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Family-linked enterprises must turn professional

By Christie Loh

Family businesses, both big and small, must turn professional as they go global.

This was the call sounded at a conference on family-linked entreprises at Global Entrepolis.

Homegrown supply chain solutions provider Y-C-H has been in business since 19-77.

And for the past 27 years, the company's C-E-O Robert Yap practises something that not many professional firms do --

I don't sack anyone, because we believe that when we take the employee in for better or for worse is there. The dynamics of the organisation itself take care of it, the person does it and feels out of place, automatically we just go away. It's almost like you just sit down there and everybody do it and you can't contribute, what do you do? You can't just sit down there, unless you're very thick skinned.

But keeping the company within family hands has not prevented Y-C-H from growing.

Its footprint spans across Asia Pacific, and it has more than 50 M-N-C customers including IBM and Pepsi.

The key, Dr Yap said, is to ensure family members run the business professionally while grooming young talent.

Agreeing with this modus operandi is NUS Associate Professor Henry Yeung.

Having studied companies run by Chinese families for the past 12 years, Professor Yeung said family-run businesses will also have to be more transparent --

This, as they have a growing need to tap capital markets.

Traditionally they rely on internal family sourcing or close friends if you like, but increasingly that's difficult because investment projects are getting bigger, they're in millions, or tens or hundreds of millions and to do so, there's no way you can absorb it within the family. And, secondly, it's too high a risk to absorb it within the family, so what it means is most family-linked enterprises will have to borrow or issue bonds.

Professor Yeung said borrowing from external sources will also help protect family wealth.

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