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Asian Nations and
Multinationals
Overcoming the Limits to
Growth

Edited by
Bernadette Andreosso-O’Callaghan
Jacques Jaussaud
M. Bruna Zolin
Asian Nations and Multinationals
Bernadette Andreosso-O’Callaghan
Jacques Jaussaud
M. Bruna Zolin
Editors

Asian Nations and

Multinationals
Overcoming the Limits to Growth
Editors
Bernadette Andreosso-O’Callaghan Jacques Jaussaud
University of Limerick University of Pau and Pays de l’Adour
Limerick, Ireland Pau, France

and M. Bruna Zolin

Ca Foscari University of Venice
Ruhr University Bochum Venice, Italy
Bochum, Nordrhein-Westfalen
Germany

ISBN 978-3-030-00912-0 ISBN 978-3-030-00913-7 (eBook)

https://doi.org/10.1007/978-3-030-00913-7

Library of Congress Control Number: 2018957434

© The Editor(s) (if applicable) and The Author(s) 2018

This work is subject to copyright. All rights are solely and exclusively licensed by the
Publisher, whether the whole or part of the material is concerned, specifically the rights
of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction
on microfilms or in any other physical way, and transmission or information storage and
retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology
now known or hereafter developed.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this
publication does not imply, even in the absence of a specific statement, that such names are
exempt from the relevant protective laws and regulations and therefore free for general use.
The publisher, the authors and the editors are safe to assume that the advice and
information in this book are believed to be true and accurate at the date of publication.
Neither the publisher nor the authors or the editors give a warranty, express or implied,
with respect to the material contained herein or for any errors or omissions that may have
been made. The publisher remains neutral with regard to jurisdictional claims in published
maps and institutional affiliations.

Cover illustration: Melisa Hasan

This Palgrave Pivot imprint is published by the registered company Springer Nature
Switzerland AG
The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland
 Acknowledgements

This book is the product of a selected number of papers presented at the

22nd Euro-Asia International Research Seminar held at the University
of Parma (Italy) in June 2017 on the theme of “Overcoming the limits
to growth and human development: Managerial Challenges” from both
Asian and European perspectives. This seminar series brings together sev-
eral renowned scholars working on contemporary economic, business
and political issues pertaining to the Asian and European economies.
The editors wish to acknowledge the contributions and discussions of all
participants at the seminar. Special thanks are due to Prof. Andrea Cilloni
and all his team at Parma University for organizing the seminar.

v
 Contents

1 Introduction: Asian Nations and Multinationals—

Economic and Human Resource Challenges 1
Robert Taylor

Part I Trade Issues and International Business Strategies

2 Free Trade Agreements and Responsible Business:

Examples from the EU’s Bilateral Agreements
in East and Southeast Asia 13
Erja Kettunen-Matilainen and Claes G. Alvstam

3 Control and Coordination of Chinese Subsidiaries

in France 29
Johannes Schaaper and Ni Gao

4 Understanding the Evolution of the World Trade

Network: An Analytic Network Process Framework 47
Guoqin Zhao and Sam Dzever

vii
viii    Contents

Part II International Trade, Agriculture, Food Supply

and Sustainable Development

5 EU Enlargement: The Impact on Agricultural

and Food Exports from Selected Asian Countries
to the EU Market—A Gravity Approach 69
Utai Uprasen and M. Bruna Zolin

6 Asian Palm Oil Production and European Vegetable Oil

Market: What Can We Learn in Terms of Sustainability? 83
Deborah Bentivoglio, Adele Finco, Giorgia Bucci
and M. Bruna Zolin

7 Does Knowledge Interaction with Universities

Enhance Firms’ Innovative Capabilities? 101
Phakpoom Tippakoon

Part III Firms and Societies in Asia Facing New Challenges

8 The Great East Japan Earthquake’s Effects

on Electric Power Companies’ Financial Situation 121
Sophie Nivoix and Serge Rey

9 Impact of the Trump Administration

on the Economies of the Greater China Region 139
Bernadette Andreosso-O’Callaghan and Lucía Morales

10 Microfinance in Southeast Asia: The Case of Vietnam

Over the Period 2005–2015 159
Long Bui-Thanh, Lucía Morales
and Bernadette Andreosso-O’Callaghan

11 Staffing of French MNCs in Asia: The Roles

of Long-Term Expatriates Versus Short-Term Assignees 175
Bruno Amann, Jacques Jaussaud and Johannes Schaaper
 Contents    ix

Part IV Conclusion

12 Overall Conclusion of the Book 195

Bernadette Andreosso-O’Callaghan, Jacques Jaussaud
and M. Bruna Zolin

Index 199
 Notes on Contributors

Claes G. Alvstam is Professor Emeritus in International Economic

Geography at the School of Business, Economics and Law at the
University of Gothenburg, Sweden, and affiliated to its Centre for
International Business Studies. His research has focused on interna-
tional trade, foreign direct investment, economic integration, and the
internationalization process of Swedish multinational enterprises, with a
regional specialization in Europe and East and Southeast Asia. His ongo-
ing research concerns bilateral and regional free trade and economic
partnership agreements, and acquisition strategies by Chinese firms in
Europe.
Bruno Amann is a Professor of Management Science at Paul Sabatier
University in Toulouse, France. His research relates to family business,
corporate governance and international management. He has presented
papers at academic conferences focused on Asia. He has published widely
in the above fields in academic journals, including in Family Business
Review, Journal of Family Business Strategy, Management International
Review and the International Journal of Human Resource Management.
Bernadette Andreosso-O’Callaghan is Jean Monnet Professor of
Economics at the University of Limerick (Ireland) where she co-founded
the first research center dealing with contemporary Asian Studies in
Ireland (in 1997). She is also currently an International Research Fellow
and visiting Professor at the Ruhr University of Bochum (Germany).
Her major research interests and publications embrace the areas of

xi
xii    Notes on Contributors

comparative Europe-Asia economic integration, as well as economic

growth and structural change in East and also South-East Asian c­ ountries.
Deborah Bentivoglio is a research Fellow and Lecturer at the
Department of Agricultural, Food and Environmental Sciences (D3A),
Università Politecnica delle Marche (UNIVPM), Ancona (Italy). She is
a graduate in Agricultural Science and Technology from the Polytechnic
University of Marche (UNIVPM)—D3A with honors, where she received
her Ph.D. in “Sustainable Management of hill and mountain systems”.
Since January 2015, she has been a research fellow at D3A. In 2017 she
obtained the National academic qualification of Associate Professor in
07/A1. Her lectures cover Agricultural Policy and Food Policy at the
Department of Agricultural, Food and environmental Sciences (D3A),
UNIVPM. She is a Project manager for Cluster Agrifood Marche (ClAM).
Her main fields of research are agricultural and resource economics,
renewable energy, biofuels, agricultural and food policy, econometric
modelling, agri-food innovation and environmental economics. She is a
member of the Italian Society for Agricultural Economics (SIDEA).
Giorgia Bucci is a Ph.D. student at the Department of Agricultural,
Food and Environmental Sciences (D3A), Università Politecnica
delle Marche (UNIVPM), Ancona (Italy). She graduated with a hon-
ors degree in Forest and Environment at the UNIVPM—D3A. Since
November 2017, she is a Ph.D. student in Agriculture, Food and
Environmental Sciences, working with EVOLVEA (Filippetti Group) on
Smart Agriculture topics. Her main fields of research are agricultural and
resource economics, mountain products and precision farming.
Long Bui-Thanh is currently a Ph.D. student in the School of
Accounting and Finance at Dublin Institute of Technology, Ireland. He
has been working at Tra Vinh University, Vietnam as a lecturer for under-
graduate and postgraduate students majoring in Economics, Accounting
and Finance since 2003. His studies and research focus on the impact of
microfinance on poverty reduction and gender equity. He worked on sev-
eral projects dealing with rural development, training and education.
Sam Dzever is Professor of Management at the Institut Mines-Telecom
Business School, Université Paris-Saclay, Evry, France. His research
in the fields of marketing, supply chain management, industrial organ-
ization, and Asia-Pacific business has appeared in noted international
academic journals, including Industrial Marketing Management,
 Notes on Contributors    xiii

