at night from Victoria Peak
expectations of further increases and attracting buyers or
speculators who are intend to make a quick profit from
short term buying and selling. This again drives up demand
and prices to unjustifiable levels. However, an analysis
of the various key symptoms including overvaluation,
speculative activities, leverage scale, and expectations for
future price gains, shows that while current prices are high,
other indicators are yet to reach alarming levels. Moreover,
demand is currently mainly user-oriented, with 90% of
transactions in the mass-market property, suggesting that
a bubble may not have formed yet.
To prevent overheating, the Hong Kong Monetary
Authority has requested banks to lower the loan-to-value
ratio from 70% to 60% for residential properties priced at
$20 million HKD or above For loans less than $HKD20
million, the 70% ratio remains, but the loan amount is
capped at $12 million HKD. As a result, mortgage demand
has eased from a few months ago.
Ultimately, future demand will depend heavily on
whether foreign funds will continue to flow into Hong
Kong, which in turn is reliant on how fast the central
banks in the advanced economies exit their ultra-loose
monetary policies. With the global recovery still fragile, it
can be difficult for the U.S. and European central banks
to withdraw monetary stimulus in the near future. The
Hong Kong real estate market, while closely regulated by
a diligent and insofar, wise government, is soaring from
the bottom of the financial crisis with yet a small risk of
bubble formation, all pointing to a promising outlook, at
least in the near future. BA
BUSINESS ASIA • Spring 2010 • 33
 Real Estate
Real
Estate in
Singapore
A
s the wave of foreclosures brought on by
the subprime crisis swept across America,
American property prices suffered sharp
declines that cut across all socio-economic
barriers. In South East Asia, however, a different story
was unfolding. Although Asian markets were certainly
affected by the recession in the West, they proved more
resilient overall and continued to make gains after a brief
period of correction.
While American banks have not generally been in
good shape, Asian banks have been relatively unaffected
by the American banking crisis and are still lending
actively, especially in the area of residential loans. Given
the recent low rates of growth in the manufacturing
and service sectors, lending for real estate has been one
34 • BUSINESS ASIA • Spring 2010
By Grace Chen, Cornell University
of the strongest components of loans growth for many
Asian banks. The banking crisis has caused U.S. interest
rates to fall to the neighborhood of 0%, and many Asian
Source: http://www.flickr.com/photos/nlann/4456318373/sizes/o/
Photograph by: nlann
countries that rely on exports to the US and Europe
for economic growth were loathe to let their currencies
appreciate against the dollar, preferring instead to decrease
their own interest rates in parallel with the American
situation. Interest rates in Asia plunged to record lows as a
result, sharply increasing the affordability of housing loan
installment payments. One overall consequence of this is a
much higher demand for housing than would appear to be
justified by the current state of many Asian economies.
In Singapore, demand and prices were weak at the
end of 2008 and the start of 2009; accordingly to the Urban
Redevelopment Authority’s quarterly statistics, overall
prices in Singapore’s private residential property market product to grow by 4.5 percent to 6.5 percent in 2010, up
fell by 14.1% quarter-on-quarter in 1Q 2009. However, from a forecast of 3 percent to 5 percent made a month
residential property prices in Singapore increased 7.4% before. New-home sales in January 2010, with 1,476 units
in the last three months of 2009 as the property market sold, were record-setting and several times higher than the
made a quick recovery from a bearish start to the year. 481 units sold in December and 601 sold in November
In the public sector of the housing market, prices 2009. One sign that private residential property prices are
were rising so fast that members of the public were set to surpass the previous high before the recent crisis
becoming increasingly vocal about the difficulty of owning is that the 1,476 units sold in January 2010 were more
and paying for a home of one’s own. In the 3rd quarter than the average of 1,230 units sold per month in 2007
of 2009, concerns about the escalating prices of resale – a year which saw a record 14,811 new homes snapped
flats prompted the Minister for National Development up. Local property agency PropNex confirmed that “the
to assure Singaporeans that Housing Development Board middle- to high-end markets are certainly moving. Some
(HDB) flats remained affordable to most. 76 percent of homes were sold at above $1,000 SGD per
Since its conception in the 1960s, the HDB has square foot, a proportion not seen for over 30 months.”
been responsible for providing housing for the masses at In a separate report, property consultancy DTZ Research
affordable prices. As median incomes in Singapore rose stated that the move towards higher-priced homes was
over the past few decades, the HDB has tried to modify already evident in the last quarter of last year, when home
the housing options it provides along with changing purchases of $3 million SGD and above made up 8%
public preferences. HDB-built apartments of the past of all transactions, a slight increase from the 7% of the
few decades were staid affairs that looked mostly the previous quarter. Singapore’s residential property prices
same from every angle, indistinguishable from each look set to rise in the near future, but at the present
other. Newer HDB projects, however, have become moment have not yet reached the peaks seen in late 2007,
more similar to the private condominiums that middle- just before the worst of the subprime crisis emerged. BA
income Singaporeans aspire to own. A notable project,
the Pinnacle@Duxton, consists of seven buildings
linked at the 26th and 50th floors by “skybridges” that
contain gardens and other facilities, features that have
never before been incorporated into Singapore’s public
housing flats. Executive condominiums with swimming
pools, gardens and other facilities have also been built for
households with monthly incomes of up to $10,000 SGD
($7,142 USD).
However, as all public housing in Singapore is
based on a 99-year lease (which, as the name implies,
expires after 99 years), investors might be more interested
in private housing options based on “freehold” tenures
that do not expire. Since the official formation of the
republic in 1965, private residential property prices have
increased by leaps and bounds, and look set to continue
rising at a greater pace than inflation.
In the private sector, with fewer governmental
controls in place than in the public sector, prices are more
closely related with fluctuations in the economy. With the
Asian economy fast recovering from the effects of the 2008
financial crisis, housing prices in Singapore look set to be
making new highs. In February of this year, the Ministry
of Trade and Industry (MTI) expected gross domestic

BUSINESS ASIA • Spring 2010 • 35

 Lifestyle

Trivia o
f Southe
Asia, Pa a st
By Bra
r t1
ndo n Ho &
Corne Y
ll Univ un Qi Mo
ersity k,

Did you know that the ancient ruin, Angkor Wat in Cambodia, is

Cambodia the largest religious temple in the world? It has become a symbol
of Cambodia, appearing on its national flag, and it is the country’s
prime tourist attraction.

