August 7, 1995


Eric Ellis, Fuzhou

THE six Chinese police banging at the hotel room door on Saturday night were clearly not out to improve their English.

 "You have broken the regulations of the People's Republic of China, and you could be severely punished," barked Ms Chen Yuyan, the deputy director of the Fujian Provincial Public Security Bureau (Foreign Ministry Division).

The Australian Financial Review's crime against the Chinese people, the formidable Madame Chen revealed, was to have visited earlier that day the freewheeling port village of Fuqing (pronounced Foo-ching), 50 kilometres from the provincial capital, Fuzhou. The town's sensitivity is not obvious. Remarkable for its ugliness, it has no military significance and is prominent mostly for the business acumen of its emigrants: Fuqing has helped spawn one of the world's most potent economic forces, the hua qiao (hwa chow) or overseas Chinese economic and political migrants. Indeed, Fujian province has spawned 14 of the world's 20 richest Chinese tycoons.

By the reckoning of Singapore's elder statesman Mr Lee Kuan Yew - himself an ethnic Hakka (a group originally from Southern China, having migrated from the north centuries earlier) - the overseas Chinese community today controls about $US900 billion in assets worldwide, much of it in Asia outside China.

This "invisible China" - an economy of 50 million people dispersed through the world's Chinatowns - generates in Asia, alone, a gross national product estimated by the World Bank at $US500 billion - higher than that of China itself. This economy has expanded 10 per cent a year.

About $US4 billion to $US5 billion is in the hands of one man. The Fuqing native-cum-Indonesian tycoon Liem Sioe Liong, alias Soedarno Salim, is the world's richest Chinese. His close friendship with President Soeharto has helped him to his staggering fortune. Liem's main business partner, Liem Oen Kians, or Djuhar Sutanto, is also from Fuqing.

But back to Madame Chen and her mob of goons. After ordering me to dress, and escorting me to a "conference room" for "interrogation", she reminded me that an application to come to China to research the origins of the hua qiao had been rejected earlier by the Foreign Ministry in Beijing on the grounds that this correspondent was not ethnic Chinese and, therefore, would be "totally unable to understand the relationship between China and the hua qiao".

The AFR had decided to go anyway on the proviso that no interviews would be conducted but that no report about the hua qiao would be complete without a visit to the ancestral source of many in the diaspora.

But for two-and-a-half hours this correspondent was detained in Fuzhou's Hot Spring Hotel, less than a kilometre from one of the few statues of Mao Zedong still standing in Deng Xiaoping's China.

I was released only after writing a Cultural Revolution-style self-criticism, admitting my crimes against the people and promising never to commit them again.

If heavy-handed experienced such as the AFR's with the Fuzhou PSB helps explain why China has generated the world's biggest diaspora, then Fuqing's main street illustrates its purchasing power.

About 90 per cent of the factories on the strip are controlled by Liem, tipping money back into his ancestral home. Of the village's 50,000 workers, Liem's operation - comprising food, plastic flowers, shoes, clothes, packaging and Fuqing's new port - employs 20,000 of them.

When the reclusive Liem burps on the Fuzhou noodles he purports to love, Indonesia and increasingly China says dui bu qi (dway-boo-chi), or excuse me.

Fuqing's only decent hotel, the Rong Qiao, or "Overseas Connection" is also Liem's, hosting groups of Chinese from Manila, Penang, Singapore and Medan, the main centre of Fujian's expatriates in Asia, all returning for sentimental reasons, or more likely, corporate ones.

Once considered country hicks by fellow hua qiao, Fujian natives, particularly from the Fuzhou region, contribute a disproportionate amount of Asia's tycoons.

Apart from the two Indonesian Liems, Fuzhou is also the ancestral home of much Taiwan's 20 million people, the Malaysian tycoon Robert Kuok, who controls the Shangri-la Hotel group and Hong Kong's South China Morning Post newspaper, plus assets in sugar, property and plantations.