Journal of Business and Industrial Marketing, Journal of Marketing

and Communication, European Journal of Purchasing and Supply
Management, Supply Chain Management: An International Journal,
Journal of the Asia Pacific Economy, Asian Business and Management,
Indian Journal of Science and Technology, among others. He has also
authored 12 books, research monographs, and edited collections.
Adele Finco is Full Professor of Agricultural and Food Economics
(AGR/01) at the Department of Agricultural, Food and Environmental
Sciences (D3A), Università Politecnica delle Marche (UNIVPM),
Ancona (Italy). Since 2005 she has been the Head of the Ph.D. course
curriculum ‘Agricultural Sciences—Sustainable Management—GSCM’.
She has been the Rector’s Delegate for UNIVPM since 2013. Chief
Editor of REA—Italian Review of Agricultural Economics from 2014
President of the Cluster Agrifood Marche—CLAM since 2015. Her
main fields of research are: Common Agricultural Policy and Food
Policy; Food Supply Chain Analysis; Marketing: Alternative Food
Networks and Short food Supply Chain; Sustainable Management of
Agricultural Systems. She has taken part in several national and regional
research projects. She collaborates with the research groups at the Free
University of Amsterdam (Netherlands), UNIOESTE—Paranà (Brazil);
ESALQ—USP Sao Paulo (Brazil). She is a member of the Italian Society
for Agricultural Economics (SIDEA), and of International Association of
Agricultural Economics (IAAE).
Ni Gao is a Doctor of the University of Pau (UPPA, France) in
Management. She is currently holding a post-doc position at Kedge
Business School, in Bordeaux. Her research interest is in the field of
international management, with a special focus on Emerging countries
MNCs, particularly Chinese ones.
Jacques Jaussaud is Professor of Management and vice-Dean of the
Doctoral School in the Social Sciences and Humanities, University of Pau,
France. His research interests are in the areas of business strategy, organi-
zation, control and human resource management, with a particular focus
on Japan, China and other Asian countries. He has published widely in
academic journals, including in Management International Review, the
Journal of International Management and the International Journal of
Human Resource Management. He has co-edited several books, includ-
ing recently Economic Change in Asia: Implications for Corporate Strategy
xiv    Notes on Contributors

and Social Responsibility, Routledge, 2017, and China’s Global Political

Economy, Managerial Perspectives, Routledge, 2018.
Erja Kettunen-Matilainen is Adjunct Professor and Senior Research
Fellow at Turku School of Economics, University of Turku, Finland.
Her research focuses on regional economic integration, business envi-
ronments, as well as urban hubs in emerging economies in East and
Southeast Asia. Recently, she has published on the impact of Free Trade
Agreements on businesses, the institutions of international trade policy,
and foreign firms’ government relations in Asia. Her ongoing research
deals with the internationalization of Finnish urban planning and
architecture into emerging economies, as well as the development of
Innovation Districts, with a particular focus on Thailand.
Lucía Morales is a Lecturer in Finance at Dublin Institute of
Technology (Ireland). She holds a Ph.D. in economics and several
postgraduate degrees at master level in Economics, Finance, Financial
Markets, Education and Time Series Analysis. She has published in
areas related to international economics and finance, emerging markets,
economic and financial crises, financial market integration, contagion,
energy economies, commodity markets, international capital markets,
education, critical thinking and learning. Additionally, she has partici-
pated in conferences at the international level in the field of Economics
and Finance and more recently in Education. Her main research inter-
ests concern the application of her research output in the context of her
teaching and learning strategies, to ensure that future economists and
financial analysts can get a better understanding of our economic and
financial reality. She thus aims to contribute to the development of teach-
ing in higher education by examining how traditional theories need to be
updated in the light of current economic and financial dynamics.
Sophie Nivoix is Associate Professor of Finance at the University of
Poitiers (France) and member of the CEREGE (EA 1722) laboratory of
Management. She is treasurer of Atlas-AFMI (Association Francophone
de Management International), the academic association of interna-
tional management, and director of the Masters in Economic and Social
Administration at the Law and Social Sciences Faculty of Poitiers. Her
research works are related to risk and return of firms listed in the stock
markets, in Europe and in Asia, and are related to financing means and
banks. She published several books, book chapters and academic papers
 Notes on Contributors    xv

in these fields. As for international activities, her teaching includes lec-

tures in various countries, such as China, India, Lebanon and Poland.
Serge Rey is a Professor in Economics at the University of Pau, and a
member of the CATT research team in economics of that university. He
is the Dean of the Faculty of Law, Economics and Management. His
research interests are particularly focussed on international trade and
finance. He has widely published in leading economic journals in these
fields.
Johannes Schaaper is Associate Professor at the Institute of Business
Administration at the University of Poitiers, France. He holds a Ph.D.
degree in Economics and a Research Accreditation in Management
Science. His research interests are in the field of international manage-
ment, with a special focus on Asian markets. He has published widely
in French and English in academic journals, including the International
Journal of Human Resource Management, Management International
Review, the Journal of Asian Pacific Economies, the Journal of
International Management and the Asia Pacific Business Review. He has
professional experience in the Netherlands, France, Lebanon, China and
Japan, thus enriching his perception of international management.
Robert Taylor was formerly Director of the Centre for Chinese Studies
and Reader in Modern Chinese Studies at the University of Sheffield.
His research interests focus on China’s domestic and foreign policy,
especially Chinese business management and foreign economic relations
as well as Sino-Japanese relations. He has published widely in such aca-
demic journals as the Asia-Pacific Business Review and Asian Business
and Management. He has contributed to media programmes relat-
ing to contemporary Asia. His publications include China’s Intellectual
Dilemma (University of British Columbia, 1981) and Greater China and
Japan (Routledge, 1996). He edited International Business in China
(Rutledge, 2012) and the Globalizations of Chinese Business (Chandos,
2014). He also engages in management consultancy.
Phakpoom Tippakoon is currently a full-time Lecturer at the College
of Interdisciplinary Studies, Thammasat University, Thailand. He is also
serving as a Deputy Programme Director of the Research Utilisation
and Social Communication Division at The Thailand Research Fund
(TRF). His research focuses on industrial cluster development, small
firm upgrading, and community-based and social enterprises. Phakpoom
xvi    Notes on Contributors

received his Ph.D. in 2011 from the Graduate School of International

Development, Nagoya University, Japan. In 2016, He conducted his
post-doctoral research at the University of Limerick, Ireland under the
Erasmus Lotus Programme.
Utai Uprasen is an Associate Professor at the Division of International
and Area Studies, Pukyong National University in South Korea. He
received his Ph.D. in economics from the University of Limerick,
Ireland. His research interests relate to international economic integra-
tion and to Asia-Europe economic relations.
Guoqin Zhao is Associate Professor of Economics at the Institute of
Finance and Economics, Central University of Finance and Economics,
Beijing, China. His research interests include regional governance, inter-
national trade and public management. He has published a large number
of articles in domestic mainstream journals and has undertaken several
research projects under the auspices of the National Social Science Fund
and the Beijing Social Science Fund.
M. Bruna Zolin is Professor of Economics—Rural Development and
Commodity Markets—at Ca’ Foscari University of Venice, Department
of Economics (Italy). The academic research activity focused primar-
ily on the following topics: agricultural and food products, economics
of rural development, international trade, environment and sustainable
development, European policy. She was Deputy-Head of the School of
Asian Studies and Business Management at Ca’ Foscari University. She
has served as an expert for the FAO in Rome and she has been a visiting
Professor in several universities. She has published mainly in the areas of
agricultural markets and rural development policies.
 Abbreviations

AANS Average Nearest-Neighbor Strength

ACFTA Asean—China Free Trade Area
ADB Asian Development Bank
ADF Augmented Dickey–Fuller test
AFTA ASEAN Free Trade Area
AIC Akaike information criterion
ANND Average Nearest-Neighbor Degree
ANNS Average nearest-neighbor strength
APEC Asia-Pacific Economic Cooperation
ASEAN Association of Southeast Asian Nations
BERD Business Expenditure on Research and Development
BLR Binary Logistic Regression
BRI Bank Rakyat Indonesia
CAP Common Agricultural Policy
CARIFORUM Caribbean subgroup within the African, Caribbean and Pacific
(ACP) group
CB Vietnam Cooperative Bank
CCP Chinese Communist Party
CEE Central Eastern Europe
CEO Chief Executive Officer
CGE Computable General Equilibrium model
CPI Consumer Price Index
CSR Corporate Social Responsibility
DIW Department of Industrial Works
EEC European Economic Community
EESC European Economic and Social Committee

xvii
xviii    Abbreviations

EIU Economist Intelligence Unit

EPU Economic Policy Uncertainty
ERP Enterprise Resource Planning
EU European Union
EU15 15 EU Member Countries
EU25 25 EU Member Countries
FAO Food and Agriculture Organization
FDI Foreign Direct Investment
FEDIOL EU Vegetable Oil and Proteinmeal Federation
FTA Free Trade Agreement
FTAAP Free Trade Area of the Asia-Pacific
GATT General Agreement on Tariffs and Trade
GCR Greater China Region
GDA Global Development Alliance
GDP Gross Domestic Product
GFC Global Financial Crisis
GSP Generalized Scheme of Preferences
GTAP Global Trade Analysis Project
HCYU Ho Chi Minh Communist Youth Union
HQ Hannan Quinn
HQs Headquarters
HRM Human Resource Management
IC Information criterion
IFC International Finance Corporation
IISD International Institute for Sustainable Development
IJV International joint venture
ILO International Labour Organization
ILUC Indirect Land Use Change
IP Intellectual Property
KPI Key performance indicators
LUC Land Use Change
M&As Merger-acquisitions
MCAR Missing Completely at Random
METI Ministry of Economy (of Japan)
MF Microfinance
MFIs Microfinance Institutions
MNCs Multi-National Companies
MNEs Multi-National Enterprises
NAFTA North-American Free Trade (Area) Agreement
NBR Negative Binomial Regression
NGO Non-governmental organization
NISA Nuclear and Industrial Safety Agency
 Abbreviations    xix

