(FORTUNE Magazine) – FROM THE burgeoning Asian economies outside Japan -- from South Korea and Thailand, Singapore, Malaysia, and beyond -- a new breed of corporate giant is rising to challenge top businesses in both the Orient and the West. Little known in the U.S., and less understood, the best Asian companies outside Japan are substantial enterprises with over $1 billion in annual sales, first-class management, fat profits, and scorchingly hot growth rates. These are the bluest blue chips of their native lands, and as they begin to weave alliances with the likes of IBM and Toyota, they are shouldering into the highest levels of world competition. Big as they are now, these emerging companies may become overpowering in just a few more years. Compared with the Japanese, they are late arrivals in global markets, but they are bound to catch up fast. More freewheeling than their Japanese counterparts and most big American multinationals, the ten companies listed on page 26 are developing a fascinating new mid-Pacific management style that melds elements of traditional Asian entrepreneurialism with business-school rigor. One early result: No longer dependent on cheap local labor as a competitive edge, they are pushing research in electronics and other fields, and opening factories overseas -- sometimes, ironically, to exploit other countries' cheap labor. Products of a vast region that embraces diverse languages and cultures, they fall into three broad categories: enterprises controlled by governments, such as Singapore Airlines; companies -- or more often groups of companies -- founded and controlled by Overseas Chinese families, including CP Group in Thailand; and South Korean conglomerates, or chaebols, such as Samsung, which also remain under founding-family control. Picking ten out of all the enterprises flourishing in the Pacific Rim is something of an arbitrary exercise. Some are privately held, making comparisons with public companies difficult. Many Asian groups behave as a single entity but do not report on a consolidated financial basis. Frequently the force that unifies them is not accounting but the ambition of a powerful dynast who is both owner and CEO. Whatever their circumstances, every company on FORTUNE's list is venturesome, long successful, and guided by a strategy that promises continued growth and greater global reach. Though some Asian stock markets inhibit participation by outsiders, the determined investor can find ways to play most of these companies. Seoul bars stock purchases by foreigners, but shares in the Korea Fund -- a portfolio of the country's blue chips including components of every Korean conglomerate on FORTUNE's list -- trade on the New York Stock Exchange. Siam Cement of Thailand officially restricts foreign ownership to 25%, but the rule is impossible to enforce. Anyone may buy those securities on the Bangkok Exchange. The Li Ka-Shing Group consists of four companies that trade on the wide-open Hong Kong market. Securities of Malaysia's Sime Darby and the other public companies are listed on their home exchanges. MEMBERS of the first category -- those backed by governments -- are lonely standouts in a region littered with inefficient state corporations. In market- minded Singapore, the government demands that its commercial enterprises earn their own way and then go public. Singapore Airlines, the world's most profitable airline, is a prime example of this policy. Says Deputy Chairman Lim Chin Beng: ''From the very beginning, Singapore Airlines has operated as a commercial enterprise without any subsidy, handout, or government interference.'' That's a slight exaggeration: The airline won landing rights in 37 countries with a little help from the state. International carriers are eager to land in strategically located Singapore, and the government welcomes all comers. In return, it demands reciprocal landing rights for SIA. Spun off nearly 18 years ago from a joint venture with neighboring Malaysia, the carrier has been publicly traded since 1985. It is now 54% state owned, but the government plans eventually to reduce that stake to around 30%. Cash- rich in an industry laden with debt, SIA has the youngest fleet of any major international airline. It also has some of the youngest flight attendants. The ''Singapore girls,'' who provide Asian hospitality plus the spice of sex appeal, must retire before they turn 40, a policy that would be illegal for an American carrier because of U.S. age discrimination laws. SIA outspends rivals on meals and serves Taittinger champagne in business class. The formula works: The airline fills an average of 78% of its seats, vs. 68% for all international carriers. Success hasn't quenched the ambition of Chairman Joseph Y. Pillay, whose management theory boils down to ''just working at it all the time.'' To boost competitive strength in the U.S. and Europe, SIA has allied with Delta and Swissair, sealing the deal with a three-way swap of minority stock interests. The airline plans to spend $10 billion on new planes and ground facilities during this decade. Sime Darby of Malaysia, another state-controlled enterprise, is an expansive conglomerate with manufacturing and trading operations that sprawl across Southeast Asia to Australia. The government indirectly owns about a third of the