CurrentsBook Review—The Survival of theMost Responsive: Asian BusinessDevelopments and Their Global Impact GILL IAN RICE

Kemp, Geoffrey. The East Moves West: India,China, and Asia’s Growing Presence in the Mid-dle East. Brookings Institution Press, 2010. 300 pp.ISBN: 978-0-815-70388-4 (hardcover). $29.95.

Gallagher, Kevin P., & Porzecanski, Roberto. TheDragon in the Room: China and the Future ofLatin American Industrialization. Stanford Univer-sity Press, 2010. 200 pp. ISBN: 978-0-804-77188-7(paperback). $19.95.

Ulrich, Dave (Ed.). Leadership in Asia: Challenges,Opportunities, and Strategies From Top GlobalLeaders. McGraw-Hill, 2010. 288 pp. ISBN: 978-0-071-74384-6 (hardcover). $29.95.

The awarding of the 2022 soccer World Cup toQatar took many by surprise, especially the UnitedStates and England, who quickly revealed them-selves to be sore losers. In a National Public Radiocommentary, Parag Khanna and Karim Makdisi at-tribute Qatar’s win to international soccer organi-zation FIFA’s nebulous criteria, “legacy” effects: thelong-term benefits of raising soccer’s profile in lesssignificant parts of the world and making the in-ternational sporting community as truly global aspossible. Geoffrey Kemp’s The East Moves West ex-amines the future of Middle Eastern countries likeQatar, which is at once a Middle Eastern nation andpart of West Asia.

In the 1990s, there existed a “unipolar moment”when the United States was the world’s sole

superpower; this moment has passed, and new pat-terns of international relations are evolving, not onlyin sport, but in trade, investment, cultural exchange,and politics. Kemp’s analysis focuses on the mean-ings and impacts of closer integration between Asiaand the Middle East.

Despite the slowdown in the world economy fol-lowing the financial crisis of 2008–2009, partsof Asia continue to prosper. For example, KevinGallagher and Roberto Porzecanski refer to Chinaas “the dragon in the room” in their analysis ofthe impact of China’s rise on Latin America. Theyshow how China is outcompeting Latin Americanmanufacturers in world markets to such a degreethat it may threaten the ability of Latin America togenerate long-term economic growth. What is theimpact of Asian countries’ economic ties with theMiddle East? Kemp argues that as these ties con-tinue to strengthen, a trend even the most cautiousof analysts would predict, business opportunitieswill also expand—executives would do well topossess a clear, careful understanding of the po-litical risks, however. Qatar and other Gulf coun-tries compete with their infrastructure projects tobe, for example, the main regional air transporta-tion hub (Dubai, Qatar, Abu Dhabi), the financialhub (Bahrain, the United Arab Emirates), and atourist attraction (Dubai, Oman). The slowdownin the global economy resulting from the 2008–2009 recession exacerbated the need for nationbranding and focus: Oman’s pursuit of a nichetourist market (adventure and nature tourism) sets it

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apart from Dubai’s sun, sand, shopping, and luxurypositioning.

The notion that what happens in Asia undoubtedlyaffects the rest of the world is the premise of Lead-ership in Asia, a collection of essays edited by DaveUlrich that contains ideas and best practices dis-cussed at the inaugural Executive Roundtable or-ganized by the Singapore Ministry of Manpower.Ulrich and his contributors discuss how Asia’s im-pact on other regions depends on Asian corporateleaders’ quality of leadership as they respond toeconomic, social, technological, and demographicchanges.

Khanna and Makdisi (2010) contend that developedcountries like the United States and England thatexpended their FIFA lobbying energies trying to se-cure World Cup hosting privileges should focus onencouraging FIFA to make the games an instrumentof not just national prestige, but also social good.In Qatar, for example, migrant workers from Southand East Asia who will build stadiums in the PersianGulf’s relentless desert heat should be properly com-pensated and given basic employment and housingrights. Any business visitor to the Persian Gulf re-gion can easily observe the large numbers of Asianexpatriate managers and manual laborers, especiallythose from India, Bangladesh, Sri Lanka, and thePhilippines. Construction projects are often super-vised by South Korean companies; cars and trucksare Japanese and South Korean. China Railway Cor-poration won the bid to build the monorail in Meccato facilitate the movement of pilgrims during the an-nual Hajj. Approximately one-third of the project iscomplete; the remainder will be finished within a fewyears. China’s relations with the smaller Gulf statesare not as extensive or intimate as India’s, however.

