“When you have culturally insensitive people come and visit a place and disparage the culture and the people and the poverty you develop an alienation and a sense of grievance against the people you are employed to serve. The service is no longer real but very forced. So we talk about this culture of ‘I’m with you’ and the idea that what I am doing helps you and the local community and what you are doing helps me too.”
Asked if this focus on communities and staff pays off in improved returns, Mr. Ho rejected the assumption. “If people try to justify stakeholder capitalism on the grounds that ultimately your profits will increase, you are an apologist of stakeholder capitalism. If you really believe in it, it may well be true that you are not maximizing your profits.”
Planting A Seed
The Asian conglomerate C.P. Group is today Thailand’s largest private company, with global revenues of $63 billion in 2018. But it started out as a seed shop in Bangkok’s China Town.
Arriving in Thailand 100 years ago barely able to speak the language, Chia Ek Chor named his business Chia Tai, taken from a Chinese expression for operating fairly and ethically.
“Conscious of our family’s immigrant status and grateful for the generous welcome they received in Thailand, my father Ek Chor sought to ‘give back to the country’ by operating his business with honesty and integrity,” says C.P. Group Senior Chairman Dhanin Chearavanont. “One of the first examples of this was seed products sold with an expiry date hand-written on the package, and a promise to exchange any that were deficient. Doing so guarantees the crop quality for farmers, whom C.P. Group counts as life partners. It was 50 years before Western retailers began to seriously adopt ‘use by’ and ‘best before’ dates and that speaks to the desire to do right by our customers.”
The values remain deeply embedded in C.P. Group’s culture and articulated through the Group’s “Three Benefits” philosophy. “Both in Thailand and beyond, C.P. Group’s priority has always been to benefit the country and the people. And only when those two priorities are met should the company seek to benefit,” the chairman said. “C.P. Group turns 100 next year and the three benefits philosophy will always be the guiding star to ensure our success wherever we invest for the next 100 years.”
Not All Perfect
While the idea of stakeholder capitalism has long been culturally acceptable and even the norm in Asia, it would be wrong to say it is a perfect model. The Western model of good governance has been slow to be thoroughly adopted and a fair share of corporate governance scandals in Asia have been the result.
“We have both a challenge and an opportunity that is very different from the West,” says Banyan Tree’s Mr. Ho. “We have embraced the idea of the broader community and done all kinds of things that are probably not always considered in the best interest of minority shareholders. Now we must adopt greater rigor in terms of defining our stakeholders and separation of interests.”
Trust in business varies widely from region to region and doesn’t translate automatically. In the US, only 43 percent of the population feel businesses are trustworthy. That means that even Asian businesses steeped in an inclusive culture need to be prepared to articulate their value, not just to domestic stakeholders, but internationally as well, in diverse markets.
Still, there is a certain arrogance in the West as it embraces stakeholder capitalism as its own thoroughly modern invention. Markets that have lived that philosophy for centuries may well serve as models for what that actually means.
Tim Payne is a Brunswick Senior Partner and Head of Asia in Hong Kong. Joanna Donne is a Partner in Singapore. Daisuke Tsuchiya is a Partner in London and Head of Japan, leading a team of more than 15 Japan experts and bilingual advisors in Tokyo and around the world. Yoichiro Sato is a Director in Brunswick’s Tokyo office, which opened in 2020.
Illustration by James Yang.