Corporate-finance

Professor Haley has edited an excellent compilation of chapters on Asian business -- I thought the chapters on China, its business environments, problems and opportunities, and industrial restructuring were particularly useful. A valuable addition to the genre.

Very good review of the major Asian economies and business concerns in these regions. Especially useful as businesses enter China after its WTO entry and ponder new relationships with post-crisis SE Asia.

Backman clearly has extensive knowledge of the complex Asian business structures that encompass families, holding companies, cross holdings and often governments. Furthermore, he presents his detailed knowledge in an readable format that is relatively easy to follow. He gives excellent insight into the workings of Asian businesses, their unwillingness to disclose information and the dangers associated with hidden transactions, creative accounting and inefficient (family) management. The research Backman has gathered in this book is priceless and thorough.

Though I would never claim to be an expert on Asia myself, having lived more than 10 years in the region, I found that I was often grinning to myself in agreement with Backman's observations. Backman further managed to fill in many blanks I have in my Asian business knowledge, having grown up to realise only the social aspects of the various cultures here.

This book is an excellent read and a good reference guide for non-Asians doing business in Asia. I also suspect it's useful for Asians doing business outside their own countries, since often these sort of cross-border, cross-cultural relationships can be tricky in the region.

Unlike most readers of this text, I am very familiar with nearly all of the information presented here, as many of these stories have occurred in the same time frame as my professional and personal experience living and working in the Pacific Rim. As such, the content of this book is not new to me, or for that matter, anyone in Asian business circles, as all of the stories have appeared in one or more of the regional newspapers at some point in time. However, in the author's defense, those observing the region from the outside would have to read well over 100 sources, many of them in foreign languages, on a daily basis to get the information that is presented in this juicy, scandalous book.

Asian Eclipse presents the reader case after case detailing the more objectionable aspects of business in Asia. After reading many of the cases (presented by chapters devoted to each country in the Asian region), it becomes extremely difficult to distinguish any real differences, and I personally could not say if the individuals in question were Chinese, Japanese, Indian, Indonesian- the behavior in the end was virtually the same. Only the company name and the locality where the less-than-above-board behavior took place differed.

The book actually pays for itself in the first three chapters, for here is where the reader will learn the commonalities across the region. It is also the place in the book where Backman chooses to delineate, albeit very briefly, the underlying reasons for the under-handed and unsavory business practices that unfortunately typify, but as we are increasingly seeing with the spectacular financial skullduggery of US and European corporations, are not wholly limited to the Asian corporate landscape.

The author tells the would-be investor in Asia what it means to be a stakeholder in publicly listed and privately held companies in the region. Backman deftly delineates all of the obstacles one will face when doing business or directing investments toward Asia. Should you decide to invest in Asia be forewarned: Comprehensive due dilligence is paramount. Too many Western businesspeople who venture unaware into the region have found themselves holding the bag for the embarrassing things their so-called Asian partners have done before, during and after the partnership.

One very important point from the book is this: In Asia, those who enforce the rules are also the same people who make the rules...and break them with impunity (Modern Feudalism writ large). Thus, any attempt to enforce the laws written on the legal books protecting minority corporate stakeholders (and foreigners are definitely relegated to minority positions) or to uphold terms and conditions as stated in written contracts, would only result in one and only one outcome- nothing. In other words, any rights and protections that you take for granted in the Western hemisphere simply do not exist in Asia.

In sum, the book serves as a stern warning about commonplace business practices in Asia. It also serves as a good bit of contemporary regional financial history. Finally, I do not believe that any of the players learned the appropriate lessons from the various Financial Meltdowns, large and small and/or country-specific or regional. As is often the unfortunate case, the movers and shakers in this region of the world learned all the wrong lessons. Rather than opening up, reforming, and tackling their problems in a sincere and concerted fashion, they have chosen to insulate themselves, beseech their governments to bail them out, and spend precious time and resources shifting the blame- almost always to foreigners.

Backman's Asian Eclipse is the kind of expose that newspaper editors in Asia can only dream about. Not only does it provide a framework for understanding Asian business culture, it reveals in excruciating detail of the shenanigans in Corporate Asia?s largest boardrooms.

As the latest attempt to offer reasons for the Asian Crisis of 1997, it goes further than most treatments by delving into the institutional, political and social causes that underlie the culture of corruption, cronyism and managerial incompetence in Asia's former 'tiger' economies. The surfeit of detail is also the book's greatest weakness as it sometimes reads like a genealogy. However, this weakness it is trivial compared to the rich descriptions of the family-based power structures that govern much of East Asia.