NRA Nuclear Regulation Authority

NSO National Statistical Office
NSTDA National Science and Technology Development Agency
NTBs Non-Tariff Barriers
OECD Organisation for Economic Co-operation and Development
OECF Overseas Economic Cooperation Fund
PBR Price-to-Book Ratio
PCFs Vietnam People’s Credit Funds
PGDP Provincial Gross Development Product
QAP Quadratic Assignment Procedure
R&D Research and Development
RATS32 Regression Analysis of Time Series
ROA Return on Assets
ROE Return on Equity
ROSCA Rotating savings and credit associations
RSPO Roundtable on Sustainable Palm Oil
SC Schwarz Criterion
SDG Sustainable Development Goals
SHG Self-help group
SITC Standard International Trade Classification
STI National Science, Technology, and Innovation Policy Office
TPP Trans-Pacific Partnership
TSD Trade and Sustainable Development
TTIP Trans-Atlantic Trade and Investment Partnership
TTO Technology Transfer Office
TYM Tao Yeu May
UILs University-Industry Linkages
UN United Nations
UNCTAD United Nations Conference on Trade and Development
USD United States Dollar
USDA United States Department of Agriculture
USTR United States Trade Representative
VBARD Vietnam Bank for Agriculture and Rural Development
VBSP Vietnam Bank for Social Policies
VFU Vietnam Farmer’s Union
VVA Vietnam Veteran Association
VWU Vietnam Women’s Union
WANND Weighted Average Nearest-Neighbor Degree
WB World Bank
WOSs Wholly-Owned Subsidiaries
WTO World Trade Organization
WWII Second World War
 List of Figures

Chapter 4
Fig. 1 Fluctuation in the overall attributes of world
trade network for the period 1995–2013 52
Fig. 2 Kernel density estimation of nodes degree and nodes
strength of world trade network in 1995, 2004
and 2013: nodes degree (left), nodes strength (right) 53
Fig. 3 Fluctuation in the average value of ANND
and WANND during 1995–2013 55
Fig. 4 Kernel density estimation of nodes difference
and weighted network clustering coefficient
of world trade network during 1995, 2004 and
2013: nodes difference (left), weighted network
clustering coefficient (right) 56
Fig. 5 Fluctuation in world trade network nodes attributes 57
Chapter 5
Fig. 1 The EU’s agricultural trade with major Asian countries
during 1999–2015 (Source Author’s calculations
based on data from the UN Comtrade database) 76
Chapter 6
Fig. 1 Malaysian and Indonesian palm oil production
(1964–2017) (Source Authors’ elaboration
on Index Mundi data 2017a) 87
Fig. 2 Word consumption of vegetable oil (1996–2017)
(Source Authors’ elaboration on USDA FAS data 2017) 87

xxi
xxii    List of Figures

Fig. 3 Production of vegetable oil in the EU (2000–2016)

(Source Authors’ elaboration on FEDIOL data 2017) 89
Fig. 4 Consumption of vegetable oil in the EU (2000–2016)
(Source Authors’ elaboration on FEDIOL data 2017) 89
Fig. 5 Vegetable oils indexed prices (1998 = 100) (Source
Authors’ elaboration on Index Mundi data 2017d) 93
Chapter 7
Fig. 1 Number and percent of firms by modes of interaction
with universities (Note Percent is shown in parenthesis.
Source Author’s survey (n = 206)) 111
Chapter 8
Fig. 1 Market shares in the Japanese electric power industry
in 2016 (Source Ministry of Trade, Economy
and Industry (http://www.emsc.meti.go.jp/english)) 126
Fig. 2 Return on equity of the Japanese electric industry
firms (Source Companies’ financial reports) 128
Fig. 3 Corporate risk-return equilibrium of the Japanese
electric industry firms in 2012 (Source Companies’
financial reports and authors’ calculations) 131
Fig. 4 Stock returns and stock price standard deviations
of the Japanese electric industry firms in 2011
(Source Companies’ financial reports and authors’
calculations) 133
Chapter 10
Fig. 1 Interest rates on microcredits in Vietnam
and Southeast Asia (Source The World Bank 2015) 168
Fig. 2 Percentage of customers having an account in formal
financial institutions (urban/rural areas in %)
(Source Demirguc-Kunt and Klapper 2012) 168
 List of Tables

Chapter 3
Table 1 Sample characteristics 35
Chapter 4
Table 1 QAP correlation analysis result of world trade network
matrix W and other influencing factors 60
Table 2 QAP correlation analysis result of influencing factors 61
Table 3 Result of model fitting 61
Table 4 Regression coefficient and test index of variable matrix
through QAP regression analysis 62
Chapter 5
Table 1 Analysed agricultural and food products 74
Table 2 The percentage changes on exports from selected
Asian countries to the EU market 77
Chapter 6
Table 1 Top five palm oil producers (2017) 86
Table 2 Top five palm oil exporters and importers in 2017
(1000 tonnes) 88
Table 3 ADF unit root test for prices of vegetable oils 94
Table 4 Johansen cointegration test for vegetable oil prices 94
Chapter 7
Table 1 Summary of key findings from the previous studies
on UILs in Thailand 104
Table 2 Business R&D in Thailand’s food-processing
industry, 2014 107

xxiii
xxiv    List of Tables

Table 3 The importance of knowledge actors for product

development and process improvement 111
Table 4 Product and process innovation by modes
of university–firm interaction 112
Table 5 Product and process innovation by firm’s size, age,
and export, and R&D 113
Table 6 Regression results 114
Chapter 8
Table 1 Correlation matrix 127
Table 2 Average annual stock returns and volatilities
in the electric power industry 135
Table 3 Average values of the main ratios before
and after Fukushima 136
Chapter 10
Table 1 Characteristics of microfinance institution leaders
in Vietnam 166
 CHAPTER 1

Introduction: Asian Nations

and Multinationals—Economic and Human
Resource Challenges

Robert Taylor

Abstract Asia remains the world’s fastest growing economic region,

where China is destined to be a key player. The Chinese leaders, how-
ever, rule through one-party authoritarianism, implying the ineffec-
tiveness of Western liberal democracy as a vehicle of economic growth
in developing countries. The efficacy of the Chinese template will nec-
essarily depend on its economic success, increasingly fostered through
increased productivity rather than the accumulation of production fac-
tors. In the development of the knowledge economy and concomitant
human capital, China may serve as an example to other Asian nations as
it plays a greater economic role in the region, as reflected in the ASEAN-
China Free Trade Area (ACFTA). It is an open question whether an
authoritarian social and political tradition will be conducive to innova-
tion in the region.