shares -- Kuwait has 6% -- but has a long track record of leaving management alone. Sime Darby's CEO is a local prince named Tunku Ahmad Yahya (tunku means prince). An economics graduate of England's University of Bristol, where he captained the soccer team, Tunku Ahmad, now 61, began as an accountant. ''Rather than bemoaning our fate of being exploited by the multinationals, we joined the club,'' he says cheerfully. He knew just how to gain admission. Back in 1975, Sime Darby was a complacent British outfit that owned massive rubber, palm oil, and coca plantations in Malaysia. Instead of nationalizing the company, the Malaysian government bought a controlling interest in one fast swipe on the London Stock Exchange. Sime Darby's return on investment reached 19.6% in 1989, up from 14.8% five years earlier. The old plantations have ''paid the rent'' in Tunku Ahmad's phrase, while Sime Darby cautiously diversified into regional ventures ranging from BMW dealerships to real estate development to the manufacture of bathtubs. Entering the condom business on a world scale, Tunku Ahmad recently bought Dur-A-Vend, a British company that makes a product called Jiffy. Its slogan: ''Do it in a Jiffy.'' IN THAILAND, a kingdom where corruption is as common as orchids, Siam Cement thrives on integrity. A royal connection enables this conglomerate to prosper without making ethical compromises that might disquiet potential Western partners. Founded by King Rama VI in 1913 to produce cement, which Thailand previously had to import, the enterprise has grown to 50 operating companies producing building materials, automotive engines, petrochemicals, and more. Thais regard anything associated with their King as almost sacred. That reverence extends to Siam Cement, some 40% owned by the King's Crown Property Bureau, a sort of charitable foundation that spends its profits on social welfare programs. High ethical standards can be a short-term disadvantage, but group president Paron Israsena, 62, argues that they pay off in the long run. For example, last year the company formed a $117 million joint venture with Guardian Industries of Michigan to manufacture plate glass. Then Thai-Asahi, a well- connected competitor with a stranglehold on Thailand's plate-glass market, induced government agencies to block Siam Cement's entry into the business. But Thai public opinion favored Siam Cement, and the deal won approval this summer. Says Paron, ''A lot of people spoke up for us.'' Paron expects revenues to surge during the next five years as new manufacturing joint ventures begin production. Siam Cement will make glass bulbs for TV tubes with Asahi of Japan, rotary compressors for air conditioners with Mitsubishi Electric, and petrochemicals with Dow Chemical. Siam Cement apparently does some creative accounting -- but in reverse. Says Timothy P. McKenna, research manager at Jardine Fleming Thanakom Securities in Bangkok: ''Based on generally accepted accounting standards, Siam Cement is understating its earnings by 20%.'' Even so, conservative Siam Cement last year reported that profits -- after nearly doubling in 1988 -- rose another 45%, to $155 million. McKenna rates Siam Cement as ''the best value'' in the Thai market. The only notable thing the company does poorly is communicate with its shareholders. Recently Siam Cement invited brokerage firms to a briefing, but refused to provide any information not published in its annual report. Several angry guests stormed out before lunch was served. The second group of emerging companies is run by Overseas Chinese, industrious people of Chinese descent who live outside mainland China. Members of this canny minority have long dominated commerce in Southeast Asia. Most of their businesses are private firms in which the patriarch makes all the decisions and the payroll is crammed with relatives, some of whom may not contribute much. Now a few Chinese entrepreneurs, determined to build lasting enterprises, are hiring professional managers, taking their companies public, and sending their heirs to American business schools. LI KA-SHING may well be the richest man in Hong Kong, where he built a personal fortune of $2.7 billion trading real estate. Considerate and gifted at nurturing relationships, he runs four public companies that make up what might be called the Li Ka-Shing Group. These companies do not consolidate accounts, but Li, 62, commands them all through his 40% ownership of Cheung Kong, a property developer. Cheung Kong, in turn, controls the other three: Hutchison Whampoa, a conglomerate; Hongkong Electric, a utility; and Cavendish, an investment holding company. Their combined annual profits add up to more than $1 billion -- more than Nissan or Toshiba earned last year. The return on equity of Hutchison, the largest unit, has averaged a meaty 19% annually over the past decade. Li sent his two sons to Stanford. He maintains traditionally tight financial controls, but he gives his subordinates, both Chinese and Western expatriates, a degree of autonomy that might shock some of his peers. His enterprise has grown far too complex for any one person to run. Hutchison, for instance, owns port terminals handling over half of Hong Kong's container traffic, a mobile telephone venture with Motorola, a TV satellite, and a coal-trading partnership