In a continuation of earlier links forged during thedays of the British Empire, India is an importantpolitical player in the Persian Gulf. This parallelsIndia’s improved relations with the United States,the Gulf’s current protector. While people in the

West mentally separate India from the Middle East,to Indians, the region is West Asia; it’s historically(many centuries before the British Empire), logi-cally, and physically close to the subcontinent. Kempnotes the trickle-down effect of the well-knownnew middle-class phenomenon in India. Seventy-fivepercent of Indians still live in villages where therural underclasses emulate Westernized urbanIndians by purchasing television sets, albeit one pervillage rather than one per household. The formertwo-tier society (the “haves” and the “have-nots”)has been transformed into a multiple-tier society ofthe “haves,” “have-lesses,” “aspiring to haves,” and“have-nots.” Over 50% of Indians are under 24 andhave no philosophical connections to socialism. AsIndians continue to increase their spending, theirenergy consumption also increases. India imports45% of its oil from the Middle East, and Kempsuggests that it is very likely India will remain de-pendent and even increase its dependence on MiddleEastern oil because of necessity, if not proximity. Anumber of issues could encourage India to become amore active player in Middle East geopolitics. For in-stance, the large number of Indian expatriates work-ing in the Gulf could become a source of frictionbetween India and the host countries with respectto the treatment of low-paid workers or the rightsto citizenship for Indians who have lived in the Gulffor generations. Such issues could be aggravated ifthe boom times in the Gulf slow down to the pointwhere fewer workers are needed.

China’s commercial interests lie in the greater Mid-dle East, especially in Iran, Saudi Arabia, and thecentral Asian nations of Turkmenistan, Uzbekistan,and Kazakhstan. Like India, China has succeededin expanding its economic ties with the MiddleEast without becoming involved in regional con-flicts or challenging the political dominance of theUnited States. China seeks competitive advantageusing a “soft power” strategy—it does not demandthe “good governance and human rights” associatedwith Western assistance. Kemp contends that doubtsremain about the sustainability of this approach. For

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now, China is one of Iran’s top trading partners anda major trading partner of the United Arab Emirates.The most visible aspect of China’s presence in Dubaiis the Dragon Mart—82 square miles (shaped likea dragon) of showrooms, restaurants, warehouses,and offices—the largest Chinese commercial centeroutside China, which also functions as a Chinesecultural exhibit.

Pakistan is the potential corridor for China to reachthe Middle East and the Indian Ocean. To fulfillits commercial and strategic goals, China is financ-ing a deep-sea port at Gwadar. The political risksof this venture are apparent: Gwadar is locatedin the largest and poorest of Pakistan’s provinces,Balochistan, where separatist sentiments are promi-nent and Taliban and al-Qaeda sympathizers live.The insurgents target Chinese workers; engineershave been kidnapped and even killed. The portof Gwadar is merely one of the many infrastruc-ture projects (airports, rail networks, roads, oil andgas pipelines) to facilitate travel and trade betweenAsia and the Middle East. Kemp’s analysis impliesthat if all projects are completed, their long-run im-pact on regional geopolitics and geoeconomics willbe extensive. Kemp devotes a chapter to maritimeagreements, important strategically, but also to com-bat piracy. In 2005, because of piracy, Lloyd’s ofLondon classified the Malacca Strait, through whichhalf of the world’s oil shipments travel, as awar zone. In response, Malaysia, Indonesia, andSingapore increased their security in their respectivewaters, and Lloyd’s removed the war zone rating in2006.