Kuok's Malaysian partner at the SCMP, fellow close Mahathir ally Khoo Kay Peng, of Malayan United Industries, is ancestrally from Fuzhou, as are the powerful Indonesian Mochtar family of Lippo group fame.

After Kuok on the wealth scale comes Indonesian Robbie Sumampouw, who owns the Christmas Island casino, Chen Teh Hsu, part-owner of Bangkok Bank, South-East Asia's biggest, timber barons Tiong Hiew King and Wong Tuong Kwang of Malaysia. Controversial Indonesian banker Eddie Tansil, who was jailed last year for fraud, is a Fuzhou native, while three of six Chinese members of Dr Mahathir's cabinet are descended from Fuzhou.

Says Penang-based historian Khoo Suu Nin: "The old-style Hokkien (Fujian) dynasties would never have competed against each other. That would be unthinkable."

The same scene that propels Fuqing's economy is being played out across China, and particularly in the booming coastal provinces and large cities.

Where big multinationals like Boeing, Siemens, Volkswagen and ICI generate headlines, hua qiao generate profits. Three of China's biggest investors are Robert Kuok's Kerry Group, Liem's Salim group and Tahi Chiu Chou (Guangdong) Dhanin Chearavanont's Char Oen Pokhpand group.

Kuok's foreign oases of hotels, apartments, shops and offices in Beijing and Shanghai earn profits estimated at $1 million a day. Dhanin's operation gives birth to five million chickens a week for Chinese and foreign dinner tables.

When communist China parades the staggering statistics of foreign investment it has generated from Deng's style of runaway capitalism, some $US25 billion ($34 billion) last year, what the figures don't reveal is that at least 75 per cent is hua qiao sourced, the communities at last deciding that China is finally moving in a politically acceptable direction.

Hua qiao communities of various ethnic and dialectic extraction, but almost exclusively from the Southern Chinese provinces of Fujian and Quangdong, are not just prominent but dominate, often controversially, the economies of Indonesia, Malaysia, the Philippines, Thailand, Burma, Vietnam and Cambodia and, some might say, inner Sydney.

The ultimate hua qiao community is probably Singapore, where the 76 per cent majority of ethnic Chinese, Hokkien-based, physically control a country, the proverbial displaced Chinese island in a Malay Sea, increasingly setting the region's development and political agenda with its loud voice.

On the principle of fi-qu-shing, or the four basic needs of daily life -food, shelter, transport and clothing - ethnic Chinese are behind the region's biggest, and smallest, banks, trading companies, property developers, air and shipping companies and non-government media.

In each country, Chinese anchor the middle class, with disposable incomes often resentfully many times higher than the original inhabitants, on a par with OECD norms. In Indonesia, and particularly in Malaysia, scratch the surface of what appears to be a "Bumi" or local business, and more often than not hua qiao will be pulling the strings.

When economists discuss the region's now fabled boom, they mostly mean a Chinese-generated one.

Their immense resources and ancestral connections in China and South-East Asia are beginning to be recognised by those outside Asia as a specific route into the region. A foreign tie-up with a Hokkien firm in Penang could yield deals in Jakarta, Manila, Rangoon, Taipei and Fujian itself if the right connections are made.

But while dialect links such as those through the Hokkien hua qiao and their sub-groups are playing less and less a role in modern Chinese commercial life, a tendency to do business with ethnic Chinese remains strong. The Australian Department of Foreign Affairs and Trade has tried to address this phenomenon in the East Asia analytical unit's latest offering, Overseas Chinese Business Networks in Asia, a copy of which has been obtained by the AFR.

The 50-page report, 18 months in research, will be launched by the Prime Minister on August 15, and is designed to be a handbook for corporate Australia in dealing in the region.

Over the next week, the AFR will look at how Chinese do business in Asia and how the region's pragmatic governments let them, and reap the benefits.