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Institutional
Integrity
By Michael Alan Hamlin
August 20, 2001
Just this week my coauthors and I finished up editing
the proofs from our new book, Marketing Asian Places (MAP). Some
of the cases in the book have appeared as columns in this space.
Reader feedback has been very valuable in tightening up the cases,
and vetting them for the inevitable typos and mistakes that occur
with any major project. Hopefully, we've caught most of them.
I'm glad it's out the door. It's been a huge task to
research and write the book, and it naturally took almost a year
longer than we all originally expected. That's my fault. I've never
been able to master the task of balancing regular work with big-ticket
writing.
By big-ticket, I don't mean financial rewards; rather,
number of words. MAP is by far the lengthiest book I've written,
but in this case, I fortunately didn't have to supply all the words.
Philip Kotler, the renown marketing expert from Northwestern's Kellogg
School of Management, and Irving Rein and Donald Haider, also Northwestern
professors, contributed substantially to the book, which is based
on their original work entitled simply Marketing Places. MAP draws
from that earlier work and illustrates the strategic principles
of place marketing in an Asian context.
My original motivation for doing this book was the
chance to have my name on a book with Prof. Kotler. Prof. Kotler
is a generous generator of opportunity for friends and associates,
and coauthoring a book with him and his colleagues is an obvious
strategic marketing initiative for any aspiring author and speaker.
He has also written books with other writers based in Asia, including
Hermawan Kartajaya (Repositioning Asia, to which I did contribute
some cases), a well-known marketing consultant in Indonesia, and
Eduardo L. Roberto (Social Marketing, which is now being updated),
the popular and respected marketing professor at the Asian Institute
of Management.
But as in all book writing, this process quickly became
a challenging but meaningful learning opportunity. Asia is, after
all, a very big place, with around 600,000 communities and it is
crammed with all different kinds of people (which sort of makes
notions of an "Asian" way of doing things laughable).
As in the case of the best teachers, the best authors are those
that learn the most from doing their work, not those that pontificate
about what they know, and what they think they know.
Among the things we learned about attracting value-added
investors, tourists, and bright people (and retaining them), is
the increasing importance of institutional integrity, and the increasing
impatience in Asia with governments that don't live up to their
mandates. By institutional integrity, I mean government institutions:
the judiciary, the executive, and the legislative.
Although institutional integrity is not absolute as
an investment catalyst, it's important enough to have threatened
China's growth in the late 90s. At that time, China felt that investor
greed would assure a steady inflow of investment and job creation
despite the difficulty of doing business with China's bureaucracy,
the frustration of being undercut by importers paying off corrupt
customs officials, or hopelessness of pursuing redress when necessary
through the murky legal system.
China was wrong, and investment stalled. When that
became obvious, growth in foreign investment had begun to stagnate,
and investors were pulling out and selling off assets, usually for
a fraction of their original value. Straddled with a bankrupt financial
sector and debt laden state-owned enterprises, it was clear to China's
leaders that they only way the country could continue to grow -
and the Communist Party to stay in power - was to strengthen institutions
and level the playing field for foreign investors.
When government got serious, it was serious indeed.
Hundreds of corrupt customs officials, for example, were executed.
Customs officials are now regularly rotated around the country so
that it is nearly impossible for them to develop the underworld
networks necessary to enrich themselves. Executives of state-owned
enterprises guilty of smuggling and bribing officials were likewise
executed or jailed.
Premiere Zhu Rongji was the role model. He first came
to prominence as the bureaucracy-busting mayor of Shanghai. His
effectiveness in reducing red tape and cleansing the local bureaucracy
earned him the nickname "One Chop Zhu." As most of you
know, a chop - a wooden or stone stamp into which names or positions
are engraved - is used in place of a signature for approvals. While
some say that Shanghai's bureaucracy remains a stickler for doing
things by the rules, few would argue that dramatic change hasn't
taken place.
As premier and second-in-command to president Jiang
Zemin Mr. Zhu has continued to strengthen government institutions,
and to make them accountable. Now, compare the China experience
with that of the Philippines. Although investment here has not just
stalled, but plummeted, does government understand why? If not,
why not? If it does understand the reasons, what has it done to
fix the problem or problems?
We all know what the sad answer is to those questions.
As a result, institutional integrity instead of strengthening, is
weakening, hard as that might seem to imagine. And with government
and the nation sidetracked by political bickering, it doesn't seem
that much is going to get done either. This means that the irrelevancy
of government is increasing, and people and the businesses they
work for are acknowledging the reality that government isn't going
to help them out.
It's good that life goes on with out government. But
just think how much better off we'd be with a government that worked.
(Mr. Hamlin is managing director of the consultancy TeamAsia
and the author of two books on Asian economies and managing in Asia.
His latest book is The New Asian Corporation: Managing for the
Future in Post-Crisis Asia. His e-mail address is mahamlin@teamasia.com.ph.)
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