Laos Did you know that Laos is home to 51 airports? However, only nine
of them have paved runways!

Source: http://www.flickr.com/photos/minnesotahistoricalsociety/3150759157/sizes/o/
Photograph by: Minnesota Historical Society
Did you know that Brunei is one of the few countries in the world
Brunei that does not hold elections? As a constitutional sultanate, Brunei has
enjoyed such a long period of political stability that has resulted in an
absolute rule.

East Timor
Did you know that East Timor has only 775,000 people? Within
this population, two-thirds to three-quarters engage in subsistence
agriculture.

36 • BUSINESS ASIA • Spring 2010

 Did you know that Thailand is called the “Land of the Free”? This is
Thailand derived from the fact that Thailand is the only Southeast Asian country
that was never colonized by a European power.

Did you know that Singapore is the largest exporter of ornamental fish
Singapore in the world? Although it is one of the 20 smallest nations in the world,
Singapore accounts for 25% of the world market for ornamental fish
exports.

Indonesia Did you know that Indonesia consists of at least 17,508 islands? The
name Indonesia derives from the Greek word nesos, meaning “island”.

Did you know that Myanmar was once called Burma? In 1989, the
military government officially changed the English translations of many

Myanmar colonial-era names, including the name of the country to “Myanmar”.

This prompted one scholar to coin the term “Myanmarification” to
refer to the top-down program of political and cultural reform during
which the renaming was done.

Malaysia
Did you know that the currency of Malaysia is the ringgit? It means
“jagged” in Malay, referring to the jagged edges of Spanish silver
dollars once circulated in the region.

Did you know that in the 1960s, this Philippines was regarded as the
second wealthiest in Asia, next to Japan? However, the leadership of
Philippines Ferdinand Marcos proved disastrous by gradually transforming the
market economy into a centrally planned economy. Only in the 1990s
with a program of economic liberalization did the economy begin to
recover.

Did you know that the traditional female garment of Vietnam is the
Vietnam “Áo Dài”? It is a long dress worn for special occasions such as weddings
or festivals. White Áo dài is also the required uniform for girls in many
high schools across Vietnam.

