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Diaspora forms ‘bamboo' supply chain

From Saturday's Globe and Mail

The first few bars of Flight of the Valkyries signal Amin Hardjono's cellphone is ringing again, but the Jakarta trader is busy looking for a missing stack of Chinese-made microwave ovens his brother ordered three weeks ago.

“He is calling 10 times a day because he's got a buyer there in South Kalimantan [province] who'll take as many as we can deliver,” Mr. Hardjono says, before lapsing into Hakka dialect to take a 30-second call from a Shanghai supplier.

“That was Uncle Tan who sent the ovens but he doesn't have any more coloured pink and that's what we want. He's going to call someone he knows and maybe we can do business. Later he'll send me an e-mail and if the price is right, next shipment we'll take a couple of hundred.”

Bullish consumer spending is one sign Indonesia is finally dragging itself out of the emergency ward seven years after the Asian economic collapse, and much of it is fuelled by the availability of cheap Chinese-made goods.

The key links in the supply chain are the enduring familial and business relationships between merchants in southeast China and the country's diaspora.

“Who can hold a candle to the influence of the Chinese diaspora?” a British investment banker says of the estimated 34 million Chinese who live outside China, Hong Kong, Macau or Taiwan.

Even those who have lived outside the motherland for generations are seen by Beijing as powerful vanguards in its domestic modernization march and its emergence as a global economic colossus.

“The Chinese government sees the overseas Chinese as a very important force,” said recent Chinese emigré Zong Li, associate professor of sociology at the University of Saskatchewan, who is himself busy developing academic connections between Canadian and Chinese universities.

“Their strategy is that even if you physically move out of China, you can still make a contribution to China through business and investments, and culture.”

Beijing's policy reversal in the past two decades to allow Chinese to emigrate throughout the world, he said, was a deliberate move to invigorate an unbreakable “bamboo” cultural and business network to help modernize China.

The global breadth and dynamism of what author and entrepreneur John Kao has called the Chinese Commonwealth is viewed by some with awe and envy.

“China's success [in using its diaspora] can give us some insight,” University of Hyderabad sociologist Sadananda Sahoo has written. According to the Indian Chambers of Commerce and Industry, Chinese expatriates account for almost 60 per cent of foreign investment in China.

“The only parallel I can think of would be the European Jews in the 19th century, the great banking families of the time and the way they used the network of families in Europe, Asia and eventually North America to expand their interests,” said the Jakarta-based investment banker.

In Canada, there are almost one million people of Chinese descent, and Chinese immigrants are arriving at the rate of up to 40,000 a year, making them the single largest source of immigration.

The community's numbers include the descendants of railway-building workers and the scions of billionaire tycoon Li Kai Shing, who has close ties to Beijing's power brokers.

More than half of the overseas Chinese live in Southeast Asia, where they have been moving for centuries. But they are now found on every continent and many — even in small numbers and out-of-the-way places — are fervently focused on doing business with their ancestral homeland.

Hakka Chinese began settling on the African island of Mauritius in the 19th century and the 30,000-strong community is dominated by business people who own restaurants, retail and wholesale shops – and companies trading primarily with China.

Peru is home to one of the largest Latino Chinese communities. Chinese slave labourers working on sugar plantations were the first arrivals in the mid-19th century, and the fledgling Peruvian-Chinese community grew in the following century in successive small waves.

Like elsewhere, many of these immigrants established restaurants known as chifas in what is commonly referred to as Barrio Chino de Lima, one of the Western Hemisphere's earliest Chinatowns. But, as China sought to beef up its relations with Latin America, local Chinese business and cultural groups also became bridges for trade.

Today, China has become Peru's third-largest export market. Fishmeal and metals are the big products. China's Shougang Group owns Peru's major iron-ore mine.

Back in Indonesia, home to about seven million residents of Chinese descent, trade with China grew by close to 30 per cent in 2003 to the equivalent of $12.7-billion.

The burgeoning trade has developed despite well-entrenched discrimination against the ethnic-Chinese minority, dating back to the Dutch colonial period.

In recent years, the repeal of laws that banned the use of Chinese characters and publications, and outlawed public celebration of Chinese New Year, sparked a renewed interest in the old country.

By some estimates, business conglomerates owned by ethnic Chinese — like the Salim Group, Sinar Mas, Lippo and Barito Pacific — control upward of 70 per cent of the Indonesian economy. China is now Indonesia's fourth largest source of imported goods, primarily machinery, electronics and motorcycles.

China is also pouring money into infrastructure projects in Indonesia, the so-called “relationship investing” that was once a cornerstone of U.S. economic policy in developing countries. Agreements for soft loans totalling $400-million were signed in 2002. The money is being used to build bridges, power plants and railway lines.

While denying that trade policy favours Indonesia's ethnic-Chinese community, a Chinese diplomat in Jakarta conceded the relationship is partly driven by shared language and values.

“This is a sensitive issue between Indonesia and China because of our recent history,” said deputy commercial secretary Li Haisheng. “The Chinese government's position has been made clear to Chinese-Indonesian businessmen, that if a person is Indonesian, they are not Chinese.

“But of course there are a large number of people here who can still speak Chinese fluently so obviously they are in a position to take advantage to do business in China. They can serve as a bridge between the two governments.”

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