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Author: tradeview   |   Latest post: Wed, 17 Oct 2018, 09:28 AM

 

(Tradeview 2018) - Ancient Chinese Philosophy & Investment Thesis For Business

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Dear fellow readers, 

Gong Xi Fa Chai & Happy Chinese New Year 2018. We would like to take this opportunity to wish all who celebrates a wonderful CNY festive season and others happy holidays. 

Once again, these writings are just my humble highlights (not recommendation), feel free to have some intellectual discourse on this. You can reach me at :


Website / Blog : http://www.tradeview.my/

or Email me to sign up as private exclusive subscriber : tradeview101@gmail.com
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In conjunction with Chinese New Year, our team would like to share a perspective on looking at businesses from a different lens. We would like to take the opportunity in this new year to talk about Ancient Chinese Philosophy and analysing certain aspects of the corporate world.

As one of the oldest civilizations in the world, and with the largest population, China has produced internationally known statesmen, philosophers, thinkers, and leaders; yet we see so little on Chinese leadership or management philosophy by Chinese scholar. This is not until recent years; the Chinese economy has become a major driver of global growth and a shaper of global markets that people start to pay attention to the possibility of ancient Chinese philosophy may be a valuable source of inspiration for contemporary management and business strategy.

There are many Chinese philosophies and ideologies such as Daoism, Legalism, and the Art of war appreciate by many business leaders, they reflect that their business value and their decision-making foundation to regulate with the vagaries of challenges are shaped by ancient Chinese philosophies. One of the world's richest and most influential men, Mr. Li Ka Shing emphasized in his recent interview, the importance of check and balance in business methodology that can be achieved by using western management model with Confucian school of thought as internal philosophy, and he has proven that it works well by the success of his business. Feel free to watch bloomberg video interview of Li Ka Shing as source of reference.



Today we will discuss a well-known Chinese teaching by Meng Zi also known as Mencius, with the aspiration of "he who rules the world that has the hearts of the populace". (得人心者得天下)

The inspiration for Meng Zi to come out with this quote is from his observation on; those kings, who know the needs of the people, try his best to provide to those needs and are kind to his people will eventually win the crown. Vice versa, those rule by fear will be overthrown if aforementioned leaders rise among peasant. In Meng Zi's archive, he discussed two kings, Jie and Zhou. He noticed that those failed Kings share some similarity in their characteristic; both are extremely intelligent and rich, however, they egoistically assumed that with their vast knowledge, skill, financial power, and reputation, they were invincible, thus did not appreciate the talents and ignore ideas and feedback from his trustee. They were blinded by their success and enjoyment and couldn't see that people of the land living in misery. They ruled by injecting fears to the people and suppressing resistance by administering cruel punishment.

Predictably, people could no longer bear with this leadership style and turn to another leader. Meng Zi concluded that, in order to become a successful leader, one must be recognized by the followers, to be recognized by the follower, the leader must understand the needs of the follower and fulfill them. By doing so, trust and support of the people will be earned.

When it comes to Politics, there is no doubt the above age old wisdom is applicable throughout. Good world leaders are few and far between, if there is, usually they wont last. Hence, Machiavellianism and Utilitarianism have often been the preference of most leaders be it in the political or business world. It is very careless for mankind to fall into the slippery slope of contemplating end goals as means to justifying their actions when philosophy should be the guiding principle in running a country or company.

At Tradeview, we are apolitical. Hence, we will only look at things from the perspective of businesses. If we look at some of the best business leaders today, few names are truly respectable. From the western world, there is the likes of Mr. Warren Buffet, Mr. Ingvrad Kamprad and from the east there is Mr. Li Ka Shing, Mr Robert Kuok. 


























If you notice, there will always be some similarities between the above titans of the industry. Firstly, they rarely come by, possibly once in a generation. It will take decades before the next one comes along. Secondly, they are usually there for a very long time (sustainable and consistent). Thirdly, they are usually humble, low profile, never flashy and always grounded. Fourthly, they are usually at the helm of their company, involve in day to day business operations even at an advance age, personally attending to issues and overlooking the business - in short tireless work ethic and always hardworking. The list can go on but if you were to ask anyone on the street, most would agree, if we were to invest in any of these companies held by the above mentioned business leaders back 30-40 years, we would be sitting on huge amount of wealth to last a a lifetime. 