BUSINESS ASIA • Spring 2010 • 37

 Lifestyle
Outdoor Sports and
By Edwina Regina, Cornell University
I
ndonesia is the world’s largest archipelago. It is dotted
with volcanoes, covered with lush green vegetation, and
surrounded by coral reef. Therefore, one can enjoy any
imaginable outdoor activity in Indonesia, making this
island nation one of the premier destinations for outdoor
enthusiasts of all types. Indonesia is also home to myriad
rare animal and plant species, such as the orang utans,
Komodo dragons, one-horned rhinoceros, anoa, and
babi rusa. Exotic white-sand beaches reach towards warm
tropical seas, which are replete with coral and marvelous
marine life in some of the most colorful, breathtaking sea
gardens in the world. Indonesia, therefore, is one of the
few places in the world where everyone is invited to be
part of its nature.
Surfing
The island of Bali, a surfers’ paradise, offers a
number of surf spots, with the most famous one being
Uluwatu. There is always some swell in Uluwatu, so it is
crowded all year round. Furthermore, there are different
types of waves in Uluwatu, making this a must-go place
for novice and expert surfers alike. For those looking out
for a more adventurous experience, Grajangan, located at
the southern coast of Java and more commonly known as
G-Land or Gee-Whiz Land would be the perfect place to
visit. Its beautiful, uncharted waves are out there, but it is a
long, tedious, and sometimes dangerous job finding them.
That is why G-land does not offer only the perfect wave,
but also the perfect adventure. I would suggest bringing
at least 2 boards, because Indonesian waves are powerful
enough to break boards. Be prepared for the thrill!
38 • BUSINESS ASIA • Spring 2010
Other surf spots such as the Parangtritis Beach in
the Southern part of Java offer a mystical experience in
addition to the surfing experience. It was said that some
lucky visitors get the chance to meet Nyi Roro Kidul, the
Indonesian Goddess that comes in the form of a green-
clothed mermaid. Therefore, visitors are strictly forbidden
by that belief to wear green colored clothing when going
out to the Parangtritis Beach.
Diving/Snorkeling
There are several diving destinations in Indonesia.
The Banda Islands, located 80 miles from Ambon,
Sulawesi would offer an enjoyable trip for beginner
Source: http://www.flickr.com/photos/iamagenious/367740093/sizes/o/in/set-72157594370745331/
Photograph by: permanently scatterbrained
or expert divers. It offers stunning a tropical scenery, a
remarkable history, friendly villages, and some of the
globe’s most pristine, biologically diverse coral reefs. The
water reaches a depth of more than 6,500 meters. Among
the 10 different diving sites are the presence of different
types of marine life – including but not limited to sharks,
enormous turtles, Napoleon Wrasse, giant groupers, tuna,
rays, and huge lobsters – that neighbor generous schools
of reef fish. The seas around Banda are the sites of the
famous Maluku sea gardens with their bright corals and
colorful fish darting through the crystal-clear waters; they
are perfect for diving, snorkeling, or simply sightseeing.
Other diving spots such as the Bunaken in Manado
offer entertainment for non-divers as well. Tourists can
take a stroll along the beach on foot or by riding in one
of the horse-pulled carriages, dokar, which are usually
forbidden on most beaches except a few in Indonesia.
Activities in Indonesia
Rafting
Only in recent years, Indonesia has started
utilizing its rivers to provide high-adrenaline recreational
entertainment, in the form of white-water rafting and
kayaking.
Whether you are in Bali, Java, Sumatera, or
Sulawesi, there is always enough adventure to satisfy
your white-water appetite. Additionally, the experience is
complemented by environmental and cultural experiences,
such as passing by local villagers gathering at the river
banks as rafters pass through the deep valleys and terraced
rice fields.
Depending on the season, the adventure can be
somewhat different. During the dry and rainless season,
the adventure is relaxing, but after heavy rains, the ride
turns to a roller-coaster ride. Don’t worry. Since the sites
are commercially operated, rafting sites will be closed
when the river-flow becomes too dangerous.
Jungle-Trekking
Jungle-trekking in Indonesia will take you into close
quarters with the rich biodiversity and scenic beauty of
the country. There are many trekking paths in Indonesia’s
dense jungles. For the best trekking experience, the islands
of Irian Jaya, Kalimantan, and Sumatra offer remote
terrains, but beautiful and untouched trails. Some of the
trips can take hours while most of Irian Jaya’s treks take a
week to complete. There is a possibility of encountering
local tribes and activities in the midst of jungle-trekking,
thus it is always safe to bring an experienced guide to
accompany your trip. Indonesia’s jungles are unique, in the
sense that they house animals, birds, and exotic flora and
fauna that can only be found in Indonesia. This experience
will stay in your mind for the rest of your life.
Mountain Climbing
Puncak Jaya (which literally means “Victory
Peak”) reaches up to more than three miles above sea
level, standing as the tallest peak in the entire oceanic
continent. Due to its height, it was the only place that
snow could ever exist on the whole Equator. In fact, Jan
Carstensz, a Dutch explorer who first sighted the peak
in 1623 was ridiculed by his fellow men for saying that
he had seen snow near the Equator. Unfortunately, the
climb is considerably physically taxing, thus beginners are
not recommended to participate in the climb.
Rinjani Mountain, which is located in Lombok,
the southern island of Indonesia is more suitable for
beginners. With an elevation that is about two miles above
sea level, this active volcanic area offers a breathtaking
view of the crater lake and the lush vegetation around it.
Locals living around the area are friendly and usually love
to bring tourists around for a guided tour.
Parks
There are several national parks in Indonesia,
with the major one being the Komodo National Park.
It has been identified by the World Wildlife Fund and
Conservation International as a global conservation
priority area. This national park serves as the home for
the world’s largest reptile known as the Komodo dragon.
There are several other terrestrial endangered snake
BUSINESS ASIA • Spring 2010 • 39
 species, mammals, and birds. Komodo National Park
is also one of the world’s richest marine environments,
consisting of cnidaria, sponges, crustaceans, bony fishes,
marine reptiles, and other marine mammals. Some
species with high commercial value such as the Napoleon
Wrasse are housed within the park to protect them from
extinction.

As most of the activities above are located far
from metropolitan life, one might think that there are
no fun outdoor activities for urban dwellers that have
to endure the hectic city life. However, the truth says
otherwise.

Golf
There are tens of golf courses located in, outside,
and around the capital
city of Indonesia,
Jakarta. Golfing is

...one can enjoy any

an important part of
city life’s sport and
business culture. Most
of the course layout
imaginable outdoor
activity in Indonesia,

gonzalez/1469535308/sizes/o/in/set-72157602229593789/, http://www.flickr.com/photos/39891373@N07/3666276078/sizes/l/
Sources from top to bottom: http://www.flickr.com/photos/oxborrow/2887744550/sizes/o/, http://www.flickr.com/photos/abnel-
is challenging and

making this island nation

renowned for its tree-
lined fairways, making
it a true test for golfers
of all levels.
one of the premier
In Indonesia, destinations for outdoor
enthusiasts of all types
golfing experience
is enhanced to be
more special, because
after playing, guests
are indulged with a
number of in-house
facilities such as, jaccuzzi, spa, and sauna.

What I have described are not all that Indonesia

has to offer. Non-swimmers, the elderly, and children can
find their own paradise in other tourists’ destinations to
relax and enjoy the breathtaking views this country can
offer. Tourists can take part in sightseeing tours, culinary
tours, cultural tours, monument tours, and even shopping
tours in traditional markets and modern shopping centers
located all across the archipelago. In Indonesia, anyone
can find a unique and personal adventure that can never
be found anywhere else in the world. BA

