Indonesian Ethnic Chinese Use Bribes to Survive
1997 contained scandal and trouble for Lippo Group based in Indonesia. The giant company, valued at more than $6 billion was controlled by the ethnically Chinese Riady family, and one target of anti-Chinese riots that killed 1,200. Ethnic Chinese were only about 3.7% of the Indonesian economy but controlled the majority of its economic strength, eliciting anxiety, fear and anger.
Around this time, international scandal arose around Lippo's use of money. Bill Clinton, over in the USA, was suspected of being bribed and adopting pro-Lippo Group policy as a result. Newsweek and other US commentators accused the Lippo Group of throwing money around in shadowy deals to gain benefit.
Lippo's actions, however, while perhaps reprehensible on an individual scale, are environmentally-induced relationship-building tactics used to minimize political instability faced by ethnic Chinese in Indonesia.
A key challenge emigrant Chinese face is lack of political stability, which has forced adaptation of alternative methods to reduce risk. Such lack of stability can occur in the country's macroculture, when the country accepting Chinese immigrants is itself volatile, or through the small size of the Chinese population.
An additional possible factor is lack of political activism by emigrant Chinese. Such macro-lack of stability forces business leaders to use bribery and other methods to gain official favor and connections, and thus embed themselves and their enterprise, reducing operational risk. Such integrative behavior is a repeated phenomenon, but has adopted a specific cultural vibe for the Chinese along the term guanxi as opposed to watsa in Arabic and simply "Old boy network" in English.
Indonesia is a country with historical anti-Chinese sentiment and a pseudo-dictatorship that made guanxi the only way to succeed. Predominately Islamic, native Indonesians have historically separated themselves from the Chinese migrants, who comprise a minority of the population yet provoke high emotions.
Suharto, the leader of Indonesia for almost 40 years took advantage of his power to build a culture of bribery, where only generous donors could do business. At the same time, however, Suharto took advantage of the increasingly negative connotation against Ethnic Chinese. Massive anti-Chinese riots led to a temporary panic and the death of dozens alongside with looting - and some propose that Suharto planned parts of the rioting in order to be able to declare martial law.
Lippo Group was thus primed for a money-slanted guanxi approach of building networks by lack of formal legal structure and a volatile region. As Lippo Group grew, it applied those techniques internationally, even as far as the USA. This type of power allowed Lippo to make real demands. Lippo members, for example, once decided that Bill Clinton should write a get well card to a sick investor.
Not only did Mr. Clinton do so, he had the letter hand-delivered. Such network building is indispensible to reduce environmental risk and can be seen in 1998 post-riot courtship of the new administration that led to appointments in high positions such as state "business ambassador."
Articles such as those in Newsweek profess anger, amazement when such affairs come to light in an American light. Formal legal structure and minimal volatility provide the comfort zone from which such articles originate. Meantime, money-based guanxi building approaches manipulate sociological dynamics to minimize the instability of governance around the Lippo Group. While any one person is culpable for morally questionable actions, the challenges facing ethnic Chinese mean such tactics are necessary for economic survival.