The central thesis of Backman's book is that poorly paid civil servants, opaque bureaucracies, antiquated government systems and a compromised media act to subvert capital markets so they act like free ATM machines to feed the empire building lusts of Asian conglomerates at the expense of minority shareholders, and local tax payers. To back up this claim, the author offers a grand tour of the history and development of business culture in Asia. In the process, he also reveals the complicity of the multinationals and their mad race toward the lowest ethical standards to buy the cooperation of local politicians, thus feeding the nascent culture of corruption.

Backman is not as sanguine about the 'Asian Way', as many writers on the region seemed to be. He traces the origins of Asian business culture to the Confucian system of responsibilities and obligations between superior and subordinate. In this system, he argues, are clearly established lines of authority and responsibility that engender trust. In an economic context where contract law is undeveloped and institutions are unstable, a reliance on Confucian ethics provided the only reliable form of governance. What this system cannot do, having been created in an era of village feudalism and not global business, is to set out a similar code of rights and responsibilities between insiders (the family) and outsiders (non-family stakeholders). Outsiders are treated with suspicion, deception, and guile. Extreme forms of opportunism, driven by Sun Tzu's Art of War tactics, are routinely encountered by minority shareholders, foreign business partners, taxpayers and other 'outsider' stakeholders. The Art of War is a treatise designed to win wars with mortal enemies and thus emphasizes the use of deception, subterfuge, and unscrupulous tactics. Little wonder that foreigners find doing in business in Asia such a legal and ethical minefield.

Thus, the Asian crisis of 1997 was not the result of a series of random events but the logical outcome of a corrupted system with minority shareholders, foreign companies, bank depositors, and taxpayers as its unwitting victims. The main players in this game are corrupt government officials at the highest levels, high-ranking military officers, and the Overseas Chinese families who provide the business networks through which expropriated public funds are sterilized.

While readers of the book should critically consider the author's conspiracy theory of the activities of the Overseas Chinese, there is no question that it offers some of the best treatments of business in Asia and of the 1997 crisis than any book that has been written on the topic. In addition to the fact that it is easy to read and highly entertaining, it's carefully researched and well-documented treatment allows the reader to go beyond the standard stereotypes of Asian business heretofore promulgated by a business press enamoured with the illusory growth of the 1980s. In short, the reader should conclude, as I did, that the Crash of 1997 was self-inflicted, and not the work of currency speculators, neo-colonialists, or the 'evil' IMF!

The book concludes with a startling analysis. Contrary to the more optimistic, the author depressingly suggests that countries have not learnt from the lessons of the Crash of 1997. He cites the continuing inability of the Indonesian government to enforce laws designed to hold businesses accountable for their problems, the continuing delay in enforcing bankruptcy laws in Thailand, the Renong (business arm of the ruling political party) bailout in Malaysia, and the pulling back from serious corporate reform by South Korea's chaebols, as evidence that the region is poised to repeat the same errors in the future by rebuilding 'along the same fault lines' (page 379).

While he doesn't suggest that foreign investors disengage from the region, he does offer some suggestions to reduce the inherent risks. Investors should pay attention to building relationships before engaging in business negotiations. Part of relationship building should be devoted to knowing one's local partner as transparency and disclosure are unfamiliar concepts to many Asian businesses. Investors should regularly conduct due diligence and independent audit exercises to verify partner claims. That cronyism costs more in the long term than it yields in the short term, as demonstrated in Indonesia, strongly suggests that foreign investors stay away from all temptations to play the political connection angle. Finally they should be wary of approaching local banks for financing since these banks may often be affiliated with local competitors.

This book proactively identifies, analyses and signals the direction of business ethics at the crossroads. The book is not a simple blueprint for achieving better corporate governance but it is at the center of a debate from which a new system of ethics may emerge - the foundations required to rebuild and nurture the trust necessary for the future of business. Given the crisis of trust currently altering the nature of economic transactions in the world economy, the book is particularly thought-provoking as we ponder on the implications of intangible assets in an increasingly globalized economy in which different cultures are compelled to interact with each other. I strongly recommend this book.

I studied this book for 2 weeks before my first trip to Korea and Hong Kong. Wow! Very informative with lots of basic but important details about meeting rituals, business card etiquette and tons more! My Boss who has been traveling to Asia for 16 years wants a copy of this fabulous book!

Our consulting staff recommends this book to all business women travelling to Hong Kong, Singapore, Taiwan and South Korea. For each country, it covers rules of business and social etiquette, gift-giving, how to handle what westerners consider to be sexual harassment, a list of recommended hotels, restaurants and "in" nightspots, and helpful suggestions on how to conduct business successfully in the local culture. Truly a bargain at this price. John R. Jagoe, Director, Export Institute.