40 • BUSINESS ASIA • Spring 2010


The Art of
Dim Sum
By Brandon Ho, Cornell University
W hy is the cuisine dim sum called dim sum? When I
first heard the term when I was seven, I pondered
long and hard. What’s so dim about a cuisine as artful as dim
sum? Is it a sum of sorts, like how fusion food works? Little
did I know that dim sum is the Cantonese pronunciation of
a wonderfully imaginative Cantonese cuisine.
Dim sum has its roots in the yum cha (tea-drinking)
culture in Hong Kong. During the post-war era in 1950s and
1960s, Hong Kong experienced an influx of refugees from
mainland China. Male refugees, most of whom were single,
met over breakfast tea to socialize and exchange tips on job-
seeking and bird rearing. This was the typical backdrop in
Hong Kong tea houses at that time. As society progressed,
yum cha moved from a venue for socialization amongst men
to a gathering place for the family. Snack foods were later
introduced to complement tea-drinking, and they evolved
to what we know as dim sum today. From the ubiquitous
shrimp dumpling, steamed buns and egg tarts to the more
cringe-worthy chicken feet and fried intestine, dim sum
is the epitome of variety. One can be easily fascinated by
each attractive morsel and tantalized gastronomically by
delectable treats.
Dim sum literally means “touch the heart” in
Source: http://www.flickr.com/photos/bigberto/4423438315/sizes/o/
Cantonese, and there is no better way to describe it. Chefs
in Hong Kong train for years to master the art of making
a variety of aesthetically intricate bites for yearning diners.
Every garnish, every fold, and every nuance, is a masterpiece
of the chef ’s cultural pride and an apt expression of his
cultural identity. I remember watching a program where the
renowned chef Gordon Ramsey was helplessly trying to
mimic the skillful execution of dim sum preparation by a
southern Chinese chef. It was an important reminder to me
that food is laden with rich meanings, far beyond functional
Photograph by: ~MVI~
satiety. There was something about the way that the Chinese
chef kept rejecting the poorly-wrapped dumplings that the
British chef produced – defiant, persistent, and unyielding.
Lifestyle
A quote by E.N. Anderson, Professor of Anthropology
at the University of California, Riverside, says that “the
Chinese fondness for snacks and small eats reaches a kind
of apotheosis.” Because food is divine and because culture
cannot be reproduced, dim sum becomes an asset that the
Cantonese has to safeguard. Perhaps the Chinese chef will
never approve of Gordon Ramsey’s shrimp dumpling.
But things have changed.
When I first saw “boiled coke with ginger”,
“luncheon meat ramen” and “saffron chicken stew” featured
on a menu in a Hong Kong restaurant, it suddenly hit me
like an asteroid. It was hard to ignore the absence of old
men in their tight singlets propping their legs on the table
like in the past. No more cigarette smoke, only clear, air-
conditioned air. No loud bantering, only hushed, soft voices.
No more traditional bamboo baskets, only functional metal
containers. Young waitresses are in tight skirts pushing carts
around. The eager tourist is snapping photos of food. The
menus are replete with awkward English translations. A
new hybrid beverage called yin yeung, which is a mixture of
coffee and tea, makes its advent. Meals are so big that Hong
Kong health officials are beginning to warn against dim sum
due to its saturated fat and sodium content. Does dim sum
still “touch the heart”? Or did it simply clog our arteries?
Worse still, does it pollute our culture?
As a sophisticated cosmopolitan city on one hand,
and an extension of Chinese culture with long-standing
Cantonese traditions on the other, Hong Kong perfectly
exemplifies the effects of globalization. As dim sum evolves
with the era and fights for space on the dinner table with
new entrants like burgers, sushi, and burritos, we too have
to evolve. However, we must not forget the tenets that the
art of dim sum expresses – creativity, tenacity, and a respect
for tradition. Only then can we progress graciously, march
forward as a people, without forgetting our glorious past.
BA
BUSINESS ASIA • Spring 2010 • 41
 Interviews

China’s Peaceful Rise:

an Oxymoron in the Making?
By Deborah Cheong, Cornell University

Richard C. Bush III is the Director of the Center for Northeast Asian Policy
Studies, a Senior Fellow for Foreign Policy, and the Michael H. Armacost Chair
at the Brookings Institution, a think-tank based in Washington DC. Before
joining Brookings, his two-decade public service career included stints in
Congress, the intelligence community, and the U.S. State Department.
He currently focuses on China-Taiwan relations, U.S.-China relations, the
Korean peninsula, and Japan’s security. He is the author of, among other
works, A War Like No Other: The Truth About China’s Challenge to America,
Untying the Knot: Making Peace in the Taiwan Strait, and At Cross Purposes:
U.S.-Taiwan Relations Since 1942.

BA: Business Asia || RB: Richard Bush

BA: As of late, “China’s Peaceful Rise” has been a Furthermore, whether China’s rise ends up being
catchphrase used by many foreign policy officials to peaceful, depends very much also on how we, the United
describe China’s foreign policy approach as she moves States, interacts going forward. The cumulative of all
forward. Despite her many reassurances that she will be actions between China and other powers will define what
a responsible world leader, there have been signs such kind of great power she will be again. Of course, it is
as the recent show of military might during her 60th not possible to conclude for sure that China’s rise will
Anniversary celebrations that suggest otherwise. What are be peaceful. Hypothetically, China could have goals that
your thoughts on these conflicting messages and do you could be a challenge to the U.S.. However, she could be
think China’s rise can be peaceful? waiting till she was more powerful before fully pursuing
these goals, and practicing a risk-adverse attitude in the
RB: If I were in China’s position and saw the anxiety of meantime. Hence, the U.S. cannot be 100% confident
neighboring countries, I would do exactly as they are and should continue to guard our interactions with North
doing – explain over and over again that my intentions are Korea, Taiwan, etc. We do not want China to challenge us
benign and that my growing power is not going to result because of misunderstandings.
in war. However, one of the litmus tests to determine the
true nature of China’s intentions will be to observe how BA: On that note, whether or not China’s rise is peaceful,
far she tries to push outward into the oceanic area where do you believe that the US should feel threatened by
the U.S. military currently operates. the actions that China has taken vis-à-vis attempting to
expand her oceanic presence?