At the same time as Asian countries like Japan,China, and India are increasing their economic pres-ence in the Middle East, they are aware of their vul-nerability in becoming more dependent on MiddleEast fossil fuels. They are all attempting to diversifytheir energy sources. Kemp is reluctant to make spe-cific forecasts. Disruptions are almost impossible topredict. Rapid economic growth can be problematic;witness Dubai’s susceptibility to market downturns.

Across the globe, Latin America continues to strug-gle to industrialize. Gallagher and Porzecanski,in The Dragon in the Room, investigate whetherLatin American countries can learn from howChina has globalized its economy. Examining therecord from 1960 to 2007 pre-economic reform andpost-economic reform (for Latin America, reformoccurred after 1982, and for China, after 1978) re-veals dramatically that on every growth, income,poverty, trade, and investment measure, China hasout-reformed and outperformed Latin Americanand Caribbean countries. Latin America has gainedhardly any ground during its reform period, whereasChina has excelled. The environmental costs andpersisting societal inequalities in China must be ac-knowledged. Nevertheless, the comparative resultsare striking. What underlies them? Gallagher andPorzecanski postulate that the approaches to glob-alization are key. They call Latin America’s ap-proach shock therapy. The region embraced the“Washington Consensus”—the quite rapid liberal-ization of trade and investment regimes and the gen-eral decrease of the role of the state in economicaffairs. Most countries in the region privatized themajority of their state-owned enterprises and madefree-trade agreements with the United States andother developed countries. China, in contrast, fol-lowed a more gradual and experimental approachto reform, called by Deng Xiaoping “crossing theriver by feeling each stone.” This permitted the de-velopment of Chinese firms and industries beforeliberalizing fully. It also created an environment sothat the potential “losers” from liberalization wouldbe less numerous, and focused more on the multi-lateral World Trade Organization rather than tradedeals with the United States.

Additional data analysis by Gallagher andPorzecanski shows that Latin America is a primary-product exporter to China. Ten sectors (such ascrude petroleum, soybeans, iron ore, and copper)in six countries (Argentina, Brazil, Chile, Colombia,Mexico, and Peru) account for 74 percent of allLatin American exports to China. Importantly,

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Latin America’s exports to China comprise onlyabout 6 percent of Chinese imports, the same level asLatin American exports to China in the 1980s. LatinAmerica, therefore, has been unable to reap muchbenefit from China’s growth in the last ten years.The serious threat to Latin America is over the longterm and arises from Latin America’s heavy biason resource-based products, with a very small sharein technology-intensive products. Gallagher andPorzecanski argue that China is the nation thathas best capitalized on the growth of the globalhigh-tech market; it continues to diversify intomore value-added activities. Comparing China toMexico, they observe that as China moves to-ward more sophisticated types of high-tech exports,Mexico remains a low-wage assembly haven for USproducts, and is not showing much of an increase inthe sophistication of high-tech exports.

An analysis of international competitiveness showsthat Mexico’s nonoil exports are threatenedby their Chinese counterparts. Many debate whetherthe Chinese interventionist policies will guaranteeor compromise China’s long-term growth. Yet, inthe immediate term, these policies provide a dis-tinct advantage to Chinese firms. Gallagher andPorzecanski highlight one particular theme: con-scious attention to science and technology policy andresearch and development (R&D) has been a cor-nerstone of China’s approach. In Mexico, it was as-sumed that technology would be transferred throughtrade and foreign direct investment. China, how-ever, learned through practice that technology ac-quisition through MNCs alone would be insufficientin achieving technology transfer and development.To increase the absorptive capacity of domesticfirms and the development of indigenous techno-logical capacity building, the Chinese government’sstrategy included government support, indigenousR&D and innovation investment within individualfirms, creation of R&D institutions, alliances amongfirms in an industry, and cooperation between firmsand research institutes, universities, and foreignfirms, especially for industry sectors regarded to be

“strategic.” A high level of support for tertiary ed-ucation in science and technology, in addition tovocational educational institutions, facilitates thetraining of skilled manpower for technological de-velopment. The effort to develop the capabilities ofdomestic firms stimulated rivalry among MNCs tobe involved in the R&D programs of these domesticfirms, in order not to be denied access to the hugeChinese market. The Chinese government also pro-vided a range of preferential tax policies and otherincentives for MNCs, particularly those in high-techindustries. Because of the large market and becauseChina serves as an export platform, China has main-tained a good deal of bargaining power versus multi-national corporations.

