Just look at Japan: For nearly a decade, economists and analysts have talked of ripping apart the opaque alliance among government, business and banking leaders that runs Japan Inc. Their behind-the-scenes agreements to lend to inefficient and outmoded businesses are clearly undermining Japan’s global competitiveness. Still, this system also produced the world’s greatest postWorld War II economic success story, providing millions of Japanese citizens with jobs and security. Little wonder then that Japan’s government is reluctant to toss this formula aside.
This month we look at two very different Asian companies -- Singapore’s Singapore Telecommunications and South Korea’s Kookmin Bank -- that, like their Japanese counterparts, are products of their countries’ recent history. In each case, shareholders must view the company’s goals through the prism of the government’s intentions.
SingTel has undergone a remarkable transformation in recent years from a stodgy, government-run local phone monopoly to a multinational with operations in Australia, Belgium, India, Indonesia and Thailand. Yet, as Hong Kong Bureau Chief Kevin Hamlin relates in “Long Distance Company” (see related story), the majority of SingTel shares are owned by the government, a fact that’s raising questions among minority stockholders about the company’s aims. Is SingTel a pawn in Singapore’s quest to expand its economic interests beyond the hugely successful -- but small -- city-state? In an interview with Hamlin, CEO Lee Hsien Yang, son of Singapore founder Lee Kuan Yew, makes a persuasive case for the viability of SingTel’s corporate strategy. Still, minority shareholders wonder just where their interests fit in with the company’s very long-term plans.
Perhaps because its recent history is less peaceful and prosperous, South Korea is reforming more energetically. Seoul-based Contributor Donald Kirk (“Riding Korea’s Big Tiger”) tells the story of the government-backed 2001 merger of Housing & Commercial Bank and Kookmin Bank to create the country’s biggest financial institution, a privatized lender with the clout to force modernization on its rivals. Run by smart, tough-minded Kim Jung Tae, the son of a farmer, the new Kookmin has become a market-driven institution devoted to consumer lending and unafraid to pull loans from big, poorly managed companies. Kookmin shareholders know exactly where Kim is trying to take his bank and why. The Japanese government should take note.