42 • BUSINESS ASIA • Spring 2010

 ...one of the litmus tests to determine the true nature
of China’s intentions will be to observe how far she
tries to push outward into the oceanic area where the
US military currently operates

RB: Some of what China is doing makes sense. As creates boundaries for China and acts as a stabilizing
China has had a very limited defense perimeter, she, force in Asia. For China to behave in a constructive way,
like any other country would want to push this oceanic the perception that U.S. is strong in East Asia must be
buffer outwards. However, some of the other things that maintained. If and when we show our weaknesses, China
China is doing are not as easily explained. For example, can easily take advantage of us and our allies. For example,
her recent military buildup agaisnt to Taiwan, given that with regard to the North Korea denuclearization issue,
their political relationship is in better shape, is a situationJapan really cares that this be addressed seriously. This is
which I do not fully comprehend. Thus, the U.S. has seen also the U.S.’ opinion on the issue. However, it is not as
it necessary to provide arms to Taiwan so that Taiwan is clear how strongly China feels toward North Korea giving
less vulnerable. But in the long term, there are many other up its nuclear weapons since China’s words and actions
opportunities for both sides to show that they are benign, do not paint the same picture. Thus, in this case, if the
thus reducing the feelings of threat. U.S. was not to remain firm, it might be the case that
Japan and South Korea end up bending to China’s will
BA: Additionally, many people have touted the 21st and accommodating her.
Century as one that belongs to the Chinese. There also
seems to be a school of thought believing that China’s rise BA: On a surface level, it seems that China’s rise has sparked
coincides with the decline of the West or the U.S. What the American imagination. Many young Americans
are your thoughts? Specifically, what impact does China’s are studying Chinese, there are TV programs teaching
rise have on the U.S.? children to speak conversational Chinese (Ni Hao, Kai-
Lan), and President Obama has recently announced that
RB: This correlation could be true, but it is definitely not he will send more students on academic exchanges to
automatic. Whether we (the U.S.) decline is up to us. We China. Surely this has an impact on US-China relations
have the capacity to maintain our lead over China vis-à- and how the US plans to negotiate China’s rise?
vis our military, scientific, and economic prowess. The
question is whether we want to or not. Is the American RB: These programs, efforts, etc. cannot hurt. There has
public willing to make the sacrifices that are necessary been a lot of misinformation that students across the
to build a strong country? Whether or not we decline years have received. However, in the end, I do not think
depends a lot on how we see our place in the world and these will greatly impact U.S.-China relations. What is
not just how we see China’s place in the world. most important is how the U.S. and Chinese military and
For the U.S., China’s rise means that we must be government view each other. It is much more important
willing to engage with her. Also, there is a need to ensure to get that right than to possess the ability to speak or
that, our military is present in Asia in a visible and serious understand Chinese. The latter is not trivial but real
way while continually working to maintain alliances with impact on policy stems from active and vocal minorities
Japan, South Korea, Australia, and other powers. Our and group interests, not public opinion as a whole. BA
security presence need not challenge China, but this

BUSINESS ASIA • Spring 2010 • 43

 Interviews
Professor George Andrew Karolyi is an

activities
internationally known scholar in the area of investment
management, with a specialization in the study of
international financial markets. He has published
extensively in journals in finance and economics, including
the Journal of Finance, Journal of Financial Economics and
Review of Financial Studies. He is a recipient of the Fama/
DFA Prize for Capital Markets and Asset Pricing (2005), the
William F. Sharpe Award for Scholarship in Finance (2001),
the Journal of Empirical Finance’s Biennial Best Paper Prize
(2006) and of the Fisher College of Business’ Pace Setter
Invesment

Awards for Excellence in Research and Graduate Teaching.

Professor Karolyi received his Bachelor of Arts (Honors) in

Economics from McGill University in 1983 and worked at the Bank of Canada for several
years in its Research Department. He subsequently earned his M.B.A and Ph.D. degrees
in Finance at the Graduate School of Business of the University of Chicago. He joined the
faculty of the Cornell University’s Johnson School in 2009, after teaching for 19 years at the
Fisher College of Business of The Ohio State University. He leads various executive education
programs in the U.S., Canada, Europe, and Asia, and is actively involved in consulting with
corporations, banks, investment firms and stock exchanges.
Border

A remarkable phenomenon of the past quarter century all around the world has
been the decline in state-owned business. However, in the last five years or so,
governments have begun accumulating stakes in purely private companies through
cross-border investment activities. Government institutions acquiring such stakes
include not only large sovereign wealth funds, like the Abu Dhabi and Kuwaiti
Cross

Investment Authority, Singapore’s Temasek Holdings, and the China Investment

Corporation, but also large state-controlled corporations and agencies.

These powerful government institutions tend to come from countries like China,
Singapore, UAE, and Saudi Arabia, that have maintained large foreign currency
reserves through strong export-led growth or large stocks of oil wealth, but they
of

also include countries, like France, Italy, Sweden and Japan, which have large
, Cornell University

government-controlled state agencies that dominate markets. Most notably, these

Implications

government acquirers have been actively targeting investments in developed

economies, including in the U.S., U.K., Australia, Canada, Hong Kong, and much of
Western Europe. There have been serious and growing concerns by the regulatory
officials in these targeted countries about the security implications from the
expanded role of government-controlled acquirers. Some of the most prominent
deals have include failed attempts, such as Dubai World Port’s incomplete
By Diya Li

acquisition of Peninsular and Oriental Steam Navigation in 2006 for $7 billion, China
National Offshore Oil Corporation’s attempt to acquire Unocal in 2004, and, most
recently, Aluminum Corporation of China Limited’s failed $20 billion acquisition of
a 20% stake in Rio Tinto in 2009.

