Forg­ing ahead with their own strengths

China Daily (Canada) - - SHANGHAI - By YU RAN in Shang­hai

yu­ran@chi­nadaily.com.cn

In a bid to fight the stereo­type that they are merely rid­ing on the coat­tails of their par­ents, sec­ond-gen­er­a­tion en­trepreneurs have said at the 5th China Fam­ily Her­itage Fo­rum that they are com­mit­ted to in­no­vat­ing old busi­ness mod­els and lever­ag­ing their own re­sources and cre­ativ­ity to carve out a unique path for them­selves.

Held at the China Europe In­ter­na­tional Busi­ness School (CEIBS) in Shang­hai on Septem­ber 10, the fo­rum gath­ered hun­dreds of first- and sec­ond-gen­er­a­tion en­trepreneurs, in­dus­try ex­perts and em­i­nent schol­ars to ex­plore the themes of busi­ness re­newal and en­trepreneur­ship as well as the kinds of suc­ces­sion mod­els that best al­low fam­ily busi­nesses to thrive.

“We’ve no­ticed the rapid changes re­gard­ing the de­vel­op­ment of fam­ily busi­nesses, es­pe­cially so in China as they are grab­bing op­por­tu­ni­ties to be in­no­va­tive with their ser­vices and prod­ucts,” said Pe­dro Nueno, pres­i­dent of CEIBS.

Two chal­lenges cur­rently faced by fam­ily-owned busi­nesses — the is­sue of busi­ness suc­ces­sion and China’s eco­nomic tran­si­tion — took cen­ter stage at the fo­rum, and ex­perts agreed that the best so­lu­tion to both chal­lenges is to em­brace in­no­va­tion.

“In to­day’s hy­per-con­nected, glob­al­ized era, in­no­va­tion and en­trepreneur­ship are the or­der of the day,” said Morten Benned­sen, An­dre and Ros­alie Hof­fi­mann Chaired Pro­fes­sor of Fam­ily En­ter­prise, INSEAD.

“If a new gen­er­a­tion of busi­ness lead­ers can marry the en­trepreneurial spirit of the first gen­er­a­tion with an in­no­va­tive, global vi­sion, they could pave the way for smoother suc­ces­sions, de­liv­er­ing a sig­nif­i­cant boost to fam­ily-owned busi­nesses.”

Ac­cord­ing to in­dus­try an­a­lysts, China’s eco­nomic re­forms over the past three decades have trig­gered a ver­i­ta­ble change in the busi­ness en­vi­ron­ment as the econ­omy has grad­u­ally tran­si­tioned from fast, in­put-in­ten­sive growth to slower, pro­duc­tiv­ity-driven growth. Hav­ing once over­seen reck­less ex­pan­sions, many fam­ily firms must now adapt if they are to cope with the new eco­nomic re­al­ity.

Michael Chan, the former sec­ond- gen­er­a­tion chair­man of Café de Co­ral Group, handed over the reins of the fam­ily busi­ness to the third-gen­er­a­tion four years ago when he was 61.

Chan was in­stru­men­tal in grow­ing the fam­ily busi­ness from 30 sin­gle-branded restau­rants in Hong Kong to the cur­rent port­fo­lio of 500 out­lets across Hong Kong and the Chi­nese main­land. He had also ex­panded the scope of the busi­ness to in­clude cater­ing, de­liv­ery and ca­sual din­ing ser­vices.

It took Chan al­most six years to com­plete the process of busi­ness suc­ces­sion and he ad­mit­ted that it was tough keep­ing him­self out of the pic­ture and trust­ing that the next gen­er­a­tion could get the job done.

“The most im­por­tant thing the pre­vi­ous gen­er­a­tion should bear in mind is that you have to

...fam­ily busi­nesses in­volve fa­mil­ial ties and pres­sure and in­flu­ence from se­nior rel­a­tives. It is a strug­gle to bal­ance tra­di­tion and in­no­va­tion.”

Jean Lee,

co-di­rec­tor of CEIBS Cen­tre for Fam­ily Her­itage

let go, al­though that was ex­tremely hard for me as well. We need to step back and let the suc­ces­sor get the job done,” said Chan, who added that be­ing able to re­spond quickly to ever-chang­ing con­sumer de­mands is es­sen­tial to an en­ter­prise’s longevity.

The CEIBS- Shang­hai Trust Re­port on In­no­va­tion in China’s Listed Fam­ily Busi­nesses and a new book on fam­ily suc­ces­sion were re­leased at the event to ex­pand the dis­cus­sion on how peo­ple can be more in­no­va­tion in their fam­ily en­ter­prises.

Ex­perts also said that most sec­ond-gen­er­a­tion en­trepreneurs want to set them­selves apart from their peers who were born with sil­ver spoons in their mouths but have no in­ten­tions of do­ing busi­ness. Un­like the lat­ter, sec­ond­gen­er­a­tion en­trepreneurs have of­ten spurned cushy jobs in the fam­ily busi­ness and turned away fam­ily wealth, eager to make a name for them­selves on their own mer­its.

“Dif­fer­ent from or­di­nary busi­nesses, fam­ily busi­nesses in­volve fa­mil­ial ties and pres­sure and in­flu­ence from se­nior rel­a­tives. It is a strug­gle to bal­ance tra­di­tion and in­no­va­tion, and to make the rea­son­able de­ci­sion that keeps ev­ery­one happy,” said Jean Lee, co-di­rec­tor of CEIBS Cen­tre for Fam­ily Her­itage and the au­thor of The Dual Chal­lenges — Fam­ily Suc­ces­sion and Or­ga­ni­za­tional Trans­for­ma­tion.

For Jamie Lim, whose fam­ily owns Scan­teak, a lead­ing fur­ni­ture store based in Sin­ga­pore, sib­ling ri­valry has proven to be a cat­a­lyst for growth and de­vel­op­ment. She is cur­rently the re­gional mar­ket­ing di­rec­tor of the com­pany while her brother runs Scan­teak’s of­fice in Ja­pan.

“We can give each other pres­sure with com­pe­ti­tion and of­fer sup­port and ad­vice when we have bad times and prob­lems — we are grow­ing to­gether in dif­fer­ent coun­tries but with the same goal,” said Lim.

With re­gard to pass­ing the ba­ton to their chil­dren in the fu­ture, the brother and sis­ter duo agree that they would let the third-gen­er­a­tion de­cide on the fu­ture di­rec­tion of the com­pany with their own ideas and abil­i­ties.

“We don’t see our­selves as own­ing the fam­ily busi­ness and the for­tunes — we are just tak­ing care of it tem­po­rar­ily. This would be the same for the next gen­er­a­tion. They have to cre­ate new paths for the growth of the busi­ness us­ing what we have left be­hind,” said Lim.

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