R. Taylor (*)
University of Sheffield, Sheffield, UK

© The Author(s) 2018 1

B. Andreosso-O’Callaghan et al. (eds.), Asian Nations and
Multinationals, https://doi.org/10.1007/978-3-030-00913-7_1
2 R. TAYLOR

Keywords Foreign direct investment (FDI) · Authoritarianism ·

Innovation · Productivity · ASEAN-China Free Trade Area (ACFTA) ·
Human resource management

In the wake of mediocre or slow growth in Western countries, Asia

remains the world’s fastest growing economic region, facilitated in part
by inward and outward foreign direct investment (FDI). This is a feature
of globalisation, a process made possible by advanced technology which
is set to continue, in spite of its desirability being questioned, exam-
ples being Britain’s Brexit decision and the accession of Donald Trump
to the United States presidency. In contrast, even though President
Trump’s November 2017 visit to Asia suggested American re-engage-
ment with the region, Asian nations, especially China, in partial response
to the America first policy, have posed as champions of free trade and
globalisation.
As a key player China’s domestic policy will increasingly impact upon
the economic fortunes of East and Southeast Asian countries, and there
is evidence that its one-party state, with continuing governmental con-
trol of major industrial sectors, even while giving play to market forces,
appears an attractive template for those countries which still retain a sem-
blance of an authoritarian political tradition. At the Nineteenth Chinese
Communist Party (CCP) Congress, held in October 2017, Xi Jinping,
enshrined his thought in the Party’s constitution and reiterated his vision
of a new era of socialism with Chinese characteristics, derived from
one-party authoritarianism. In tandem the Chinese official media have
decried the weakness and ineffectiveness of Western liberal democracy.
In short, the Chinese leaders continue to stake their legitimacy on ris-
ing living standards, a sine qua non of which is one-party rule, without
which provincial particularism and ethnic diversity, the latter especially in
the country’s Western borderlands, would lead to internal dissension. In
fact, China’s current political stability and economic success have drawn
approval from the Asian leaders, mainly in the context of battles against
corruption, notably in the Philippines. As will be discussed later, it can,
however, be argued that only countries with representative government
providing the prerequisites of free thinking and innovation, can provide
the framework for economic progress, the question being whether the
Chinese can maintain growth momentum without political liberalisation.
 1 INTRODUCTION: ASIAN NATIONS AND MULTINATIONALS … 3

Is, for example, CCP control of social media compatible with the ­internet
as a source of innovation and economic growth (Editors, East Asia
Forum 2017; US-China Business Council 2017b).
Thus the relevance of a Chinese template will necessarily depend
on economic success, the CCP’s objective being to achieve the goal of
becoming a moderately well-off society by doubling Gross Domestic
Product (GDP) from its 2010 level to a target of per capita US$9000
by 2020. Significantly, however, the per capita target is to address social
inequality by taking millions of the population out of poverty (McCahill
2017b). In his work report at the beginning of the CCP Congress Xi
Jinping outlined a populist message, implicitly stressing public account-
ability by strengthening party discipline concerning issues like bribery,
integral to the anti-corruption campaign. In Marxist terms, Xi Jinping
stated that the greatest contradiction in Chinese society was between
unbalanced development and the people’s ever growing expectation of a
better living standard.
Thus policies to address these issues included the elimination of
poverty, better infrastructure to reduce the urban–rural divide as well
as improved education and public health (McCahill 2017a). China’s
economic strategy reflects these priorities; as the country enters a new
pattern of slower growth but faster structural change, the focus is on
increases in productivity rather than accumulation of production factors.
In short, the emphasis is on quality rather than quantity, with a stress
on capacity reduction in such areas as steel, aluminium and cement. In
contrast, a greater role is to be accorded to knowledge-intensive indus-
tries and services. Significantly, during President Trump’s visit to China
in November 2017, China’s Foreign Ministry stated that, in accordance
with the country’s own timetable, barriers to entry by foreign investors
to such sectors as banking, insurance and securities securitie would be
substantially eased, presumably to gain experience as yet inadequate in
China (Cai and Zhang 2017; US-China Business Council 2017c, d).
To further the knowledge economy the Chinese leaders face a number
of challenges related to education, healthcare, human resources, labour
law and the environment. With the cumulative effects of the now aban-
doned one-child policy, China now no longer enjoys an excess labour
dividend, and employees, whether rural migrants or city dwellers, will
need better education and retraining, making it imperative, for instance,
that compulsory education be extended from nine to twelve years,
thus ensuring better qualified human capital (Cai and Zhang 2017).
4 R. TAYLOR

While an OECF report issued in 2010 noted the strengths of upper

­secondary vocational education in China, involving a range of specialisms
and the commitment to workplace training, it called for closer consul-
tation with employers on skills provision and recommended enhanced
fiscal transfers at provincial and county levels (OECD Directorate for
Education, Education and Training Policy Division 2010).
Prior to the 1980s, modern healthcare was largely an urban phenom-
enon in China but the advent of social media has precipitated greater
public awareness of provision, especially in view of the adverse effects
of environmental degradation on human life. In 2015 the National
Planning Comprehensive Blueprint targeted key areas for development,
including the reiteration of the importance of multi-institution practice
practitioners, a tentative move towards cooperation with the private sec-
tor, by which medical practitioners currently working in private hospi-
tals will enjoy added flexibility in practice in the non-public sector. An
intended objective could be, as in Western countries, an attempt to
reduce pressure on the public sector by allowing a greater role for the
private sector in admitting patients paying fees (Norton Rose Fulbright
2015).
Healthcare reform is an integral part of human resource manage-
ment, a stated priority at both national and corporate levels in China.
Knowledge workers, given their role in innovation requiring substan-
tial individual initiative, demand more sophisticated means of control.
Additionally, in view of greater acknowledgement of employee rights,
China’s Ministry of Human Resources in 2017 issued Three New
Regulations to Strengthen Enforcement of Labour Laws, by which com-
panies would be given a rating on their compliance with legislation based
on a series of random checks and inspections (DLA Piper, Be Alert Asia
2016).
Air pollution and environmental degradation have been the price
paid for economic growth in China and increasingly impact upon wel-
fare and living standards. Accordingly, in 2015 a new environmental pro-
tection law took effect in China. There are, however, constraints on the
Implementation of the new law. Enforcement is impeded by fragmented
environmental governance, and local governments are often more inter-
ested in economic growth at all costs. Moreover there is a spirit still of
rule by law rather than rule of law. Government officials often intervene,
and a public environmental litigation system, whereby individuals may
bring lawsuits against officials is in effect absent. Legislation, of course,
 1 INTRODUCTION: ASIAN NATIONS AND MULTINATIONALS … 5

also has a favourable economic dimension; in addition to better health

for the populace through the promotion of, for example, electric vehicles
and other environmentally friendly products, inward foreign investment
and overseas market penetration may be facilitated (Zhang and Cong
2015; US-China Business Council 2017a; McCahill 2017a).
Maritime disputes in the South China Sea have not to date seri-
ously impeded further economic integration in the Asian region, where
China, through trade and investment, is destined to play a major role.
In fact, the Chinese leaders may be said to be projecting their coun-
try as a regional power, and integral to this is the economic relation-
ship. China’s main rival for influence is the United States and President
Trump’s abandonment, at the time of writing, of the Trans-Pacific
Partnership (TPP) provides a further window of opportunity. Recent
trade flows may be cited as evidence of growing economic dependency
between China and Southeast Asia. During the period between 2005
and 2014 trade flows, that is, the sum of exports and imports of goods
between the ten ASEAN nations, namely Brunei Darussalam, Cambodia,
Lao PDR, Indonesia, Malaysia, Myanmar, the Philippines, Singapore,
Thailand and Vietnam, and China tripled, with a total of US$380 bil-
lion in 2014. While ASEAN overall trade only doubled, China’s share
rose to 15% of that total. Moreover China is already among the top five
trading partners for every ASEAN nation, even though that dependency
varies. The six more advanced economies of the region have more diver-
sified trade but less developed countries like Cambodia and Vietnam are
more reliant on China. In addition, economic growth in the region has
been spurred by the initiatives in 2010 of the ASEAN-China Free Trade
Area. In turn, intra-regional trade is being furthered by the participa-
tion of Chinese and ASEAN companies in transnational production net-
works (Li and Amer 2017; Berry 2017; Abbate and Rosina 2016). These
transnational production networks are a product of ODI, with momen-
tum coming from both China and the ASEAN nations. In China’s case,
application procedures will be facilitated as the country moves towards
capital account liberalisation. Some industries in China suffer from over-
capacity and this can be reduced if enterprises move production overseas
where demand is still increasing and labour costs are lower. The ASEAN
nations themselves seek Chinese investment to renew capital stock, to
promote employment for the growing number of young of working age
and to improve productivity and competitiveness, especially as in com-
ing years their economies move up the value chain. Sectoral investment,
6 R. TAYLOR