When reforming, Mexico mistakenly thought thatif it dismantled its old economic policies, learn-ing and growth would follow. Gallagher andPorzecanski report that, by 1990, the Mexican gov-ernment relinquished all interference in the technol-ogy process, leaving it entirely to the parties involvedin foreign direct investment (FDI). Economic lib-eralism also led to a reduction in government in-vestment in R&D, education, and training, with theassumption that market forces would take care ofthese issues. Gallagher and Porzecanski discuss vari-ous policy implications of their analysis; these relateto diversification, innovation, the role of the gov-ernment, and preferential trade agreements. Manycountries, including China and, to some extent,the United States, are retooling their economies inresponse to the 2008–2009 financial crisis; mostcountries in Latin America have not yet seized theopportunity to do so. What can they learn fromChina’s experience? Gallagher and Porzecanski urgethe key players to follow a pragmatic approach thatmust include a discussion of the role of technology,innovation, and industry. According to economictheory, nations that are more diversified are alsomore stable and grow faster. Latin America is indanger of going in the opposite direction, in partpredicated by China’s rise. This presents an opportu-nity for policymakers and businesspeople to build a

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balanced approach to economic development wherethe state cultivates an environment in which privatefirms can thrive and compete.

The East Moves West focuses on how business ex-pansion can have an impact on international rela-tions; The Dragon in the Room emphasizes howbusiness expansion can affect global competitionand economic development; and Leadership in Asiahighlights the nurturing of human capital so thatfirms can expand across borders successfully andcompete in the global marketplace. Leadership mustbe a capability shared throughout a firm if it is tocontribute positively to a nation’s economic devel-opment. Ulrich stresses that anyone who is chargedwith getting work done by guiding the behaviors ofothers is considered a leader: senior executives, anew product team leader, the head of finance, HRstaff, or a country manager, for example. AlthoughAsia is an amalgamation of countries, companies,cultures, and contexts, there are common leadershipprinciples that apply more to the Asian context thanto other settings.

Many Asian firms have enjoyed recent prosper-ity. Prosperity, however, may hide underlying weakleadership abilities, because the company might begrowing quickly no matter what the leader does.Ulrich contends that as Asian leaders have experi-enced success and enormous prosperity, they need tocontinue to renew and reinvent themselves to avoidthe limitations of prosperity such as arrogance orlethargy. Also, as Asian organizations become an in-creasing part of the global community, competitionmeans that leaders must be externally focused; bestpractices are based less on an organization’s her-itage and more on its capability to meet customerexpectations. Traditionally, Asian firms have beenfamily-run and are often managed as benevolent pa-triarchies. Today, companies need leaders who willtreat employees in a more professional rather thanpatriarchal way. It is not enough to have an Asiantalent pool for Asian companies, as Asians needto be able to lead their companies in countries all

around the world. This means being able to adaptto a global workforce with values quite differentfrom an all-Asian employee group. Contributor toLeadership in Asia Wee Chow Hou notes that withthe weakening of Western economies arising fromthe 2008–2009 financial crisis, Asian companies,led by China, are likely to make greater forays intothe West. He questions whether Asian companieshave the right mind-set and psyche to excel in thehighly competitive and often combative and hos-tile Western business environment. He notes the dif-ficulties experienced by some Chinese companies,even when they have acquired other Asian compa-nies, in countries such as Malaysia, Thailand, andIndonesia.