with Total of France. Simon Murray, 50, a Briton who served in the French Foreign Legion, is Hutchison's managing director and Li's ambassador to Western companies. Says $ Murray, an experienced Asia hand: ''Li is a brilliant strategist -- and he leaves me to run the business.'' Li insists that Hong Kong, which reverts to Chinese rule in seven years, ''is still a good place to make a profit.'' But he is hedging a bit. In 1986 he bought control of Husky Oil, Canada's largest integrated independent oil company. He is also investing $1.6 billion in a 204-acre development in Vancouver that amounts to practically an entire township of apartments and office buildings. If Hong Kong someday sinks into the sea, Li will not sink with it. In Thailand, another Overseas Chinese family has turned chicken feed into big profits, building a multinational called Charoen Pokphand, or CP Group. Chairman Dhanin Chearavanont's father and uncle started the business in 1921 as a small Bangkok shop that sold seeds. Since then CP has grown into a huge agro-industrial group of some 100 companies, operating from China to Turkey. The group, most of whose member companies are privately owned, does not disclose total profits, but bankers say it can finance relentless expansion. CP has prospered by creating an integrated poultry industry in Thailand, where labor remains relatively cheap. The company produces feed and breeding stock, processes birds, and often exports them to Europe and Japan as frozen dinners. Nothing is wasted: Chicken droppings are sold for fertilizer. Trying to cover every base, CP is also a major international commodity trader, a wholesale distributor of foodstuffs, and a Kentucky Fried Chicken franchisee in Bangkok and China. The company has teamed with Oscar Mayer to make packaged pork and with Mitsubishi to breed prawns. Another round of diversification is pushing CP far beyond food. Says executive vice president Ajva Taulananda: ''Our founders were entrepreneurs, so we're always looking for new things to do.'' CP is building a $400 million petrochemical plant with Belgium's Solvay to make feedstocks for plastics, which the company also plans to produce. The Thai group has launched 15 businesses in mainland China, where Ajva claims CP's Overseas Chinese identity will help it flourish. The firm, which has several joint ventures in the People's Republic, makes motorcycles there with Honda and beer with Heineken.

FIFTEEN HUNDRED miles east, in Taiwan, the largest nongovernment enterprise is Formosa Plastics Group, founded and still dominated by Chairman Y. C. Wang, 73. Wang quit school at 15 and started out as a rice merchant and lumber dealer; he went on to pioneer Taiwan's plastics industry. The group he runs -- a mix of public and private companies -- is the world's largest producer of polyvinyl chloride (PVC), the plastic used in plumbing pipes. Formosa Plastic, which operates 14 plants in the U.S., is the top producer of PVC pipe in America. A frugal multibillionaire, Wang commands his 44,000 employees with hands-on attention to the smallest details. Says his son Winston, 39, a company manager who earned a Ph.D. in chemistry at the Imperial College of Science and Technology in Britain: ''I've never seen a decision made by anybody except the chairman.'' Most days the patriarch lunches with subordinates, who eat before he arrives so they can concentrate on his torrent of queries. Dismayed at the opportunities Wang saw for suppliers to corrupt his purchasing managers, he had the purchasing process computerized so that managers and vendors never meet face-to-face. Says Wang: ''The way that one executes a job can always be improved, so rationalization has no end.'' His idiosyncratic management style pays off handsomely: Formosa Plastic's pretax return on capital topped 33% last year. SOUTH KOREA is home to the third group of emerging Asian companies. Dominated by some 30 conglomerates, or chaebols, Korea's economy achieved world prominence by producing many of the same goods as Japan at a lower price. But that strategy no longer works: During the past several years local labor costs have shot up and the value of Korea's currency, the won, has risen sharply. The best-run chaebols are responding by automating their factories, setting up offshore plants in Southeast Asia, and hunting for new sources of profit. Korean conglomerates all seem to be in the same businesses -- electronics, shipbuilding, construction, and industrial equipment -- but each reflects the personality of its boss. Samsung is Korea's leading producer of electronics, food products, pharmaceuticals, and paper. It also owns a baseball team. Started as a trading company in 1938, it is still controlled by descendants of the late founder, Lee Byung Chull. Greatly influenced by Japan -- perhaps because he kept a second family in Tokyo with his Japanese mistress -- Lee shaped his group of 38 companies along Japanese lines, picking managers by competitive exams and investing heavily in their training. Chairman Lee Kun-Hee, 48, third son of the founder, believes Samsung must change dramatically to prosper in the 1990s. Says he: ''Unless we become one of the world's first-class corporations by the end of this decade, we simply can't survive.'' For years, Samsung flourished as an efficient, low-cost