44 • BUSINESS ASIA • Spring 2010

BA: Business Asia || GK: Professor George Karolyi
BA: Has there been an increase in foreign acquisitions of
American targets by Asian companies?
GK: There has been $620 billion worth of cross-border
acquisition activity led by government-controlled acquirers
over the past 20 years of which $310 billion, or one-half,
has taken place in the last four years alone (2005-2008). The
US has been the largest target by far ($124 billion over the
whole period) and $45 billion (or about 40%) has arisen
from Asian acquirers.
BA: In which industries have these deals been most active
in?
GK: They have been targeting a variety of industries,
although they have been focusing on banks and financial
services during the most recent years.
BA: What do you think is the reason behind it, given that
most of them do not have such experience decades ago?
Do you think the acquisitions are successful?
GK: I think there has been this dramatic increase in
government-controlled cross-border acquisition activity
in large part because of the large accumulation of foreign
currency reserves in these sovereign wealth funds. So, the
reason that they are investing in stakes in overseas private
companies is because of the opportunities in terms of risk
and return not easily found in their home markets, in other
types of assets, or securities markets.
BA: What are some obstacles Asian firms face when
acquiring American companies?
GK: In 2007, the U.S. Congress passed the Foreign
Investment and Security Act that gave legal status to a
little-known Committee on Foreign Investment in the U.S.
(CFIUS), a multi-agency group formed in 1975 to monitor
U.S. policy on foreign investments that might have an impact
on national security. This new Act gives significantly more
power and control to CFIUS with specific guidelines on
what kinds of acquisitions could trigger a review. It explicitly
identifies the potential security concerns associated with
government-controlled acquirers. Many countries around
the world are now changing their regulations with respect
to potential security concerns from overseas government-
controlled acquirers.
BA: In times of globalization, do you think that national
concerns will gradually adapt to the changing investment
landscape?
GK: I am sure that we have not seen the end of the debate
or discussion about these national security concerns. The
worries will be expressed by those governments promoting
the overseas acquisition activity through their own state-
controlled agencies as well as the regulators in countries
that represent their primary targets. Globalization is a force
of change in global capital markets that is too strong in the
long-run for these temporary regulatory restrictions to slow.
BA: What are the some synergies from mergers and
acquisitions between Asian and American companies for
the firms and the general economy?
GK: My research study (with Professor Rose Liao of Rutgers
University) entitled “What is Different about Government-
Controlled Acquirers in Cross-Border Acquisitions?” tries
to answer this question. We examine 5,300 of these cross-
border deals worth over $620 billion led by government-
controlled acquirers and compare them to the 150,300 such
deals valued cumulatively at over $11 trillion of corporate-led
cross-border deals. We show that the flow of such activity in
terms of the home country from which the acquirers come
or the destination country in which the target is located is no
different between the two types of deals. The motives for
those two types of deals and the economic consequences
also appear to be no different. The types of deals that they
go after in terms of attributes of the target firm, the terms
of the offers and even how the shareholders of the targets
react (which is typically positive for target stakes above 5%)
are also no different.
BA: What are the differences between the Asian, American,
and European capital markets?
GK: Ever increasingly, less and less is different about these
markets. Foreign investors – both in direct and portfolio
forms – are a growing presence in terms of holdings of
local markets and their traded securities. More and more
companies are sourcing their debt and equity capital from
overseas. The force of globalization is making sure of it.BA
BUSINESS ASIA • Spring 2010 • 45
 Interviews
A graduate of Cornell University, Kevin
McGovern ’70 is currently the chairman
and CEO of McGovern Capital, a private
investment firm and global intellectual
property rights strategist. He is the key
shareholder in more than 15 companies
and has engaged in multiple ventures
in Asia. In 2007, he was honored the
Cornell Entrepreneur of the Year award,
which is given to those who exemplify
entrepreneurial achievement, community
service, and high ethical standards. An
active member of the Cornell Board of
Trustees, McGovern also founded the
Cornell Club in New York City.
McGovern earned a law degree from St.
John’s University School of Law (1975)
and also studied at the London School
of Economics. McGovern is also the co-
chairman of Angstrom Publishing, and
of the Silver Shield Foundation, which
provides scholarships and benefits to
children of police and firefighters killed in
the line of duty in New York, New Jersey,
and Connecticut. McGovern is currently
working on The Water Initiative, a system
aimed at providing clean water, which will
be active in Asia very soon.
46 • BUSINESS ASIA • Spring 2010
Entrepreneurship
in China, Part
2: The Business
Environment
By Sandy Tun, Cornell University
BA: Business Asia || KM: Kevin McGovern
BA: As you said in our previous interview, China is looking more
at multi-national companies. And it’s hard for the middle market to
develop there. Do you see that changing?
KM: Definitely. The Chinese have learned from the Americans that
the backbone of the American economy is not the multinational
companies. It’s what’s called SME: Small Medium Size business.
That’s the backbone. That’s where the innovation takes place in this
country. It happens in Silicon Valley, in Route 128, etc. It happens
where inventors are given freedom to create and innovate. People
all over the world including the Asians are learning that smaller
businesses and encouraging entrepreneurs to develop their own
businesses is the best way that they can innovate and create new
opportunities, technology, etc. So it’s very important to create an
atmosphere that spawns and encourages early stage businesses to
grow, particularly around intellectual centers, such as universities
where there’s so much good peculation of thought. You want to
have a fertile atmosphere, an atmosphere for companies to grow
and for early stage entrepreneurs whether it’s graduating students,
graduate students, or professors in collaboration with students to
allow them to build companies.
BA: You have a lot of experience in China. Where do you see China
heading in the next 5-10 years? Are there particular areas to go in Asia other than China is Singapore. There’s a very
that you see developing faster? powerful Chinese community in Singapore, so again it’s a
circle back to relationships.
KM: I think China right now is too dependent on exports.
They really have to develop a greater consumption BA: What are some advantages you see are unique to
of their goods by their own people. So the mindset of businesses in Asia?
consumerism has to grow much more in China for it to
become the mature giant that it wants to be. I think it will KM: Businesses in Asia are built more on relationships. I
take place. I go to some of the main shopping boulevards am a lawyer, so I am very sensitive to legal infrastructure.
and yes, it’s crowded, but the real brand names from the
U.S. are not so crowded. I think there’s more statistical
evidence of consumerism than physical evidence. In Just because I am a good
China, I don’t see it as much. A lot of the money invested
by the government is in infrastructure. It’s in the Beijing
businessman in the United
Olympics. It’s in the Shanghai Expo. It’s in construction.
What it needs is investment in entrepreneurship in
States, it doesn’t make
business, in laws to protect business people, and in laws
to protect intellectual property. China is now realizing that
me a good businessman
the ability to protect your rights is important for them in China. If I have good
internally. Otherwise, when they grow, they will go through
some pains. And now we’re a little old. China is very instincts and I learn from
young and maybe they can learn from us. And maybe we
can join together to create something we can individually the people I hire in China
form. I realize that 1 plus 1, China and the U.S., together
can equal so much more than the two of us trying to who understand China, I
compete with each other at every level. Collaboration and
cooperation on an economic level will hopefully transcend will be okay. But I am not
any political issues that we may have. And I think China
needs that. I am very worried about China’s ecological and
going in on my own.
environmental issues. I know the water in China is a long
term health problem. A lot of their water is polluted, so The best I can say as a foreign person doing business
my key focus now is clean water. China is becoming much in Asia is that I don’t rely as much on the legal side as
more environmentally conscious, but it would still need much as I do in the United States. As I have said, it’s a
much more green investment. people thing. You really need local expertise. Just because
I am a good businessman in the United States, it doesn’t
BA: It seems that only a few people control the businesses make me a good businessman in China. If I have good
in Asia. What is your take on that? instincts and I learn from the people I hire in China who
understand China, I will be okay. But I am not going in
KM: Just like every place in the world, a small group of on my own. I do not believe in going in to do business by
people control the economy and make the investments to myself. I always try to find smart people who can really
help out the business economy. Traditionally over centuries, help me understand the subtleties. Sure, we can read
the Chinese has been merchants and the business class of books and regulations. But it’s the subtleties that make
Asia. Even if I go to Malaysia, it’s often the Chinese in us successful in understanding the cultural differences.
Malaysia who are the business leaders. Similarly when I go The understanding of the subtleties of doing business
to Thailand, it’s the Thai with Chinese ancestry who are can take a lifetime. That does not take a year of learning.
much more business oriented. It’s amazing that it’s a small You need to build a team of local expertise plus global
loop of people who all know each other. My favorite place expertise. That’s the best of all. BA