Just as Kemp emphasizes in The East Meets West,it is almost impossible to predict the future fromthe present. Linear predictions are interrupted withdisruptions from the economic, political, social,and technological environments. When leaders de-velop the capacity for responsiveness to continualchange, they become less worried about disruptionsand more worried about their capacity to respondto whatever changes erupt. Ulrich summarizes theresults of a key informant interview study of lead-ership experts. These indicate that there is a Lead-ership Code, whereby leaders are strategists whocan envision and create a future; executors whocan translate strategy into action; talent managerswho can identify, build, and engage talent to getshort-term results; human capital developers whocan ensure that the organization has the longer-term competencies required for future success; andare personally proficient. This last quality is espe-cially important and is related to the emphasis onlearning and training discussed by Gallagher andPorzecanski with respect to economic developmentin general. Whether leaders have an introverted, ex-troverted, intuitive, or sensing style is immaterial.What matters is that they have the right physical fit-ness, emotional resiliency, social support network,strong sense of values, and, vitally, an intellect thatexhibits learning agility.

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A study of Chinese CEOs referred to by contribu-tor Arthur Yeung, former chief HR officer of theAcer Group, reveals that talent management is themost frequently and consistently mentioned criticalbusiness issue—ahead of business model innovation,relationship with headquarters, and supply chainmanagement. Another contributor to Leadership inAsia, J. Stewart Black, explains that one reason thewar for talent is likely to last for about 20 more yearsis because of the shift in competitive advantage tointangible assets: these are either people or drivenby people (such as a customer service culture). An-other important reason for the talent war is the im-balance between demand and supply. Even thoughChina has emphasized education and training in itsscience and technology policy, changes in vast coun-tries like China take decades to implement fully. Thisis also the case in India and Vietnam. In Vietnam,the student-faculty ratio at universities was 4.7 to1 in 1986 and 15.3 to 1 by 2004, and demand forworkers with vocational training was expected to be500,000 in 2010, while supply was expected to growto only 55,000. In his chapter, Black explains how tocreate a superior employee value proposition, takinginto account what the company can offer (the natureof the company’s business, the company culture, thequality of the company’s leaders, the job character-istics, and rewards) versus the costs to the employeein terms of hours, personal sacrifice, stress, and ef-fort. Contributor Peter Smith quotes the chairman ofIndia’s Infosys Technologies Ltd., N. R. NarayanaMurthy: “Our core assets walk out every evening.It is our duty to make sure these assets return thenext morning, mentally and physically enthusiasticand energetic.” Smith also describes how a leadingIndian IT services firm is leveraging the economicdownturn as an opportunity to move up the valuechain. In particular, this company is able to attract

quality consulting talent from top firms in the UnitedStates, something that was previously hard to do.The challenge for this company will be to retain thistalent once the US economy recovers.

Leadership in Asia includes case studies of Sin-gaporean companies, CapitaLand (real estate),SMRT Corporation Ltd. (public transportation),and Alexandra Hospital, as well as Unilever FoodSolutions, Tata Consultancy Services, Microsoft,and UBS. Significant takeaways are summarized byUlrich: companies must adapt, not adopt best lead-ership practices; these practices should be integratedinto a best system that permeates the organization;and Asian leaders should maintain Asian uniquenesswith a global perspective. Fergus Balfour, one of thebook’s contributors, quotes a Japanese leader: “It’snot the strongest species that survive, nor the mostintelligent, but the ones most responsive to change.”This succinct perceptive sentiment reflects the delib-erations and analyses in The East Moves West andThe Dragon in the Room just as much as it does thediscussions presented in Leadership in Asia.

ReferencesKhanna, P., & Makdisi, K. (2010). Foreign policy: Is theWorld Cup a cup of plenty? National Public Radio. Retrievedfrom http://www.npr.org/2010/12/22/132268128/foreign-policy-is-the-world-cup-a-cup-of-plenty

Gillian Rice is Professor Emerita at the Thunderbird Schoolof Global Management and was a Fulbright Senior Scholarat the University of Bahrain in 1996–1997. She holds aPhD from the University of Bradford. Dr. Rice’s researchinterests include environmentally related consumer behavior,the fair trade movement, and models of employee creativ-ity and organizational innovation. She can be contacted atgillian.rice@thunderbird.edu.

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