Concept

Asian Conglomerates

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Asian tycoons and their conglomerates tend to have the same repeating pattern. This concept sequence outlines what business expertise looks like in messy, developing countries with little-to-no rule-of-law.

The broad arc of an Asian Tycoon is laid out in the Commoncog essay How to Become an Asian Tycoon. Briefly, the arcs looks like this:

  1. They get their start in business, which is almost always some form of trading. From this they learn 1) calibrated risk taking, 2) a nose for demand, and 3) an intuitive sense of deal leverage.

  2. At some point, every tycoon realises that competition is for suckers.

  3. They seek out (or stumble onto) a moat-protected business. This is usually — though not always — a government granted monopoly.

  4. They have a source of cash that is unassailable. From this they expend outwards.

  5. They survive through political or macro-economic change.

The cases in this sequence demonstrate various aspects of these Asian tycoons and the conglomerates they build.

Some of the themes worth watching out for include:

  • Corruption (common because the majority of developing Asian countries have governments with weak institutions).

  • Power — which is necessary when there is no rule of law.

  • Family succession dynamics.

  • Control dynamics in a conglomerate structure.

Cases

The Samsung Risk

How Samsung became the single most important company in South Korea.

Members only

The Rise of Dhirubhai Ambani

The story of Dhirubhai Ambani, founder of Reliance Industries, who transformed from a polyester trader to a tycoon over the course of his life.

Members only