Family planning for succession
As Hong Kong entrepreneurs from the 1960s pass retirement age, their families are faced with the often difficult problems of succession. Liana Cafolla talks to both business experts and family therapists
In February, Cheng Yu-tung, Hong Kong's fourth richest man, according to Forbes' Rich List, announced his retirement at the age of 86 as chairman and executive director of the property giant New World Development. He passed the reins to his son, Henry Cheng Kar-shun, at the same time making Henry's son, Adrian, an executive director and joint general manager, and Adrian's sister, Sonia, chief executive of New World Hospitality. Late last year, Cheng had listed the company jewellery business, Chow Tai Fook Enterprises, on the Hong Kong stock exchange.
Between the IPO and the nominations, it was, observers said, a well-planned succession, covering not just the second but also the third generations. It was not, however, Cheng's first attempt to ensure the future of the company he had founded in 1970.
He had previously retired in 1989, after handing power to Henry. But the business quickly ran up debts of HK$25 billion, prompting Cheng senior's return to the company a year later. He stayed put for another 23 years.
That scenario is one which other family businesses in Hong Kong are seeking to avoid, observers say, and never more so than now. 'We are in the midst of the greatest inter-generational transfer of wealth that this region has ever seen,' says William Ahern, principal of Family Capital Conservation and a family consultant on succession, tax and legacy.
Many of the city's largest companies were founded around the same time by young entrepreneurs in the 1960s, who are now in their 80s or 90s. Cheung Kong's Li Ka-shing is now 84, Lee Shau-kee of Henderson Land Development is 85, and Stanley Ho Hung-sun of Shun Tak Group is 91 - and has already faced a vitriolic and highly public family governance crisis.
Family businesses are a traditional format in Chinese society, and often appear to have a straightforward organisational structure. Nonetheless, passing on a family business to the next generation is often anything but simple.
From the inevitable overlap between family relations and business concerns, to the difficulties wrought by the generation gap - or gaps, when third or even fourth generations become involved - to questions about decision-making, accountability, and responsibility for the bottom line, transitions in Asian family businesses can be a minefield.