Economic success in the Asia Pacific

China recently banned James Cameron’s 2-D Avatar to give way to Chow Yun-Fat’s Confucius, the movie. “When his film premiered last week,” says The Times, “Mr. Chow said he expected Confucius to put up a good fight against James Cameron’s science fiction fantasy. He may find it a lot easier now.” Why is China obsessed with protecting its Confucian values and domestic market from Western values and interests? Could it be that their culture is so prized because it is responsible for their success throughout the ages? While numerous factors have contributed to Chinese and Asia-Pacific economic success, there is no doubt that their culture plays a primary role in the success game. It shapes the management and organization of their institutions and networks, educational systems, human resource practices, work ethic, financial habits, long-term strategies and quality management.

The secret to economic success

When Newsweek’s Fareed Zakaria interviewed Premier Wen Jiabao, he asked about China’s secret to economic success. “Premier Wen,” Zakaria asked, “your country has grown, as you pointed out, 9.5 percent for 30 years-the fastest growth rate of any country in history. What is the key to your success? What is the model?” Wen answered, “…Ensure that both the visible hand and the invisible hand are given full play…” Wen explained how socialism and capitalism could work together as one, but Zakaria wondered how China could do that since for many people, especially Westerners, it is a contradiction. For those who are familiar with Asian culture though, it is easy to understand.

Merriam-Webster defines culture as “the customary beliefs, social forms, and material traits of a racial, religious or social group.” Asian philosophy is part of their beliefs, and this easily explains Wen’s answer to Newsweek. At the core of the Middle Kingdom’s philosophy is Confucius’ Doctrine of the Mean or the Middle Way. As Confucius says, “The virtue embodied in the Doctrine of the Mean is of the highest order. But it has long been rare among people.” Chinese government officials are required to know the teachings of Confucius by heart. To its left is Sun Tzu’s Art of War, and to its right is Lao Tzu’s Tao Te Ching and the teachings of Chan or Zen Buddhism. Together, when used harmoniously, it is the Chinese, Japanese and Korean way to success.

Wen speaks of the parallelism between Adam Smith’s economic policies and Asian philosophy. The invisible hand is the market forces that are to be left alone. It follows the principles of the Tao Te Ching and passive Yin. As it says, “There are four different levels of ruler. The highest is the one who leads without words, allowing the people to follow their own natures and live in their own way.” In other words, a great ruler needs to allow natural forces such as economic market forces to move without interference, as described by Adam Smith’s The Wealth of Nations where market forces are the invisible hand.

In contrast, the visible hand is the regulatory role of government in ensuring justice and social equity. It follows the principles of active Yang, the teachings of Confucius and the Art of War. If too much laissez-faire occurs, the people will be robbed by corrupt businessmen, so the government will try to control people who create inequity and attempt to distribute wealth evenly. But if too much intervention occurs, investors will be dispirited. Therefore the government will carefully think of the right balance of incentives and deterrents to promote equitable success. As the Art of War asks, “Which rewards and punishments make sense?” When the two hands, active Yang and passive Yin are used in a harmonious and coordinated manner, success follows.

To understand Asian hierarchy, social networks and concepts such as guanxi, Keiretsu or Chaebol, one must have a firm understanding of the Pentacle of Confucius (Five Elements): Wood, Water, Earth, Fire and Metal. They are abstract representations of how everything is organized by nature in an interconnected and interdependent way. They sit at the tips of a five-pointed star that shows the dynamic harmony-conflict interplay between the Elements.

Rodney St.Michael in Sync My World: Thief’s Honor (Ren Qing) GA SK describes the Five Elements in relation to Abraham Maslow’s Hierarchy of Needs, social class, “gender” and “race.” Wood equals self-actualization needs (Scholars). Water equals superego or esteem needs (Shamans). Earth equates to social and belongingness needs (Ubuntu or Social Business Class). Fire equals security and economic needs (Military and Militant Business Class). And Metal equates to physiological or basic needs (Working Class and Bi-Military). This hierarchy of needs form a pyramid. Furthermore, the Five Elements are within each person’s mind because each well-rounded person requires all needs.

Thus, when Confucius was asked what makes a complete person, he says, “Someone who has the intelligence (Wood) of the wise official Zang Wuzhong, the uncovetousness (Water) of Meng Gongchuo, the courage (Fire) of Zhuangzi of Bian, and the talent of Ran Qiu (Metal), together with the knowledge of propriety and music (Earth), can be considered complete.” Each society also has classes corresponding to the Elements. Each gender also has an element: male, female, lesbian, gay and bisexual, respectively. And each “race” has a corresponding element: Yellows, Small Browns, Blacks, Whites and Big Browns, respectively.

However, as St.Michael asserts, while the hierarchy exists, it is dynamic and constantly moving. The Elements have infinite degrees and combinations that make each person unique yet similar when classified in this manner. The Elements are also interconnected and interdependent just like a forest ecology model. Wood (or trees) needs Water, sunshine (Fire) and soil (Earth). But it can be burned by wildfire and chopped down by Metal.

Therefore a certain balance that is needed to maintain harmony. As St.Michael states, this ecology model also corresponds to the social classes, “races,” genders, organizations, political parties, nations, etc. Thus, concepts such as guanxi, Keiretsu and Chaebol are simply variants of this model. It is the objective of the manager then to bring harmony to the organization, whether it is the family, company, government or the world, by creating the right balance of policies and strategies. The Asian view of an interconnected and interdependent society may be strange to the West, but it has given them proven success throughout the millennia, so they continue to use it, especially for entrepreneurial or family-based enterprises.

So many Asian practices are the consequence of this Confucian philosophy. For example, Yellows, considered as Scholars, place great emphasis on education. Japanese and Korean children carry heavy book bags and may do their homework past midnight. Many parents also send their children to extra-curricular schools, such as piano schools, English classes, math tutorials or science tutorials, after their regular classes. And while mainland Chinese children used to enjoy a lot of leisure hours, mainland schools are now increasing their load too. With this kind of emphasis on education, the Yellows are now ahead of their peers in terms of science and math, giving them a technological business advantage over their rivals.