BUSINESS ASIA • Spring 2010 • 47

 Interviews
Investment banking in Hong Kong
By Christine Seo Hyun Kim, Cornell University
Yunyun Cai, a junior in College of Arts and Sciences, who has gotten into Deutsche
Bank in Hong Kong, was interviewed for her success in finding this internship.
BA: Business Asia || YC: Yunyun Cai
BA: What is your background?
YC: I am from Shanghai, China. As a freshman, I was more
interested in the humanities, as I wanted to explore journalism as
a career. However, as I progressed academically, I realized that I
enjoyed more quantitative classes and decided to change my major
to Math and Economics.
BA: What first drew you into finance?
YC: When I came to Cornell, I joined my friends and attended
information sessions for banks. The topics during the presentation
were interesting, and I wanted to find out more about finance.
The more exposure I had to finance, the more I found it to be
intellectually-stimulating as it combined various disciplines,
including math, economics, and psychology. After speaking to
people in the financial services industry, I found that a career in
finance involves a lot of interactions with people, which makes
it fun and exciting. After considering my strenghts, I knew that a
career in finance, especially in the investment banking division, fits
perfectly with my skill set, as it involves both social and technical
aspects, i.e. financial modeling, research, etc.
BA: How did you decide which division within a bank that you
would be most attracted to?
YC: I thought about where I would thrive best. Hours are usually
long in the investment banking division; but compared to trading,
the pace in the investment banking division would allow me to
have more time to make decisions and implementing these into
actions. The environment in the investment banking division is
quieter than that of trading, but it is still dynamic, cooperative, and
requires a lot of patience. In addition to that, I have always been
interested in the financial modeling aspect of the work.
BA: How did you prepare for the interview?
YC: I reviewed the Vault Guide to Finance Interviews. It was
very helpful as it prepared me for the technical and behavioral
parts of the interview. For technical questions, I found reviewing
the course material on a class in Financial Statemnet Analysis to
be especially helpful. Interviewers from Asia tend to focus on
48 • BUSINESS ASIA • Spring 2010
technical skills with a lot of follow-up questions. For behavioral
questions, I looked through my resume and summarize it. I thought
of different experiences that I have and how they are relevant to
the position that I am interviewing for. I have always believed that
interviewing is also a process of knowing more about myself. The
best way to prepare for interviews is to interview! Interviews can
be intimidating at first, but you should just go into the interview
room and get comfortable with the intense atmosphere.
BA: Did you talk to alumni, info session, or people at career
centers?
YC: Attending information sessions help, but it is not the most
essential part. By talking to people who are currently working in
the financial services industry, I have become more comfortable
with the fast-paced and high stakes environment. I have also
reached out to the people in the career centers, and they are really
helpful with reviewing resumes and cover letters.
BA: Are there differences within the interview in Asia or U.S., and
how many rounds? How is it different?
YC: The formats of the interviews in Asia are different from the
ones in the United States. The application process for banks in Asia
require applicants to complete online numerical tests. In Asia, we
usually have first round interviews conducted through the phone.
Then, if we pass the first round, we will get invited for a Super
Day in New York City. The second set of interviews are usually
three to four rounds. There are instances where interviewees are
asked to complete paper based numerical tests and mandarin tests.
Source: http://www.flickr.com/photos/maxbraun/1269673910/sizes/o/
Photograph by: Max Braun
Keep in mind that cultures do vary among banks in Asia, and
interviewees will have higher chance of being accepted when they
find that they have things in common with the interviewers.
BA: Any other comments?
YC: The finance industry in Asia is dynamic and fast-growing. If
you have an interest in finance, consider working in Asia, as it will
provide many opportunities in your future career But my biggest
advice is to reach out to alumni and learn as much as possible
about the industry. Be sure that it fits with your personality and
strengths. If you have no previous background in Asia, do not be
intimidated as there are a lot of people willing to help if you reach
out to them.
 Careers

