Asia tycoons thrive on government handouts

Earlier this month, I attended the Forbes Global CEO Conference. Discussion panels that were supposed to inspire great business minds to brainstorm on big questions turned out to be puff interviews. Media were walled off from the executives, as if they were royalty. Few of the CEOs even bothered to take questions from the media – Air Asia CEO Tony Fernandes being one notable exception (and he agreed to investigate my issue with the budget airline) – or make themselves available for interviews; my thanks to Apollo Hospitals managing director Preetha Reddy for sitting down to discuss medical travel.

The conference’s overwhelmingly self-congratulatory tone was perhaps to be expected. However, the outright lies spouted by some bigwigs, for example children of billionaires recounting their struggles to reach the top of the family business, shocked me. You expect public relations people to fib on the behalf of the client, but bosses born on third base telling counterparts how they invented the triple exhibits a vast reservoir self-delusion.

That level of detachment from reality confirms the gulf between conventional wisdom and reality revealed in Asian Godfathers, a groundbreaking book by journalist Joe Studwell that’s even more relevant now than when it debuted in 2007.

(I’m looking forward to reviewing Studwell’s latest book, How Asia Works: Success and Failure in the World’s Most Dynamic Region, released earlier this year.)

Subtitled Money and Power in Hong Kong and Southeast Asia, Asian Godfathers debunks myths and solves key mysteries surrounding Asia’s richest people. For example, most tycoons present rags-to-riches stories, but the book shows that most inherited their money or married the boss’ daughter.

The most devastating revelations are about how these tycoons typically make their money. They like to claim that they’ve done it through bare knuckle capitalism free of government interference but in most cases, these moguls have long gotten preferential government treatment, from colonial concessions for opium plantations to modern crony capitalism’s import licenses and telecom concessions. In many cases, these government handouts provide the keystone of what have grown into sprawling international empires.

Studwell has no time for the lie that Hong Kong and Singapore are the world’s freest economies. He also demonstrates how tycoons abuse capital markets, leading to the weak performance of Asian shares compared with the region’s economic growth.

Government favoritism toward tycoons undermines another pillar of Asian commercial mythology: ethnic Chinese superior business skills. Studwell notes that ethnic Chinese in Southeast Asia benefited disproportionately from government largesse going back to colonial times because they posed no threat to the indigenous political elite. That’s a well known story.

But Studwell also challenges the Asian Values myth championed by Singapore’s founding father Lee Kuan Yew. Lee contends that Confucian values underpin the accomplishments of Chinese tycoons’ in Asia, but Studwell shows their success is due to an ability to assimilate and adapt to whatever regime happens to be in power, just as Lee did for decades under British rule when he called himself Harry. In fact, Studwell portrays Lee as the ultimate chameleon who’s stood for nothing consistently throughout the years except his own perceived self-interested.

Above all, Studwell shows that, aside from their ability to blow with the wind and game the system, there’s little special or brilliant about Southeast Asia’s tycoons. They haven’t created any globally competitive brands or produced a single technological breakthrough. Rather than driving Southeast Asia’s growth, they’ve ridden the wave on the backs on tens of millions of poor people. And they could hardly be more proud of it.

Totally globalized native New Yorker and former broadcast news producer Muhammad Cohen is author of Hong Kong On Air, a novel set in his adopted hometown during the 1997 handover about television news, love, betrayal, high finance, and cheap lingerie. See his bio, online archive and more at www.muhammadcohen.com; follow him on Facebook and Twitter @MuhammadCohen.

Air Asia Indonesia performance doesn’t fly

Air Asia founder Tony Fernandes says “Indonesia is the jewel in our crown.” If he’s serious, he’d better upgrade his royal caretakers.

I’m a longtime Air Asia flyer. I’m used to the budget carrier’s no-frills, pay-for-it-if-you-want-it approach laden with creative surcharges, and I’m resigned to its at best indifferent customer service. But my experience with Air Asia Indonesia was a shock.

First, there’s the absolutely tacky – and in many jurisdictions likely illegal – practice of requiring that each passenger pay in advance for baggage, whether they have any or not, rather than being straightforward and simply adding that mandatory charge to the base fare. While Air Asia has always dug up ways to charge for services, it’s never gone to this extreme, making customers buy something regardless of whether they want or need it. That goes against the entire Air Asia ethos.

Far worse was the experience when I tried to fly Air Asia Indonesia from Bali to a family wedding in Makassar. My wife’s youngest brother was getting married, so she and our six year old daughter both had key roles in the ceremony. En route to the airport – I’d been on assignment for Fodors.com – we got caught in Bali’s extraordinary traffic as it prepares for major international meetings later this year, and arrived at 2:40pm for a 3:30pm flight.

The employee at the desk refused to check us in, even the plane had not even arrived at the airport. And, of course, Air Asia wouldn’t consider rescheduling our flights or refunding our money. We asked him for let us talk to the supervisor; this employee claimed he was the supervisor. We asked him to let us talk to the people at the gate to see if they could help us – again, the aircraft hadn’t arrived yet, so it’s not as if boarding had already begun – and he refused. As my wife pleaded and our daughter cried, the employee seemed to delight in our predicament, rather than show any desire to help us.

We appealed to other airport personnel, including the security staff, to assist us. They recognized the absurdity of the Air Asia employee’s behavior and tried to intervene on our behalf. Again, the Air Asia employee refused to show any common sense or common decency. Instead, he became confrontational and aggressive toward us. We were in a completely ridiculous situation, but it was clear that the person who could fix it wouldn’t.

Fortunately, we found an alternative flight to Makassar with another carrier at substantial additional cost, and missed nearly all of the evening ceremonies due to the later flight time. All of this unhappiness could have been avoided if this one Air Asia Indonesia employee had chosen cooperation rather confrontation as his mode of customer service. When purchased our new tickets, we couldn’t help notice that the Air Asia ticket counter’s thick glass window had been broken; apparently we are not the carrier’s first dissatisfied customers in Bali.

Perhaps worst of all, I wrote to Air Asia about the incident via its website with full details, including the name of the employee. I got an acknowledgement that the item was received but no further response. I tried to follow up without success, then began the whole process again, and again got no reply. No one at Air Asia had the guts to stand up and say the employee followed our rules and we stand by his actions, or to apologize and say they’d try to ensure future customers didn’t face similarly suffer in situations that could be fixed so easily.

So let me now ask Tony Fernandes whether he thinks his employees took good care of Air Asia’s crown jewel in this case. I look forward to his response.

Totally globalized native New Yorker and former broadcast news producer Muhammad Cohen is author of Hong Kong On Air, a novel set in his adopted hometown during the 1997 handover about television news, love, betrayal, high finance, and cheap lingerie. See his bio, online archive and more at www.muhammadcohen.com; follow him on Facebook and Twitter @MuhammadCohen.