however, varies according to levels of economic development. Resource-

rich countries like Cambodia and Indonesia have benefited from invest-
ment in the primary sector. Additionally, Chinese textile and clothing
have been relocating labour-intensive production to such countries as
Cambodia, Laos, Myanmar and Vietnam to take advantage of lower
wage costs. Again, reflecting different phases of production, consumer
electronics and car parts have played a major role in Chinese investment
in Malaysia, Thailand and Singapore, although in the latter state most
Chinese investment goes to the service sector. Furthermore Singapore
is the region’s major financial centre and is the top ASEAN investor in
China (Garcia-Herrero 2015; Kubny and Voss, n.d.; Abbate and Rosina
2016).
These trends in the growth of trade and investment have been
reflected in the stated goal of the ASEAN-China Free Trade Area
(ACFTA) to increase the region’s trade with China to US$1 trillion by
2020 and to stimulate the growth of Chinese FDI from US$50 billion to
US$150 billion, with US$10 billion being funded by the China-ASEAN
Investment Cooperation Fund (CAF), established in 2010. Achievement
of these objectives will be facilitated by the removal of non- tariff barri-
ers and impediments to trade in services and investment, as envisaged by
the China-ASEAN Summit in 2015. Thus, in summary, Chinese trade
and investment will increase economic integration (Abbate and Rosina
2016).
Moreover development in the region will bring in its human resource
management challenges similar to those currently being addressed in
China. A number of initiatives in these areas are already being taken at
ASEAN Community level. Nevertheless a reservation must be entered
regarding the effectiveness of such initiatives, given that the practice of
consensus informs the decision-making process which will inevitably
impact on Community policies. This, in turn, could prove an obsta-
cle to further economic growth, essential for employment creation and
improvement in social welfare across the region. Moreover the develop-
ment of human capital is consequently crucial for competition in global
markets (Emmers 2017; Basri 2017).
Informing discussions at ASEAN Community level has been focused
on the development of physical infrastructure and connectivity, both
crucial for boosting GDP. Improved physical infrastructure furthers
production and distribution; connectivity between countries facilitates
 1 INTRODUCTION: ASIAN NATIONS AND MULTINATIONALS … 7

investment flows and movement of skilled workers. Connectivity helps

mobility of human capital. This is the objective of the ASEAN University
Network (AUN) which is designed to develop academic and profes-
sional resources in the region and create a knowledge-based society.
Similarly, the ASEAN Human Resource Blueprint, adopted at the meeting
in Phnom Penh, Cambodia in April 2010, outlines such features of
human resource management as merit-based recruitment, training and
performance-based remuneration, all a reflection of Western experience
and increasingly also being adopted in China. While health service
­provision differs across ASEAN, attempts have been directed at promoting
universal health coverage across the region.
Industrial growth in ASEAN, as in China, is being achieved at the
cost of environmental degradation, itself injurious to human health. The
two volumes of ASEAN Environmental Law, Policy and Governance
are wide-ranging, covering areas like biodiversity, water resources man-
agement, health and trans-boundary pollution, although enforcement
lies largely with individual nations (Centre for Strategic Studies 2017;
ASEAN Education Ministers Meeting 2017; ASEAN Human Resource
Blueprint 2010; Sriratanaban 2015; Kheng 2009).
The issues discussed above impact upon human capital and have
implications for future economic growth. Thus, to meet the challenges
presented, the Asian nations must effectively deploy human resources.
Keys to productivity and market competitiveness are creativity and
innovation, in the past fostered by the values inherent in civil liberties
and representative government. It is an open question whether the
countries of Asia with authoritarian social and political traditions will be
able to create such a conducive environment (Editors, East Asia Forum
2017; US-China Business Council 2017b). This introduction informs
the content of the following chapters. The book investigates more spe-
cifically the main challenges in overcoming the limits to growth both
from the viewpoint of Asian nations and of multinational compa-
nies (MNCs). It is structured in four parts: Part I is devoted to Trade
Issues and International Business Strategies; Part II to International
Trade, Agriculture, Food Supply and Sustainable Development, Part III
embraces issues falling under the broad heading of Firms and Societies
in Asia Facing New Challenges; these issues are for example natural dis-
asters as well as the difficult access to credit by large parts of the popu-
lation in Southeast Asia, and Part IV concludes.
8 R. TAYLOR

References
Abbate, F., & Rosina, S. (2016). ASEAN-China Trade Growth: Facts, Factors
and Prospects. Accessed 10 Nov 2016 at www.newmandala.org/.
ASEAN Education Ministers Meeting (ASED). (2017). Accessed 18 Nov 2017
at asean.org/.
ASEAN Human Resource Management Blueprint. (2010, April 9–10). Adopted
by the CCBWG Meeting, Phnom Penh-Cambodia.
Basri, M. C. (2017). ASEAN Against the World on Trade. Accessed 30 Oct 2017
at www.east_Asia_forum.org/2017/10/29.
Berry, M. (2017). On the Eve of Trump’s Visit to China: Examining Beijing’s
Strategic Priorities, an Interview with Oriana Skylar Mastro. Accessed 8 Nov
at www.nbr.org.research/activity.Aspx?id=815.
Cai, F., & Zhang, X. J. (2017). How Can China Sustain Growth. Accessed 30
Oct 2017 at www.east_asia_forum.org/2017/10/23.
Centre for Strategic Studies, Issue 25. (2017). ASEAN and the World@ 50th
Anniversary of ASEAN and Beyond. www.rsis.edu.sg/research/cms.
DLA Piper. (2016). China Ministry of Human Resources Issues Three New
Regulations to Strengthen Enforcement of Labor Laws in 2017. www.dlapiper.
com.
Editors, East Asia Forum. (2017). Southeast Asia’s Strongmen Looking to China
as Trump Visits Asia. Accessed 6 Nov 2017 at east_asia_forum.org.
Emmers, R. (2017). ASEAN Minus X: Should This Formula Be Extended?
Accessed 24 Oct 2017 at www.google.com/mail.
Garcia-Herrero, A. (2015). China’s Outward Foreign Direct Investment.
Accessed 10 Nov 2017 at bruegel.Org/2015/06/.
Kheng, L. K. (2009). ASEAN Environmental Law, Policy and Governance:
Selected Documents (Vol. 1). Accessed 10 Nov 2017 at www.Papers.ssrn.com/
sol13/papers.cfm?abstract_id=1469388.
Kubny, J., & Voss, H. (n.d.). China’s FDI in ASEAN: Trends and Impact on Host
Countries. gdex.dk/ofdi/10/kubnyvoss.
Li, J. W., & Amer, R. (2017). Achieved in the South China Region? Accessed 26
Oct 2017 at www.worldfinancialreview.com/?p=22048.
McCahill, E. C. (2017a). China’s ‘New Era’ and Xi Jinping Thought. Accessed
25 Oct 2017 at www.nbr.org/research/activity.aspx?id.
McCahill, E. C. (2017b). The Chinese Communists’ New Politburo Standing
Committee: More Claque Than Collective Leadership. Accessed 27 Oct 2017 at
www.nbr.org/research/activity.aspx?id=813.
Norton Rose Fulbright. (2015). China’s New Healthcare Reform 2020.
Accessed 13 Nov 2017 at www.nortonrosefulbright.com/knowledge/
publications/128859.
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They left the laboratory and made their way to the elevator that would
lift them high into the Relay Station where the machine shop was
located. As they entered the elevator, Don shook his head.
"What's the matter?"
"Well, Friend Farrell is on the beam again. If he feels that we're close
to the answer, I'll bet a hat that we're hanging right on the edge. Also,
that kind of work would kill me dead. He likes to stick on one thing
until the bitter end, no matter how long it takes. I couldn't do it."
"I know. About three hours of this and you're wanting another job to
clear your mind. Then you could tackle that one for about three hours
and take back on the first."
"Trying to do that to Farrell would kill both him and the jobs," said
Don. "But you and I can keep two or three projects going strong. Oh
well, Wes is worth a million."
"He's the best we've got," agreed Walt. "Just because he has a
peculiar slant on life is no sign he's not brilliant."
"It's you and I that have the cockeyed slant on life," grinned Don.
"And frankly, I'm proud of it." He swung the elevator door aside and
they walked down the corridor. "This isn't going to be much to see,
but we'll take a look."
The machine shop, to the man, was clustered around the one cabinet
under construction. They moved aside to permit the entry of
Channing and Franks.
"Hm-m-m," said Don. "Looks like a refrigerator and incinerator
combined."
It did. It stood five feet tall, three feet square, and was sealed in front
by a heavy door. There was a place intended for the tube that Farrell
was tinkering with in the blister, and the lines to supply the power
were coiled behind the cabinet.
"Partly wired?" asked Don.
"Just the power circuits," answered Walton. "We'll have this finished
in a couple of days more. The other one is completed except for Wes
Farrell's section."
Channing nodded, and said: "Keep it going." He turned to Walt and
after the passage of a knowing glance, the pair left. "Walt, this waiting
is getting on my nerves. I want to go down to Joe's and drink myself
into a stupor which will last until they get something cogent to work
on."
"I'm with you, but what will Arden say?"
"I'm going to get Arden. Self-protection. She'd cut my feet off at the
knees if I went off on a tear without her."
"I have gathered that," grinned Walt. "You're afraid of her."
"Yeah," drawled Don. "After all—she's the cook."
"I'm waiting."
"Waiting for what?"
"If and when. If you two go on as you have for another year without
one of you turning up with a black eye, I may be tempted to go forth
and track me down a dame of my own."

