Royal Selangor’s amazing 132-year success story
Iam back in the country after a gruelling seven days of uninterrupted Family and Corporate Governance campaign covering major business groups in two of East Africa’s biggest economies, Kenya and Ethiopia.
This campaign is an initiative of the World Bank’s private sector arm, International Finance Corp. or IFC in making sure the investment they placed in these family-owned enterprises adheres to corporate governance protocols.
Family-owned and -controlled businesses loom large not only in Asia but also in Africa. Some are grappling with awkward succession battles, while others have shown innovation as younger members rise through the ranks. The issue is why do some family businesses go on for centuries? What is their secret?
To address this phenomenon, I have embarked on a new set of articles that will focus mainly on family business longevity series. The first two companies I shared about last month were the almost 500-year-old/18th generation Toraya Confectionery Group from Japan and the Hongkong- based Lee Kum Kee Condiments Group. Toraya has been recognized as one of the world’s top 25 oldest family-owned businesses.
Next in our longevity success stories is Royal Selangor, a 132-year-old Malaysian pewter manufacturer and retailer and considered the largest of its type in the world.
Founded in 1885 by Yong Chin Seong, Yong Wai Seong and Yong Koon, it is a successful family business that has weathered global recessions, and survived two world wars as well as the boom and bust of the tin industry, including a bitter family feud.
The company started out making Chinese ancestral worship items in the 1880s and later expanded to cigarette boxes and vases that appealed to European colonials. In the 1950s, it began making souvenirs and corporate gifts after the Malaysian independence sparked a tourism boom.
Royal Selangor opened its first store abroad in the 1970s and now has 50 stores around the world in countries including Singapore, Japan and Australia. The brand is also found in stores such as Harrods and John Lewis in the UK.
For all this fame and fortune, the family has “proper succession planning and a family charter in place” to thank, notes Yoon Li, who runs the business with cousin Chen Tien Yue, making them the fourth generation to do so. Apart from the two, the company is run by a team of professional managers. “We rely on the heads of various departments to come up with strategies and execution plans,” says Yoon Li.
For the fourth generation family members, formulating a Family Charter was the best thing that ever happened to Royal Selangor. And to prevent a repeat of a damaging family feud, a six-member family council along with a family charter, were established in 2002 with guidelines to handle potential disputes.
Yoon Li says his family’s charter has gone through at least 30 iterations since it was implemented. It was put in place to ensure that the family business “was not considered a place of occupation for family members or an employer of last resort.”
This policy simply means that anyone interested in joining the family business is required to have worked outside the scope of the company for at least two years. The charter basically sets the ground rules and is the constitution for how the family engages with the business. For instance, things like who gets to have a physical office and who is allowed to use the resources of the business are specified in the charter.
“It is this foundation that has kept the family-run entity in business all these years,” he adds.