by Young Accountants Association of HK
It takes ten years to grow trees, but a hundred to rear people, Chinese philosopher Guan Zhong once said.
Adapting this line of thought to modern businesses, we can say that family succession is more difficult than rearing people. And the issue goes beyond one generation.
“The succession process is in fact the ultimate test of good management,” said noted management consultant and author Peter Drucker.
Family succession nowadays always focuses on legacy planning. According to the Holistic Wealth Family Legacy Five-Dimension Model co-created by Amen Lee, the effort should encompass five elements — family value consensus, sustainable family relationship, transfer of family knowledge, family wealth management, and family enterprise succession.
However, wealth succession plan may not proceed well due to lack of common understanding or harmony in family relationship. That would lead to disagreement, frictions and feuds. The feud in the family that controlled Hong Kong’s iconic roast goose restaurant Yung Kee is a typical example. Two brothers failed to reach a settlement on buying up shares until one of them passed away.
There are very few family businesses that have endured for over a century in China. By contrast, there are far more long-life family businesses in Japan. Seven Japanese family companies have existed for over 1,000 years, and 32 family businesses existed over for 500 years.
And as many as 3,146 family firms in the country have a history of over 200 years, while more than 50,000 family firms go back to more than 100 years.
That shows the close relationship with Japan’s family culture. Japan Broadcasting Corporation has conducted a survey of 600 old Japanese companies. The survey showed that over 80 percent of family firms in Japan instilled business management ideas in factory rules and family instructions.
Craftsman’s spirit, Japanese spirit combined with western learning, and family spirit are key elements of family culture succession.
Succession should start with values, since values and success factors of first-generation entrepreneurs have a bearing on the family future and characteristics of family members. The first step is to sort out family values and history.
All family traditions and culture are similar to a tree, and family cohesion stems from core family values. Family values are similar tree roots that go deep into earth. Solid foundation of common family values will lead to family consensus and a strong family tree, which can survive both sunny and rainy days.
For example, the Rothschild family that has dominated the banking world in Europe has a family motto that as long as you are united, you are unbeatable. The day you break apart from each other, it’s the start of a downhill journey.
The core value of a family is offering adequate support for family members. It’s a unique gene passed down generations. Family members will feel they have a special family mission to achieve. Some wealthy people may take up charity as a mission, while some will support educational ventures and others may seek to propagate the faith.
The key is whether family members have a common mission.
When fulfilling a mission, it would extend to family traditions and customs. Family values can be passed on to the next generation as the elders try to instill correct values in their children through bedtime stories, family gatherings, etc.
Every family member is like a fruit of the tree. They may have different shapes but still have the same root. Their unique characteristics and talents would help the family flourish as a whole.
Unique stories of each family should be remembered, as each story is a key cornerstone for building family culture.
Family culture can be gleaned from published interviews or through books or video footage of the elders and passed down from one generation to the other.
Allan Lee Ka-fai is the writer of this article, which appeared in the Hong Kong Economic Journal on June 10.
Translation by Julie Zhu
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