Chinese diaspora aka corporate mobsters
What do San Francisco, Cape Town, Singapore and Sydney all have in common?
Well, they all have Chinatowns.
In fact, there are prominent Chinese communities across the globe.
And don’t be fooled, they’re not all selling trinkets and dumplings.
The Chinese have large stakes in trade and industry worldwide. And in Southeast Asia, Chinese minorities dominate the business world.
In fact, the world’s largest diaspora population – meaning people living outside of their homeland – is Chinese.
It accounts for 50 million people internationally.
China’s diaspora population is so strong in numbers and money, it could be a sizable country in its own right.
Together the Chinese diaspora boasts a GDP of around US$1.5 trillion, putting it on a par with countries like Canada and South Korea.
And this sum grows every year. From 2001 to 2008, the number of leading companies owned by ethnic Chinese outside of China grew by 111 percent! And quite a few of these are conglomerates.
So, where do Chinese people call home?
Simply put: everywhere.
They’re millions of Chinese in all corners of the earth.
And yet, Southeast Asia is still the favorite relocation destination. Roughly 70 percent of all emigrating Chinese end up in Asia, as you can see below.
More importantly, Southeast Asian economies are the most heavily shaped by their Chinese minorities. Whole sectors throughout ASEAN economies fall almost entirely under Chinese control.
The real masters of Southeast Asian business
Ethnic Chinese have taken over Southeast Asia’s business to a shocking degree – just look below.
Ethnic Chinese run the business scene by 92 percent in Cambodia, 81 percent in Thailand, 96 percent in Singapore and 99 percent in Laos (where they only make up 2 percent of the population!)
And let’s not forget about Hong Kong – Asia’s financial hub. It’s home to 39 ethnic Chinese billionaires. Their net worth reaches over $184 billion.
For better or worse, the Chinese diaspora’s capital, labor and business skills have helped grow Asian economies.
Now, many minority Chinese individuals own the region’s largest conglomerates.
This is true for Indonesia’s Salim Group, Thailand’s Charoen Pokphand (CP) Group, the Philippine’s SM Group and Cambodia’s Royal Group.
Collectively, Chinese minorities control a ton of corporate power.
The Chinese passport: streamlining success
But how did Chinese immigrants manage such sweeping international business achievements?
On this topic, there’s a general consensus from both Western and Asian scholars.
They agree that the characteristics below make the Chinese diaspora business savvy and economically strong:
- Cultural values: an emphasis on entrepreneurship, diligence, education, thriftiness, and an eagerness to learn and succeed.
- The family business approach (the framework holding Chinese-owned conglomerates together)
- Informal inter-diaspora channels (the “bamboo network”): an exchange of business information and dealmaking built on mutual trust and ethnicity.
- Confucian culture: ideology supporting the family business model and hierarchical relations.
Chinese diaspora’s contribution to local economies
So what impact do Chinese populations have in emerging markets in Southeast Asia?
In truth, it’s a little ambiguous.
But it appears that the larger (or more realistically, the more influential) the Chinese community, the more FDI and exports the country will receive from the motherland due to the “bamboo network”.
Of course, this is only after removing advanced economies, like Korea and Japan, out of the picture.
As you can see below, Hong Kong takes home the golden goose for both. Singapore and Thailand also have significant Chinese business relationships.
The reality is that Chinese business ties spark trade and economic growth. Time and time again, these ties hoisted Southeast Asian economies up and pulled them into the global marketplace.
In that way, Chinese emigrants have added considerably to the progress and development of Southeast Asia. Of course, that’s only good news if you support Chinese hegemonic power…
Chinese migrants own excellent conglomerates
But what does all this mean to you as an investor?
Let’s recap. We’ve learned that Chinese diaspora groups are in every corner of the globe. They are especially prominent and powerful in Southeast Asia.
These communities tend to be business-centric and economically powerful. Their cultural norms reinforce prosperous corporate behavior. They are well connected with the motherland and other elite Chinese business groups.
The result? This web of influence holds up Chinese companies, even large and diverse conglomerates, high above their competitors.
To explain this point we’ve created a portfolio that includes nine of the world’s top ethnically Chinese owned conglomerates.
As you can see in the chart above, the combined stock performance of Chinese conglomerates significantly outperforms the S&P 500 index, Hang Seng index, MSCI AC Asia Pacific Index, and MSCI Emerging Markets Index – not a small feat.
But why? The reason Chinese conglomerates are worth investing in can be boiled down to Han chauvinism corporate culture.
It’s centered around an extreme devotion to business and expansion. The goal is always to grow…bigger and bigger. And they will stop at nothing to get to the top.
Below we’ve listed the top ten Chinese owned conglomerates that show great investment potential. Get a piece of the Chinese diaspora glory by keeping an eye, or dime, on their firms.
In our coming daily we’ll see how Korean “chaebols” got a little gift from their enemies and made real estate their trophy assets.