Forging ahead with their own strengths
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.”
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.