The ‘Chimerican’
Partnership:
Knowing
the Chinese
Counterpart
By Christine Seo Hyun Kim, Cornell University

A
Source: http://www.flickr.com/photos/87913776@N00/3033615378/sizes/o/

fter 31 years of U.S.-China trade normalization, without extensive research. Recently, Chinese companies
“Chimerican” business strategies have recently are being more cautious before entering into partnerships
been reemerging. Understanding one’s Chinese with foreign investors, thus making joint ventures the only
business counterpart is a crucial method for U.S. possible solution. Therefore, it is the foreign firms’ duty to
or foreign business to gain prolonged success in help design a win-win strategy that will continuously allow
China. Chinese firms to accept them in the future.
Creating a mutually beneficial strategy is a key to The win-win strategy is also exemplified in
sustaining a prolonged economic relationship between Korean-Chinese businesses. With a similar culture and
Photograph by: futureatlas.com

U.S. and China. For instance, twice the population of history, China remains the most lucrative market for
U.S. uses cell phones, while 74% of the businesses Korean companies. For instance, SK Group, the third
remain very profitable. On the Chinese side, however, largest multinational corporation in Korea, has been
due to an increasingly domestic-driven economy, more establishing Chinese business infrastructure by adapting to
companies are reluctant to accept foreign investments China’s local investment venture in energy sectors (i.e. SK

BUSINESS ASIA • Spring 2010 • 49

 Wohorim and local technology sales). Also, SK Group
was successful in receiving an official medical permit
from China, the first for any Korean company to do so in
Beijing. The opening of hospital ventures also means the
expanding of the possible business sector. Thus, even for if research is done about the nuances of the Chinese
South Korean companies, understanding the Chinese-
counterpart is the key to long-term success.
Business culture in the
is without doubt a clever strategy for foreign companies.
This mutual understanding of different business
protocols serves as a strong and lasting business strategy.
These contextual challenges can only be overcome
market before the actual business initiatives.
In addition, there is misunderstanding
surrounding guanxi, which literally means “relationship,”
an important element of Chinese business. Contrary
to popular belief, guanxi is not a necessity for foreign
businesses to succeed, and guanxi does not necessarily
mean corruption. Through guanxi, companies can

U.S. is goal-oriented navigate their way through China’s complex bureaucracy

by interacting with reliable local personnel—ranging

and based on individual

from government officials, business leaders, consultants,
etc. In China, mianzi, which literally means “face,” also
plays an important role whether it be in transactions
achievements, whereas or internal businesses. Foreigners should especially be
cognizant of giving their Chinese counterparts their due
business culture in Asia mianzi.
Finally, understanding Chinese collectivist
focuses on harmony and culture in business environments may help individuals
understand each other better. Business culture in the U.S.
conformity. Individuals is goal-oriented and based on individual achievements,
whereas business culture in Asia focuses on harmony
who cannot work well and conformity. Individuals who cannot work well in
group settings cannot easily fit into the Asian business
in group settings cannot culture even if they have all the necessary skill sets. In
addition, in Asia, employees usually wait to leave until the

easily fit into the Asian boss finishes his work as a courtesy. Internalizing these
nuances may help any foreign business fully understand

business culture even

the Chinese business sector. Thus, aligning business plans
with China’s working culture is extremely important.
The financial crisis has brought a greater focus
if they have all the to China, a land of opportunity that also requires
deeper insight into internal customs and perspectives.
necessary skill sets. Economically, a stronger Chinese business sector
requires foreign companies to form a joint venture to
succeed. Socially, understanding government regulations
and cultural sentiments will serve an effective long-term
Challenges remain in understanding the business strategy to gain prominence in China. Although
complexity of Chinese government, the people, and entering business in China requires as much insight
nation-based cultural preference. For instance, what as any other markets, one’s willingness to understand
a U.S. party may consider to be a finished negotiations the Chinese business counterpart will add to bilateral
may not be complete on the Chinese side. Rather than partnership between China and any other foreign
presenting all issues at the outset, adapting the “when in countries in the future. BA
Rome” approach in China by following the local practice

50 • BUSINESS ASIA • Spring 2010

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