Asian family businesses - THE LEX COLUMN. 330 words
18 July 2005
(c) 2005 The Financial Times Limited. All rights reserved
Family feuds are usually best kept in the family. The power struggle at Stanley Ho's Macanese casino empire - with lawsuits and paternity revelations - is unseemly. So was the Ambani brothers' spat over the Dollars 23bn Reliance group. But they are costly too: Reliance stock fell by 10 per cent at the peak of the row. Even in 21st century Asia, families dominate the corporate landscape - they either control or have links to two thirds of the region's top 1,000 companies, according to academic Henry Yeung.
Family ructions are coming to the fore as the founding fathers, now in their 70s and 80s, prepare to hand control to the next generation. Even clear-cut succession plans have not precluded bad blood, as testified by the feuds at Reliance and Korea's Hyundai group. Li Ka-shing, one of Asia's most powerful tycoons, looks shrewder. He handed the reins to his older, more conservative son, Victor, enabling the younger son, Richard, to pursue separate media and technology interests. But Li senior remains very much in the picture. That suits investors, who set huge store by Li senior's magic touch, but suggests the real transition is yet to come.
The rows highlight another weakness: the inability of many family businesses to evolve in a newly deregulated environment that values professionalism over connections. Stanley Ho, for example, owes his riches to a lucrative casino monopoly, while his successors will share the turf with industry veterans from Las Vegas. Despite this, family businesses remain entrenched in classic deal-making businesses. While some sons are re-writing the book - witness Anil Ambani's moves into Bollywood - others have come full circle. Richard Li plunged into telecoms, but his flagship PCCW derives chunky profits from property. The riches of the fathers will not necessarily be visited on the sons. This time, it will not be just the families with capital at risk.