The cabinet stood in the north end of Venus Equilateral but it was not
alone. It may even be the record for all times; certainly no other
cabinet three by three by five ever had twenty-seven men all standing
in a circle awaiting developments. The cabinet at the south end of
Venus Equilateral was no less popular, though the number of
watchers was less by one. Here, then, were winner and runner-up of
inanimate popularity for the ages. The communicator system set in
the walls of the two rooms carried sounds from the north room to the
south, and those sounds in the south room could be heard in the
north room. Channing grinned boyishly at Arden.
"This, my love, is a device which may make it quite possible for me to
send you back to mother."
Arden smiled serenely. "No dice," she said, "Mother went back to
grandmother last week. When is this thing going to cook?"
"Directly."
"What are we waiting for?"
"Walt."
"I'm ready," came Walt's voice through the speaker.
"About time, slowpoke."
"Really, it was not his fault," objected Wes. "I wanted to check the
scanner-synchronization."
"He's precious," chortled Arden in Don's ear. "He wouldn't think of
letting Walt—the big bum—take the blame for anything that wasn't
Walt's fault."
"That's a good line," grinned Don. "Walt's faults. After we set this
thing aside as a finished project, we'll set that 'Walt's faults' to music.
Ready, Walt?"
"Right. I am now slipping the block into the cabinet. The door is
closed. Have you got the preliminary synchronizing signal in tick?"
Channing called: "Wait a minute, I'm lagging a whole cycle."
"Cut your synchronization input and let the thing catch up."
"O. K. Um-m-m—Now, Walt."
"Has anyone any last words to say?" asked Walt.
No answer.
"Then since no one has any objections at this time, I assume that
everything may be run off. Silence, people, we are going on the air!"
"There was a very faint odor of corn in Walt's last remark," said Don.
"I think the corn was on his breath," said Arden.
"Done!" announced Walt. "Don, crack the door so that the rest of us
can laugh if it don't work."
Channing swaggered over and opened the door. He reached inside
and took out the—object.
He held it up.
"Walt," said he, "what are you giving me?"
"Huh?"
"I presume that you shipped me one of the cubes?"
"Right."
"Well, what we got at this end would positively scare the right arm off
of a surrealist sculptor."
"Hang on to it—I'll be up."
"Hang on to it?" laughed Don. "I'm afraid to."
It was three miles from one end of Venus Equilateral to the other and
Walt made it in six minutes from the time he stepped into the little
runaway car to the time he came into the north-end laboratory and
looked over Channing's shoulder at the—thing—that stood on the
table.
"Um," he said. "Sort of distorted, isn't it?"
"Quite," said Don. "This is glass. It was once a three-inch cube of
precision, polish, and beauty. It is now a combination of a circular
stairway with round corners and a sort of accordion pleat. Hell's
bells!"
"Be not discouraged," gurgled Walt. "No matter what it looks like, we
did transmit matter."
Arden tapped Don on the shoulder. "May I say it now?"
"You do—!"
"Then I won't say it doesn't matter."
"I'm ignoring your crude remark. Walt, we did accomplish something.
It wasn't too good. Now let's figure out why this thing seems to have
been run over with a fourth dimensional caterpillar-tread truck."
"Well, I can hazard a guess. The synchronizing circuits were not
clamped perfectly. That gives the accordion-pleat effect. The starting
of the trace was not made at the same place each time due to
slippage. We'll have to beef up the synchronization impulse. The
circular staircase effect was probably due to phase distortion."
"Could be," said Don. "That means we have to beef up the
transmission band so it'll carry a higher frequency."
"A lower impedance with corrective elements?"
"Might work. Those will have to be matched closely. We're not
transmitting on a line, you know. It's sheer transmission-tube stuff
from here to there. Well, gang, we've had our fun. Now let's widen the
transmission band and beef up the sync. Then we'll try number two."

