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Don’t put all your eggs in one basket: Bernard Chan

2017-05-24

The Myanmar Times  

 

EGGS in one basket – take away Chinese trade and investments, and the economy collapses. This is certainly true for Hong Kong. But is it also true for Myanmar?

Bernard Charnwut Chan, president of Asia Financial Holdings and grandson of Chin Sophonpanich, the late founder of Bangkok Bank, spoke to The Myanmar Times about the changing dynamics of ASEAN and China and the Belt and Road Initiative (BRI).

Very much like the interviewee, Hong Kong as a city often acts as a bridge between greater China and Southeast Asia. In Joe Studwell’s Asian Godfathers: Money and Power in Hong Kong and Southeast Asia, the author included Hong Kong within the sphere of Southeast Asian economies. Mr Studwell labelled Hong Kong as “a place that traditionally swivels on an axis that allows it to be part of greater China and Southeast Asia as self-interest dictates”.

As the grandson the late founder of Bangkok Bank, an executive councillor of the Hong Kong government cabinet and a deputy to China’s National People’s Congress, Mr Chan shuttles between Southeast Asia, mainland China and the metropolitan. The Myanmar Times asked him what these various roles mean to him personally, and for his businesses.

There isn’t a huge amount of identity or cultural clashes for Mr Chan, who essentially sees himself as a member of the Chinese diaspora.

“My late grandfather was Chinese, but we all have a common root: we are all Chinese. The only difference is that a majority of my family resides in Thailand and we are in Hong Kong.

“My side of the family identify ourselves as more Chinese than anything else – we’re overseas Chinese, whereas a majority of my relatives would consider themselves Thai. But of course they are of Chinese descent as well. So I don’t see that there’s a huge difference in each other, except for the fact that we are the more Chinese side of the family while they are the more Thai side of the family,” he said.

Because of his grandfather’s entrepreneurship, the family has business interests in Thailand, Hong Kong, and mainland China. That has an implication for doing businesses across the regions.

“I used to be told that you don’t want to put all your eggs in one basket. So apart from our Thai asset, we have a complete separate outfit in Hong Kong with a completely different asset that we own. The idea back then was to make sure that if something went wrong in one place, you still have another place,” he explained.

But after four decades, that mindset is no longer necessary.

 

“Today, it’s not like we need something in Hong Kong in case Thailand falls, or vice versa. However, it turns out that it’s the other way around: because we’ve been in Hong Kong for so long, we are the family gateway to China. And because we are also in Thailand, Thailand became the gateway for our family to ASEAN,” the executive councillor said, adding that there is more than ever a reason for “the two arms”, i.e. the two family branches, to work closely together.

“For our Thai family, who want to invest in greater China, they come through us because we are their natural partners. Similarly, if we, the Chinese side, ever want to invest in Myanmar or in the region, we would go for our Thai associates because they know that area better.

“Because of my private and public roles, I would be the ideal partner for my Thailand-based relatives to do business with. Similarly, if I wanted to go into Myanmar, I would definitely look for my Thai relatives for their leadership in the region. And that’s what we do, we have investments in Myanmar,” he added.

In an increasingly globalised world, Mr Chan thinks that strong business partners are pivotal because no one understands every market.

“We need local partners for every market we go to. It just so happened that we have already had partners, our relatives, in the area, so it will be a first-choice for partnership...”

Hong Kong seems to have taken the exact opposite direction: the former British colony, which was handed over to China in 1997, has become more reliant on trade with its mighty sovereign.

Mr Chan doesn’t think there is a choice between collaborating with China or not. For many countries in ASEAN, China is the biggest trading partner. But the lesson from Hong Kong is that placing all eggs in one basket is a risky move, despite the Chinese market attraction.

“There’s not really a matter of choice anymore.

“For Hong Kong, what I think we may have done wrong was that we’ve spent too much effort in one direction only – you don’t want to put your eggs in one basket.

“In the past 20 years, we may have pushed all our attention towards China because it made sense at the time and also the number is so big. So we can’t blame everyone. But Hong Kong’s survival is not about just being a city in China, we are a financial hub and a trading port, so we should also look at ASEAN, Europe, and the US; we should be looking everywhere, rather than just in China,” he argued.

The size of the Chinese market, though, presents a major dilemma.

“Although I must admit, in terms of numbers, my efforts in China would cover many grounds than, let’s say, your efforts in ASEAN.

“You could say that the China effort would outshine the ASEAN effort by a lot. But even so, I still think that you need to spread your concentration. Hong Kong’s future definitely is not about China alone, it’s about the regional play and connectivity – connecting China with the rest of the world and the rest of the world with China. Hong Kong should actively participate in ASEAN.

“I certainly hope that we will continue to maintain our efforts within ASEAN, though China will still be our major partner,” he said.

The challenge for Myanmar, which is highly dependent on Chinese foreign direct investments (FDIs) and Chinese border trade, and whose peace process also counts on the neighbour’s blessing, is surprisingly similar to the city state: China cannot be replaced, but developing connectivity within and beyond the region will help hedge the bets.

A recent special report from the Economist argued that Hong Kong’s best future is to remain China’s superconnector.

The map tells a similar picture for Nay Pyi Taw. With the Bangladesh, China, India and Myanmar Economic Corridor (BCIM) and with the BRI development, Myanmar’s economic potential may best be realised by connecting western China to the outside world.