assembler of such products as television sets and microwave ovens. But those markets have matured. And with Samsung's Korean workers costing an average of $20,000 annually, vs. around $30,000 in Japan, Samsung can no longer just make cheaper versions of me-too products. Says Jee Seung-Lim, director of corporate planning: ''Now we're focusing on higher-technology activities.'' The difficulty is that as Samsung's competitors, from Texas Instruments to Sony, expand globally, they are increasingly reluctant to sell or license their technologies. So the scrappy chaebol is investing $1 billion a year, 6.2% of manufacturing sales, in research and development in such areas as photographic color film, biotech pharmaceuticals, and advanced semiconductors. Early results include a new high-speed fax machine, which Samsung claims is comparable to the latest Japanese models. The company's pattern already is clear: It started making memory chips just eight years ago and is now one of the world's top producers. LEE IS ALSO striving to boost profits, which amounted to just 1.3% of sales last year. To streamline managers' work, Samsung now requires that once voluminous reports be shortened to summaries of a page or two. Managers cut the palaver at meetings by announcing how much the gatherings cost per hour. Overtime for office workers has plunged thanks to the campaign. Says planner Jee: ''Now our people leave the office much earlier in the evening -- no later than 8 P.M.'' The founder of Daewoo, Korea's youngest major chaebol, is still in charge. Chairman Kim Woo-Choong, 53, started the group in 1967 as South Korea's first exporter of textiles. A legendary workaholic who sleeps only a few hours a night and almost never takes a day off, Kim has a special talent for global marketing. As Yoon Young-Suk, 52, president of the group's trading flagship says, ''The whole organization has the smell of international dealings.'' Daewoo is particularly adept at opening new markets, most recently the Soviet Union and Eastern Europe. ''With those countries,'' says Yoon, ''simple import and export are not going to happen.'' To sell its ships, autos, and electronic products to Czechoslovakia, for example, Daewoo takes payment in credits for Libyan oil, which it then processes at its refinery in Belgium. Similarly, it built a tire factory in Sudan in exchange for cotton, which it uses to make clothes in Korea. Chairman Kim has relied mainly on acquisitions to extend Daewoo's tentacles into industry after industry, from autos to electronics to heavy machinery. He made the most of the subsidized loans the government once granted to all Korean conglomerates in their formative stages. A power in both electronics and petrochemicals, Lucky-Goldstar is trying to make a dramatic transition with help from McKinsey & Co., the American management consultant. As insiders readily acknowledge, the family-controlled company needs to shed its slow-moving, bureaucratic ways to compete effectively in global markets. Says executive vice president Kwon Moon-Koo: ''In the past our chairman ordered and controlled everything. He has announced that in the future management should be professional.'' Lucky-Goldstar is counting on alliances with Japanese and Western companies to overcome what Kwon candidly terms ''our shortcomings'' in technology. The group is working with Siemens in telecommunications equipment, Honeywell in industrial control systems, and Hitachi in communications cable. The Korean company is moving plants overseas to key markets, making TVs and VCRs in West Germany, microwave ovens in Britain, and refrigerators in Italy. Says Kwon, echoing his U.S. consultants: ''We no longer have the lowest costs, so we must compete by giving more service to customers.'' THE MOST AGGRESSIVE chaebol of all may be Ssangyong Group, whose ambitious chairman, Kim Suk-Won, is at 45 the youngest head of any Korean conglomerate. The founder's son, Kim earned a degree in economics at Brandeis and developed a Korean ski resort on his own before inheriting the top job in 1975. ''The only major product we had then was cement,'' remembers Kim, whose family controls the group. Diversifying rapidly, Kim built an oil refinery in Korea in partnership with National Iranian Oil Co. When Khomeini took power, Kim bought out the Iranians. A cement-making joint venture in Singapore positioned Kim to build the Raffles City complex there, including a 73-floor hotel billed as the world's tallest. The contract is worth $400 million to Ssangyong Group. In 1982 Kim realized that the rising yen priced his cement 30% below that of Japanese producers, so he spent three years fighting for the right to sell it in Japan. He was finally allowed in after he agreed not to underprice Japanese producers, an arrangement that boosted his profit margin. Such tactics -- combined with strong operations, solid financing, and heady rates of growth -- make Asia's emerging companies a force that international executives can no longer afford to ignore. Says Mark Greenwood of First Pacific Asia Securities in Thailand: ''These companies are aggressive, long- term players out to conquer the world.'' More often than not, they are trying to do that with Western partners -- and winning.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: THE UP-AND-COMERS OF ASIA