The sad thing today is the generation only looks to instant gratification and fast returns without any basis. Without actual fundamentals to back any of the investment thesis, people will blindly follow the herd and crowd. When we invest our hard earn money, we should always ask ourselves, how many plates or bowl of noodles one has to sell in order to make this much money over a duration of time? If we ask ourselves such questions, we would tend to be more careful before simply putting our money behind a company just because our friends told us to do so. 





Case in point No. 1 - Bitcoin. Many months back, we had lots of readers and subscribers asking us about Bitcoin and if Tradeview would recommend buying. We have maintained the same position from Day 1 until present, how do you value something that has no intrinsic value? How do you assess the fundamental viability and worthiness of the item? Isnt it just a bubble and Ponzi scheme waiting to burst? In order to not offend those who invested, we just answer, we do not invest in things we do not understand. This is not an "I told you so", but a form of discussion. Hindsight is always 20/20. Fact is, we know the value of Bitcoin and other cryptocurrency lies in the Blockchain Technology, not the cyrptocurrency itself. Hence, it is always important to know what one should invest in. 



Bitcoin few months back vs Today


Case in point No. 2  - MLM. MLM has existed a long long time. Since the Tupperware parties days in 1950 or Avon cosmetic products until present day. This is a sensitive topic as we know many have different views when it comes to MLM. Supporters think it is a Godsent which help provides livelihood and sustenance. Dissenters think it is a scam which monetises personal relationship, erodes the ethics of hard work, stifle creativity and ingenuity etc. There are many successful MLM companies today that is still doing well such as Tupperware, Amway, Coway and others. Equally, the number of MLM scams are abundant. One thing to note, we acknowledge MLM as a form of efficient business model but we do not recognise MLM as creating value for society or being a part of it equates to entrepreneurship. Everyone throws the word of entrepreneurship around just because it is "sexy" but how many truly understand the concept of building business or creating value? MLM supporters often adopts campaigns and large scale conferences to show a collective front and efficiently using the herd mentality to convince, motivate, propagate to new joiners and members them to be part of the movement. We will save this topic for another day but we hope that young minds will focus their energy, capability and creativity on truly building businesses and creating value instead of rushing in for the quick gratification of short term monetary gains and lose out on meaningful long term goals in life.




A very wise business leader of one of the blue chip company in Malaysia once told me, the key to sustaining a company is the "Value". Only the right company's value can ensure the it survives the test of time. An example would be Mitsui Fudosan, which has been around for over 300 years. The current business leaders of Mitsui attributes their success to the "value of the leader or founder".


Whenever new readers ask Tradeview about our investment philosophy, we always say we focus on the Fundamental Analysis as the key and Technical Analysis as guide. What we seldom share is our strength is the ability to analyse and dissect a company beyond the financial records. We look into the business itself and the people behind the business before we come to a conclusion whether to proceed to put our money behind the investment. If the numbers adds up but we do not like the business leader or management team, no matter how enticing, we will skip. However, if the business leader or management team displays an extraordinary grit, charisma, work ethic, value and brilliance, we would focus our attention and monitor the company very closely. In a nutshell, we should always assess businesses on the following 

1. business model, 
2. nature, 
3. business leader, 
4. management team, 
5. company's philosophy, values & principle.


PS: We would like to share the credit of this article with the writer, a brilliant up and and coming consultant who first wrote an article Titled : Ancient Chinese Philosophy as a Source of Inspiration for Talent Management / Leadership Management. For those who understands Mandarin, can read the following.

桀纣之失天下也,失其民也;失其民者,失其心也。得天下有道,得其民,斯得天下矣。得其民有道,得其心,斯得民矣。得其心有道,所欲与之聚之,所恶勿施尔也。

"夏桀和商纣之所以丢掉天下,是因为民众不再支持他们;之所以不再支持,是由于对他们失望。要得天下的办法就是去获得民众的支持,做到了就能得到天下;要获得支持的办法就是获得他们的认可,做到了就能得到; 要获得民众认可的办法就是做民众期望的,不要做他们反感的。

《得人心者得天下》选自《孟子·离娄上》

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Food for thought: 




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