“Like I said earlier, no one can afford to replace China. But you should still have multiple bilateral agreements within the region,” the interviewee concluded.

Bernard Charnwut Chan, president of Asia Financial Holdings and grandson of Chin Sophonpanich, the late founder of Bangkok Bank, spoke to The Myanmar Times about the changing dynamics of ASEAN and China and the Belt and Road Initiative (BRI).

Very much like the interviewee, Hong Kong as a city often acts as a bridge between greater China and Southeast Asia. In Joe Studwell’s Asian Godfathers: Money and Power in Hong Kong and Southeast Asia, the author included Hong Kong within the sphere of Southeast Asian economies. Mr Studwell labelled Hong Kong as “a place that traditionally swivels on an axis that allows it to be part of greater China and Southeast Asia as self-interest dictates”.

As the grandson the late founder of Bangkok Bank, an executive councillor of the Hong Kong government cabinet and a deputy to China’s National People’s Congress, Mr Chan shuttles between Southeast Asia, mainland China and the metropolitan. The Myanmar Times asked him what these various roles mean to him personally, and for his businesses.

There isn’t a huge amount of identity or cultural clashes for Mr Chan, who essentially sees himself as a member of the Chinese diaspora.

“My late grandfather was Chinese, but we all have a common root: we are all Chinese. The only difference is that a majority of my family resides in Thailand and we are in Hong Kong.

“My side of the family identify ourselves as more Chinese than anything else – we’re overseas Chinese, whereas a majority of my relatives would consider themselves Thai. But of course they are of Chinese descent as well. So I don’t see that there’s a huge difference in each other, except for the fact that we are the more Chinese side of the family while they are the more Thai side of the family,” he said.

Because of his grandfather’s entrepreneurship, the family has business interests in Thailand, Hong Kong, and mainland China. That has an implication for doing businesses across the regions.

“I used to be told that you don’t want to put all your eggs in one basket. So apart from our Thai asset, we have a complete separate outfit in Hong Kong with a completely different asset that we own. The idea back then was to make sure that if something went wrong in one place, you still have another place,” he explained.

 

But after four decades, that mindset is no longer necessary.

“Today, it’s not like we need something in Hong Kong in case Thailand falls, or vice versa. However, it turns out that it’s the other way around: because we’ve been in Hong Kong for so long, we are the family gateway to China. And because we are also in Thailand, Thailand became the gateway for our family to ASEAN,” the executive councillor said, adding that there is more than ever a reason for “the two arms”, i.e. the two family branches, to work closely together.

“For our Thai family, who want to invest in greater China, they come through us because we are their natural partners. Similarly, if we, the Chinese side, ever want to invest in Myanmar or in the region, we would go for our Thai associates because they know that area better.

“Because of my private and public roles, I would be the ideal partner for my Thailand-based relatives to do business with. Similarly, if I wanted to go into Myanmar, I would definitely look for my Thai relatives for their leadership in the region. And that’s what we do, we have investments in Myanmar,” he added.

In an increasingly globalised world, Mr Chan thinks that strong business partners are pivotal because no one understands every market.

“We need local partners for every market we go to. It just so happened that we have already had partners, our relatives, in the area, so it will be a first-choice for partnership...”

Hong Kong seems to have taken the exact opposite direction: the former British colony, which was handed over to China in 1997, has become more reliant on trade with its mighty sovereign.

Mr Chan doesn’t think there is a choice between collaborating with China or not. For many countries in ASEAN, China is the biggest trading partner. But the lesson from Hong Kong is that placing all eggs in one basket is a risky move, despite the Chinese market attraction.

“There’s not really a matter of choice anymore.

“For Hong Kong, what I think we may have done wrong was that we’ve spent too much effort in one direction only – you don’t want to put your eggs in one basket.

“In the past 20 years, we may have pushed all our attention towards China because it made sense at the time and also the number is so big. So we can’t blame everyone. But Hong Kong’s survival is not about just being a city in China, we are a financial hub and a trading port, so we should also look at ASEAN, Europe, and the US; we should be looking everywhere, rather than just in China,” he argued.

The size of the Chinese market, though, presents a major dilemma.

“Although I must admit, in terms of numbers, my efforts in China would cover many grounds than, let’s say, your efforts in ASEAN.

“You could say that the China effort would outshine the ASEAN effort by a lot. But even so, I still think that you need to spread your concentration. Hong Kong’s future definitely is not about China alone, it’s about the regional play and connectivity – connecting China with the rest of the world and the rest of the world with China. Hong Kong should actively participate in ASEAN.

 

“I certainly hope that we will continue to maintain our efforts within ASEAN, though China will still be our major partner,” he said.

The challenge for Myanmar, which is highly dependent on Chinese foreign direct investments (FDIs) and Chinese border trade, and whose peace process also counts on the neighbour’s blessing, is surprisingly similar to the city state: China cannot be replaced, but developing connectivity within and beyond the region will help hedge the bets.

A recent special report from the Economist argued that Hong Kong’s best future is to remain China’s superconnector.

The map tells a similar picture for Nay Pyi Taw. With the Bangladesh, China, India and Myanmar Economic Corridor (BCIM) and with the BRI development, Myanmar’s economic potential may best be realised by connecting western China to the outside world.

“Like I said earlier, no one can afford to replace China. But you should still have multiple bilateral agreements within the region,” the interviewee concluded.