The Lee Kum Kee family secret
Hong Kong sauce giant Lee Kum Kee Group is one of a handful of Chinese family-owned enterprises in the world that has not only managed to survived for more than a century but has thrived after 129 years of steadfastly holding on to some unique and time-tested values reinforced with a powerful succession plan model.
Established in 1888, the Lee Kum Kee group has a remarkable history built over five generations. Yet, despite its market leadership and being a world-renowned brand offering an assortment of Chinese sauces, the group has not been spared its share of family conflict as a result of business disagreements and buyouts.
Major shocks
In 1972, the third generation heir, Lee Mantat and grandson of the founder, suggested to its shareholders the importance of creating additional product lines for its oyster sauce business to reach a bigger market. But the idea did not sit well with his uncles, so the following year and with the backing from his father, Lee Man-tat ended up buying all the shares of the company.
Another setback happened In 1986 when Lee Man-tat proposed the idea of expanding the factory but ended up being rebuffed by his younger sibling, who at that time owned 40 percent of the business. Due to differences in management style, Lee Man-tat offered to buy his brother’s shares.
After going through these two major corporate hiccups, Lee Man-tat ended up gaining control of the business. His five children then joined the company one after another.
The two shocks made the Lee family realize the vulnerability of the enterprise to internal conflicts, so in 2002, the family agreed to set up a family council and draft a family constitution.
Family first, business second
The core value of Lee Kum Kee is “family first, business second.” There are other values, according to writer Alan Lee Ka-Fai, that are worth emulating by family business owners, and these are the following:
a. Entrepreneurship is key: The family requires the successors to stay as entrepreneurs, as “it does not believe one would succeed in keeping the business without instant innovation and thinking out of the box.” The family business will not be able to stay on long unless it always maintains the mindset of entrepreneurs.
b. A governance system must be in place: Apart from family values, the family constitution and family council are two key elements of family gov- ernance. These elements would help build trust among family members and cement family ties.
c. The family motto also underlines achieving a win-win situation.
Additionally, I have included some of the powerful values I mentioned in my article last week namely: d. Put others first, before yourself; e. Pragmatism; f. Integrity; and g. Benefiting the community. According to Dr. Amen Lee, president of Legacy Academy, developing a long-term vision is a key element. He goes on to espouse the five dimensions that include the practice of family values, continuation of family relationship, passing on of family knowledge, management of family wealth and succession of family business.
Inevitably, for family enterprises aspiring to become legacy bearers, the key is to pass on the values of the first-generation entrepreneurs, including their core concepts and life wisdom.
Writer Allan Lee Ka-fai concluded that “Family businesses which have lasted more than 100 years usually have a very unique understanding of family, business and relationships, and pass it on to the next generation as the family legacy.”
Another setback happened In 1986 when Lee Man-tat proposed the idea of expanding the factory but ended up being rebuffed by his younger sibling