Number two was tried the following afternoon. Again, everybody

stood around and watched over Don's shoulder as he removed the
cube from the cabinet.
"Nice," he said, doing a little war dance.
Franks came in puffing, took the cube from Don's fingers and
inspected it. "Not too bad," he said.
"Perfect."
"Not by a jug full. The index of refraction is higher at this edge than at
the other. See? Walt held the cube before a newspaper and they
squinted through the glass block.
"Seems to be. Now why?"
"Second harmonic distortion, if present, would tend to thin out one
side and thicken up the other side. A sine-wave transmission would
result in even thicknesses, but if second harmonic distortion is
present, the broad loops at the top create a condition where the
average from zero to top is higher than the average from zero to the
other peak. Follow?"
"That would indicate that the distortion was coming in at this end. If
both were even, they would cancel."
"Right. Your scanning at one end is regular—at the other end it is
irregular, resulting in non-homogeneity."
"The corners aren't really sharp," objected Arden.
"That's an easy one. The wave-front isn't sharp either. Instead of
clipping sharply at the end of the trace, the signal tapers off. That
means higher frequency response is needed."
"We need a term. Audio for sonics; radio for electronics, video for
television signals—"
"Mateo," said Arden.
"Um—sounds sort of silly," grinned Walt.
"That's because it's strange. Mateo it is," said Don. "Our mateo
amplifier needs higher frequency response in order to follow the
square wave-front. Might put a clipper circuit in there, too."
"I think a clipper and sharpener will do more than the higher
frequency," said Farrell. He was plying a vernier caliper, and he
added: "I'm certain of that second harmonic stuff now. The dimension
is cockeyed on this side. Tell you what, Don. I'm going to have the
index of refraction measured within an inch of its life. Then we'll check
the thing and apply some high-powered math and see if we can come
up with the percentage of distortion."
"Go ahead. Meanwhile, we'll apply the harmonic analyzer to this thing
and see what we find. If we square up the edges and make her
homogeneous, we'll be in business."
"The space lines will hate you to pieces," said Arden.
"Nope. I doubt that we could send anything very large. It might be
more bother to run a huge job than the money it costs to send it by
spacer. But we have a market for small stuff that is hard to handle in
space because of its size."
"I see no reason why Keg Johnson wouldn't go for a hunk of it,"
offered Wes Farrell.
"I've mentioned it to Keg; the last time I was in Canalopsis," said Walt.
"He wasn't too worried—providing he could buy a hunk."
"Interplanet is pretty progressive," mused Don. "There'll be no reason
why we can't make some real handy loose change out of this. Well,
let's try again tomorrow."
"O. K. Let's break this up. Will we need any more blocks from Terran
Electric?"
It was less than a month later that a newspaper reporter caught the
advanced patent notice and swallowed hard. He did a double take,
shook his head, and then read the names on the patent application
and decided that someone was not fooling. He took leave and made
the run to Venus Equilateral to interview the officials. He returned not
only with a story, but with a sample glass block that he had seen run
through the machine.
The news pushed one hatchet murder, a bank robbery, a football
upset, and three political harangues all the way back to page seven.
In terms more glowing than scientifically accurate, the matter
transmitter screamed in three-inch headlines, trailed down across the
page in smaller type, and was embellished with pictures, diagrams,
and a description of the apparatus. The latter had been furnished by
Walt Franks, and had been rewritten by the reporter because Walt's
description was too dry.
The following morning Venus Equilateral had nine rush telegrams.
Three were from cranks who wanted to go to Sirius and set up a
restorer there to take people; four were from superstitious nuts who
called Channing's attention to the fact that he was overstepping the
rights given to him by his Creator; one was from a gentleman who
had a number of ideas, all of which were based on the idea of getting
something for nothing, and none of which were legal; and the last one
was a rather curt note from Terran Electric, pointing out that this
device came under the realm of the power-transmission tube and its
developments and that they wanted a legal discussion.
"Have they got a leg to stand on?" asked Walt.
"I doubt it."
"Then to the devil with them," snapped Walt. "We'll tell 'em to go jump
in the lake."
"Nope. We're going in to Terra and slip them the slug. If we clip them
now, they'll have nothing to go on. If we wait until they get started,
they'll have a fighting chance. Besides, I think that all they want to do
is to have the facts brought out. Are we or are we not under the terms
of that contract?"
"Are we?"
"We're as safe as Sol. And I know it. That contract pertained to the
use of the Solar beam only, plus certain other concessions pertaining
to the use of the power-transmission tubes and other basic effects as
utilized in communications."
"Why can't we tell 'em that?"
"It's got to be told in a court of law," said Don. "Kingman's mind runs
to legal procedure like Blackstone."
"We'll take the gadgets?"
"Right. What are you using for power?"
"What other? Solar beams, of course. We don't bother about running
stuff around any more. We plug it in the 115-volt line, it energizes the
little fellows just long enough to make them self-sustaining from Sol.
All the 115-volt line does is to act as a starting circuit."
"You and Farrell had better dream up a couple of power supplies,
then. We can't use the Solar beam on Terra."
"I know. We're a little ahead of you on that. Wes and one of the
Thomas boys cooked up a beam-transducer power supply that will
get its juice from any standard 115-volt, sixty-cycle line socket. We've
two of them—and they run the things easily."
"Good. I'll 'gram Terran Electric and let 'em know we're on our way for
the legal tangle. You load up the Relay Girl and we'll be on our way.
Stock up the usual supply of bars, blocks, gadgets, and traps. Might
include a bar magnet. When we show that it is still magnetized, we'll
gain a point for sure."
"If we take a magnet, we'd better take the fluxmeter to show that the
magnetic field hasn't dropped."
"Right. Take anything you can think of for a good show. We can knock
them dead!"
Mark Kingman put his assistant legal counsel on the witness stand.
"You will state the intent of the contract signed between Terran
Electric and Venus Equilateral."
"The contract holds the following intent: Use of the power-
transmission tubes for communications purposes shall fall under the
jurisdiction of Venus Equilateral. For power transmission, the tubes
and associated equipment is under the control of Terran Electric. In
the matter of the Solar beam tubes, the contract is as follows: Venus
Equilateral holds the control of the Solar beam in space, on man-
made bodies in space, and upon those natural bodies in space where
Venus Equilateral requires the Solar power to maintain subsidiary
relay stations."
"Please clarify the latter," said Kingman. "Unless it is your intent to
imply that Terra, Mars, and Mercury fall under the classification of
'places where Venus Equilateral requires power.'"
"Their control on natural celestial objects extends only to their own
installations and requirements. Basically, aside from their own power
requirements, Venus Equilateral is not authorized to sell power. In
short, the contract implies that the use of the sub-etheric phenomena
is divided so that Venus Equilateral may use this region for
communications, while Terran Electric uses the sub-ether for power.
In space, however, Venus Equilateral holds the rights to the Solar
beam."
Frank Tinkin, head legal man of Venus Equilateral, turned to Don and
said: "We should have this in a technical court."
Don took his attention from the long discussion of the contract and
asked: "Why not change?"
"Judges hate people who ask for change of court. It is bad for the
requestee—and is only done when the judge is open to the question
or disinterested—and also when the suspicion of dislike is less
dangerous than the judge himself."
"Well, this should be in a technical court."
"Want to chance it?'
"I think so. This is more than likely to turn up with differential
equations, physics experts, and perhaps a demonstration of atom-
smashing."
Kingman finished his examination and turned away. The judge
nodded sourly at Tinkin. "Cross-examination?"
Tinkin faced the witness, nodded, and then faced the court.
"The witness' statements regarding the contract are true. However,
Judge Hamilton, I will attempt to show that this case is highly
technical in nature and as such falls under the jurisdiction of the
Technical Court. May I proceed?"
"Counsel for the plaintiff assures me that this is not truly a technical
case," snapped Hamilton. "However if you can definitely prove that
the case in point hinges on purely technical matters, what you say
may be instrumental in having this hearing changed. Proceed."
"Thank you." Tinkin turned to the witness. "Exactly what is the point in
question?"
"The point in question," said the witness, "is whether or not the matter
transmitter falls under Terran Electric's contract or Venus Equilateral's
contract."
"Isn't the question really a matter of whether the basic effect is
technically communication or power transmission?"
"Objection!" barked Kingman. "The counsel is leading the witness."
"Objection permitted—strike the question from the record."
"I was merely trying to bring out the technical aspect of the case,"
explained Tinkin. "I'll rephrase the question. Is it not true that the
contract between Terran Electric and Venus Equilateral is based upon
a certain technology?"
"Certainly."
"Then if the case is based on technical aspects—?"
"Objection!" marked Kingman. "More than half of all manufacturing
contracts are based upon technical background. I quote the case of
Hines versus Ingall in which the subject matter was the development
of a new type of calculating machine. This case was heard in a legal
court and disposed of in the same."
"Objection permitted."
"No further examination," said Tinkin. He sat down and turned to Don.
"We're in trouble, Hamilton does not like us."
"Well, we still have the whip hand."
"Right, but before we get done we'll have trouble with Hamilton."
"Before we get done, Kingman will have trouble with us," said Don.

Terran Electric's lawyer called Wes Farrell to the stand. "Mr. Farrell,
you are employed by Venus Equilateral?"
"Yes."
"In what capacity?"
"As an experimental physicist."
"And as such, you were involved in some phases of the device under
discussion?"
"I was," said Farrell.
"Does the device make use of the Solar beam?"
"It does but—"
"Thank you," interrupted Kingman.
"I'm not through," snapped Farrell. "The Solar beam is not integral."
"It is used, though."
"It may be removed. If necessary, we can have hand-generators
supplied to generate the operating power."
"I see," said Kingman sourly. "The device itself is entirely new and
basic?"
"Not entirely. The main components are developments of existing
parts, specialized to fit the requirements."
"They are based on specifically what?"
"Certain effects noted in the power-transmission tubes plus certain
effects noted in the Solar beam tubes."
"And which of these effects is more contributory?"
"Both are about equally responsible. One will be useless without the
other."
Kingman turned to the judge. "I intend to show that the use of these
effects is stated in the contract."
"Proceed."
"Was there any time during the development of the device any
question of jurisdiction?"
"None whatever," said Farrell. "We knew how we stood."
"The statement is hearsay and prejudiced," stated Kingman.
"Strike it from the record," snapped Hamilton.
"It stands at 'none whatever,'" said Kingman.
The secretary nodded.
"Since absolutely no attention was paid to the terms of the contract,
doesn't that imply that a certain ignorance of the terms might
prevail?"
"Objection!" shouted Tinkin. "Counsel's question implies legal
carelessness on the part of his opponent."
"How can you be aware of the ramifications of a contract that you do
not read?" stormed Kingman.
"Objection overruled."
"May I take exception?" requested Tinkin.
"Exception noted. Counsel, will you rephrase your question so that no
lack of foresight is implied?"
"Certainly," smiled Kingman. "How were you certain that you were
within your rights?"
"If this plan had been open to any question, my superiors would not
have permitted me—"
"That will not serve!" snapped Kingman. "You are making an
implication—your testimony is biased."
"Naturally," barked Farrell. "No one but an idiot would claim to have
no opinion."
"Does that include the court?" asked Kingman suavely.
"Naturally not," retorted Farrell. "I was speaking of interested parties."
"Let it pass. In other words, Dr. Farrell, you were never sure that you
were within your rights?"
"I object!" exploded Tinkin. "Counsel is questioning a witness whose
business is not legal matters on a subject which is legal in every
phase."
"Objection sustained," said Hamilton wearily. The matter was
dropped, but Kingman had gained his point. The item may never
appear in the records, but it was present in the judge's mind.
"Dr. Farrell," said Kingman, "since you have no legal training,
precisely what has been your education and background?"
"I hold a few degrees in physics, one in mathematics, and also in
physical chemistry." Farrell turned to the judge. "Judge Hamilton, may
I explain my position here?"
"You may."
"I have spent thirteen years studying physics and allied sciences. I
believe that I stand fairly high among my fellows. Since no man may
be capable in many arts, I believe that I have not been lax in not
seeking degrees in law."
"No objection," said Kingman. "Dr. Farrell, in order that the process
be properly outlined in the record, I am going to ask you to explain it
in brief. How does your matter transmitter work?"
Farrell nodded, and took time to think. Tinkin whispered in Don's ear:
"The stinker! He knows Hamilton hates anything more complex than a
can opener!"
"What can we do?"
"Hope that our demonstration blasts them loose. That's our best bet,
plus fighting for every inch."

