Fam­ily Busi­ness Net­work makes it de­but in China

China Daily (Canada) - - SHANGHAI - By XU JUNQIAN in Shang­hai

xu­jun­qian@chi­nadaily.com.cn

More than 32 mil­lion fam­ily-run busi­nesses in China are cur­rently be­ing passed down from one gen­er­a­tion to the other, and if this crit­i­cal tran­si­tion is not man­aged prop­erly, the world econ­omy will be se­verely im­pacted.

Chavalit Fred­er­ick Tsao, the chair­man of Fam­ily Busi­ness Net­work (FBN) Asia, said that this was the rea­son why he de­cided to hold this year’s FBN Global Sum­mit in China for the first time.

The con­se­quences of a shaky tran­si­tion can in­deed be dev­as­tat­ing. Ac­cord­ing to China’s Min­istry of In­dus­try and In­for­ma­tion Tech­nol­ogy, 60 per­cent of the coun­try’s GDP is con­trib­uted by pri­vate­ly­owned com­pa­nies, which in China re­fer pri­mar­ily to fam­ily busi­nesses, while up to 80 per­cent of job op­por­tu­ni­ties in the coun­try are pro­vided by such en­ti­ties.

Founded in 1989 in Switzer­land, FBN is a non-profit in­ter­na­tional net­work com­mit­ted to the strength­en­ing of fam­ily busi­nesses around the world. To­day, FBN has more than 10,300 in­di­vid­ual mem­bers from over 3,210 fam­ily busi­nesses across 58 coun­tries. Some of its most notable mem­bers in­clude Swarovski, Fer­rari and Ga­leries Lafayette.

Yu Jiangbo, who hails from the sec­ond gen­er­a­tion of Neoglory Hold­ings Group, one of China’s best-known jew­elry com­pa­nies, is the chair­man of FBN China.

FBN shares best prac­tice and knowl­edge to help such busi­nesses achieve sus­tain­abil­ity and longevity. Ac­cord­ing to Tsao, only 14 per­cent of fam­ily busi­nesses around the world be­come multi­gen­er­a­tional. The per­cent­age is even lower in China.

Tsao, the fourth gen­er­a­tion owner of Sin­ga­pore-head­quar­tered ship­ping com­pany IMC Pan Asia Al­liance, noted that one of the big­gest chal­lenges fac­ing fam­ily busi­nesses is achiev­ing sus­tain­abil­ity. He com­pared own­ers of fam­ily busi­nesses to marathon run­ners. Listed or pub­lic com­pa­nies, on the other hand, are akin to sprint­ers.

“Fam­ily busi­nesses have to think long term in terms of gen­er­a­tions. If you are not a fam­ily busi­ness, you only jus­tify your­self quar­ter af­ter quar­ter,” said Tsao, dur­ing an in­ter­view af­ter the global sum­mit.

Tsao be­lieves that FBN has opened a re­gional chap­ter by hold­ing the global sum­mit in China and em­pha­sizes that the or­ga­ni­za­tion hopes to, in ad­di­tion to pro­mot­ing sus­tain­abil­ity in fam­ily busi­nesses, make a dif­fer­ence in China’s com­mer­cial evo­lu­tion.

Tsao’s fa­ther, Tan Sri Frank Tsao, grad­u­ated from St. John’s Univer­sity in Shang­hai in 1945 be­fore work­ing in trad­ing, trans­porta­tion and bank­ing com­pa­nies that his fam­ily owned. He later ven­tured to Hong Kong where he co-founded Great South­ern Steamship Co Ltd and In­ter­na­tional Mar­itime Car­ri­ers Ltd (IMC) in 1949 and 1966 re­spec­tively.

Born in 1957, Tsao joined the fam­ily busi­ness in 1977 af­ter grad­u­at­ing from the Univer­sity of Michi­gan. In 1995, Tsao de­fied the old Chi­nese say­ing that “fam­ily busi­nesses or wealth can­not go be­yond three gen­er­a­tions” when he took over the reins. He even man­aged to trans­form the busi­ness from a tra­di­tional ship­ping com­pany to a global con­glom­er­ate that to­day boasts di­verse busi­ness in­ter­ests in more than 16 coun­tries.

But Tsao’s as­tute busi­ness acu­men was ev­i­dent even be­fore he took over the fam­ily busi­ness. In the 1980s, he de­cided to in­vest in the poorly per­form­ing Unithai Ship­yard, which was lo­cated in a re­mote part of Thai­land, and dug deep in or­der to turn its for­tunes around.

“It did not seem like a sen­si­ble move to make,” said the 59-yearold of the de­ci­sion to take over the ship­yard. “But we man­aged to build the in­dus­try around the ship­yard and turn it into the only ma­jor ship­ping fa­cil­ity in the coun­try, which meant that we got all the busi­ness.”

“I did it be­cause I saw how Ja­pan and Korea were in­dus­tri­al­ized. I knew the same thing would hap­pen in Thai­land, but I just didn’t know when. In this case, it was 15 years. But when you are com­pletely funded by your­self and have no loans to re­pay, you have no pres­sure. You just wait un­til the time comes,” added Tsao.

When it comes to long and com­mit­ted in­vest­ments of this kind, Tsao em­pha­sized that money is never the big­gest chal­lenge. Rather, it is about hav­ing a clear vi­sion.

“It’s all about in­vest­ing ef­fort, time and pas­sion into the search for a solution. That’s the ex­pen­sive part. But that is also the part that helps you be­come a bet­ter en­tre­pre­neur,” said Tsao.

PRO­VIDED TO CHINA DAILY

Chavalit Fred­er­ick Tsao, the chair­man of Fam­ily Busi­ness Net­work (FBN) Asia

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