I can remember in 1998 writing a long article about Peregrine, the Asian investment bank, which pointed to a number of its follies. Thanks, however, to the stupidity of a sub-editor in London, the negative tone of the article was overshadowed by the headline he selected: 'Peregrine's still flying'. Four weeks later Peregrine was bankrupt.
In a somewhat grander fashion, Jim Rohwer put out a book around a year before the Asian crisis called Asia Rising and that title became the bane of his existence. Someone else even authored a book called Asia Falling that was released after the crisis to parody Rohwer's famous title.
Remade in America is Rohwer's retort.
A 383-page book, it picks up where Asia Rising left off, but takes a new twist. Talk of the Asian Century has gone. This book, as its title suggests, examines how Asia will change because of America's 1990s boom.
Rohwer begins his argument with the key year of 1974, when the oil shock rocked America and forever changed its economy. Thanks to financial disintermediation and vigorous corporate restructuring, the old America – with all its vested interests – was regenerated by a new crew of capitalist corporate raiders, fuelled by junk bonds and obsessed with returns on equity. By the time America entered the Internet age, the economy was more ready for it than anyone else, thanks to the pain that was taken in the 1980s.
Meanwhile, Asia surged along in Japan's slipstream, having embraced its economic development model in full. All this changed with the 1997 Asian crisis when the Japan model (which had itself been failing in Japan since 1990) was bankrupted. Asia's poor returns on equity were likewise exposed in full.
Rohwer argues that the 1997 crisis will basically be for Asia what the 1974 crisis was for the US. It will be remembered as a catalytic moment of change. The new Asia he sees has embraced many of the lessons of the American economic model, including vast amounts of M&A and focusing on core competencies.
Rohwer – returning to his theme from Asia Rising – reckons Asia will be all the stronger for this and will spring America into a new growth path.
I personally am a great believer in Asia, so Rohwer's basic premise was not meeting much resistance on my part. For the more cynical, however, the line of argument is not the book's great strength. This does not have the persuasive power of A Modest Proposal or other great rhetorical essays of persuasion.
The book is worth reading for its anecdotes, its interviews and the data it provides.
I enjoyed the interview with General Electric's titanic boss, Jack Welch, who responded to a question about China thus: "Look, what I know about China is this. I've been going there for 20 years and every time I go there I laugh at how little I knew the time I came before. You know, every time I go I think I learn something. The next time I go there I learn how little I knew. It is so vast and complicated and so hard to figure out. I don't know the answer. I truly don't. That's probably why I'm retiring. Somebody else is going to have to figure it out."
Also noteworthy is a 1998 statement of Kentaro Aikawa, chairman of Mitsubishi Heavy Industries: "We'll be in trouble if the theories of Harvard Business School are brought to Japan … I have always said that Mitsubishi's management values jobs before profit. Lately, I've become surer than ever that this thinking is correct. We don't give a hoot about things like return on equity."
By nature, the book is a Manifesto Americana. This manifesto can go too far, especially when he talks about education and says that Asian students in Britain are only there "because the British are lucky enough to speak the same language as the Americans".
The difference in the approach to education in top British universities and American ones might be as big a reason. Just ask Lee Kuan Yew, who sent his eldest son to his alma mater, Cambridge University.
By the same token, while Rohwer goes through all the positive economic lessons America gave the world after its 1974 oil crash, he ignores one of the most fundamental global trends, privatization, which just like punk music came from the UK. Indeed, China is currently examining the UK electricity privatization and regulatory model, and doing its best via conferences and seminars to learn how to avoid California's problems.
The other danger about writing a book like this – and a sign of how fast Asia moves – is that events can overtake it. The interviews with Richard Li and the stuff about PCCW are a classic case of this, as you will discover if you choose to read this book.&
Reviewed by Steven Irvine
Rating: 3.5 stars