Farrell moistened his lips and said: "Utilizing certain effects noted with
earlier experimentation, we have achieved the following effects. The
matter to be transmitted is placed in situ, where it is scanned by an
atom-scanner. This tube removes the substance, atom by atom,
converting the atoms to energy. This energy is then reconverted into
atoms and stored in a matter bank as matter again. The energy of
disintegration is utilized in reintegration at the matter bank with but
small losses. Since some atoms have higher energy than others, the
matter bank's composition will depend upon the scanned substance."
"The matter bank is composed of the same elements as the matter
for transmission?" asked Kingman.
"No. Some elements release more energy than others. It is desirable
that the energy-transfer be slightly negative. That is to say that
additional energy must be used in order to make the thing work."
"Why?
"All power lines and other devices are developed for delivering
energy, not receiving it. It is less disastrous to take energy from a
power line than to try and drive it back in—and the energy must be
dissipated somehow."
"Then the matter bank is not the same material."
"No," said Farrell. "The substance of the matter bank is
nonhomogeneous. Instantaneously, it will be whatever element is
necessary to maintain the fine balance of energy—and it is in
constant change."
"Proceed," said Kingman.
"In passing from the disintegrator tube to reintegrator tube, the energy
impresses its characteristic signal on a sub-ether transmission
system. Radio might work, except that the signal is unbelievably
complex. Wired communications—"
"Objection to the term," said Kingman.
"Sustained."
"Wired ... transfer? ... might work, but probably would not due to this
same high complexity in transmitted signal. At any rate, upon
reception, the signal is used to influence, or modulate, the energy
passing from a disintegrator tube to a reintegrator tube in the
receiver. But this time the tube is tearing down the matter bank and
restoring the object. Follow?"
"I believe so. Does the Court understand?"
"This Court can follow the technical terms."
"Now, Dr. Farrell, the matter transmitter does actually transmit over a
power-transmission tube?"
"Yes. Of the type developed by us for communications."
"But it is a power tube?"
"Yes."
"Then are you certain that you are sending no energy?"
"I object!" shouted Tinkin. "The question has no answer!"
"Hasn't it?" queried Kingman. "My worthy opponent, all questions
have an answer."
"Objection overruled," snapped Hamilton sourly. "Let the witness
answer."
"It is impossible to send communications without sending some
energy. It is the intent to which the energy is put that determines the
classification."
"Explain further."
"You must send energy when you communicate with a light-blinker,"
grinned Farrell, "The receiving party receives the energy, but couldn't
possibly read a newspaper with it. The beams at Venus Equilateral
send out several million watts—and by the time they get to Luna, they
require amplifications bordering on the million-times before they are
usable. The intent is clear—we are not supplying power, we are
sending intelligence."
"I contend," said Kingman to the judge, "that the contract states
clearly that developments of this device are to be used for
communications only when operated by Venus Equilateral. I further
contend that the transmission of matter does not constitute a
communication, but rather a transfer of energy."
"I object," said Tinkin. "If this statement was objectionable to the
learned counsel before, it is equally objectionable to me now."
"Previously," said Kingman suavely, "counsel was trying to influence a
witness. I am merely trying to explain my point."
Hamilton cleared his throat. "Counsel is merely attempting to
influence the Court; the same privilege will be available to his
opponent at the proper time. That is why we have courts."
Tinkin sat down.
"I maintain that the concept of communication precludes matter
transmission," stormed Kingman. "Matter transmission becomes a
problem for the transportation companies and the power companies.
Matter, your honor, is energy. They are transmitting energy!"
He stalked over to Tinkin and smiled affably. "Cross-examination?" he
offered.
"No questions," said Tinkin.
Hamilton rapped on the bench. "Court is adjourned for ten minutes!"

"Looking for something?" asked Don. Arden turned from the window
and faced him.
"I was trying to see Niagara Falls," she smiled. "I've heard that you
could see 'em from Buffalo."
"You can," laughed her husband, "but not from this part of Buffalo.
What do you want to see Niagara Falls for, anyway? Just a lot of
water falling over a cliff at two pints to the quart."
"If you recall, chum, we went to Mars, not Niagara. There wasn't two
pints of water on the whole planet, let alone a thing like Niagara."
Don nodded. "At the risk of offending a lot of Buffalonians, I'm
beginning to dislike the place."
"It isn't the people," said Arden. "It's the position we're in. Bad, huh?"
"Not going too good at all. Kingman slips in a sly dig every now and
then. Frankly, I am getting worried. He's got a few points that really hit
very close to home. If he can sell the judge on a couple more of them,
we'll be under the sod."
"You won't be out entirely, will you?"
"Not entirely. He'll have to use the beams of Venus Equilateral to
operate, but he'll be collecting all the real gravy. We'll just be leasing
our beams to him."
"Well, don't go down without a fight, chum."
"I won't. I really hate to see Kingman get ahead of this, though." Don
stretched, took another look out across the city of Buffalo, and then
said: "We'd best be getting back. We'll be late ... he said ten minutes."
They went down the staircase slowly, and at the courtroom door they
met Keg Johnson. The latter smiled wearily. "Not too good?"
"Nope."
"Don, if you lose, then what?"
"Appeal, I guess."
"That isn't too good. Judges do not reverse lower courts unless a real
miscarriage of justice takes place."
"I know, but that's our only chance."
"What would you advise me to do?"
"Meaning?" asked Don.
"Interplanet. We'll be run right out of business if this thing goes over
to Kingman and that bunch."
"I know."
"Look, Don, have you tried living matter?"
"Plants go through with no ill effects. Microscopic life does, too.
Animals we have tried usually die because of internal disorders—but
they move while being scanned, and their bodies come out looking
rather ugly. An anaesthetized mouse went through all right—lived for
several hours. Died because the breathing-function made a
microscopic rift in the lungs, and the beating heart didn't quite meet
true. We must speed up the scanning-time to a matter of micro-
seconds and then we can send living bodies with no harm."
"That would clean out the space lines," said Keg. "I think I'll offer that
bird a slice of Interplanet for an interest, if he wins. We've got to have
it, Don."
"I know, Keg. No hard feelings."
"Of course," said Keg wistfully. "We'll be across a barrel if you win,
too. But the barrel will be less painful with you holding the handles
than if Terran Electric holds them. The same offer goes for you, too."
"O.K.," nodded Channing. He turned and entered the courtroom.
Tinkin called Don Channing to the stand as his first witness. Don
explained the function of Venus Equilateral, the job of interplanetary
communications, and their work along other lines of endeavor. Then
Tinkin said to the judge:
"I have here a glass cube, three inches on a side. This cube was
transmitted from Venus Equilateral to the Lunar Station. I offer it as
Exhibit A. It was a test-sample, and as you see, it emerged from the
test absolutely perfect."
The judge took the cube, examined it with some interest, and then set
it down on the desk.
"Now," said Tinkin, "if you do not object, I should like to present a
demonstration of the matter transmitter. May I?"
Hamilton brightened slightly. "Permission is granted."
"Thank you." Tinkin made motions and the technicians came in with
the two cabinets.
"This isn't good," said Kingman's assistant to the lawyer. "The old
goat looks interested."
"Don't worry," said Kingman. "This'll take a long time, and by the time
they get done, Hamilton will be ready to throw them out. Besides, it
will make a good arguing point for my final blast. And, brother, I've got
a talking-point that will scream for itself."
"But suppose they convince—"
"Look," smiled Kingman, "this is really no argument as to whether
matter or intelligence is carried. Believe me, that has nothing to do
with it. I'm keeping this one under the wraps until shooting-time so
they won't be able to get an argument against it. We're a cinch. That's
why I kept it in a legal court instead of a technical court. The Techs
would award it to Channing on a technical basis, but the legal boys
have got to follow my argument."
"How about an appeal?"
"The record of this court is still a very heavy argument. Look, they're
about to start."
The racket and hubbub died, and Tinkin faced the judge. "These are
plainly labeled. They are matter transmitter and matter receiver. We
have here a set of metal bars. They are made of copper, steel,
aluminum, some complex alloys, and the brother to that glass cube
you have before you. We will transmit this set of objects from here to
there. Have you any suggestions?"
"A matter of control and identity. What have you for control?"
"Nothing that is outside of our hands," smiled Tinkin. "Would you care
to send something of your own? Your gavel? Inkwell? Marked coin?
Anything?"
"I'd offer my glasses except for the fact that I can not see without
them," said Judge Hamilton.
"We wouldn't break them or damage them a bit."
"I know—that much faith I have—but I'd not see the experiment."
"A good point. Anything else?"
"My watch. It is unique enough for me." He handed over the watch,
which was quite sizable.
Tinkin inspected the watch and smiled. "Very old, isn't it? A real
collector's item, I daresay."
Hamilton beamed. "There are nine of them in the Solar System," he
said. "And I know where the other eight are."
"O.K., we'll put it on the top. I'll have to stop it, because the
movement of the balance wheel would cause a rift during
transmission."
"How about the spring tension?"