Taking over a family business in one of the fastest-growing regions of the world should be a great experience. For a new generation of young Asian business leaders it is a reality, but they face challenges before they can succeed. Asia’s rapid growth has created significant prosperity – the wealth of high-net-worth individuals in the region is estimated at USD12 trillion and this is expected to rise to almost USD16 trillion by 2015.
But the speed of change in Asia, while stimulating and exciting, can create a gulf between generations. The founders of some of the biggest corporate empires have their roots in the years after the Second World War, a time of poverty and upheaval for many. This is in contrast with their children and grandchildren, who are often wealthy, independent and educated at top Western universities.
Family tensions can be a problem, but our experience of the “next generation” suggests that they are finding ways to bridge the gap
At a recent HSBC conference for the adult children of Asia’s largest family businesses, almost half of those asked said that family feuds were the biggest threat to their future prosperity. This is against a cultural background where concerns of those younger may be misinterpreted as a challenge to the authority of elders.
Family tensions can be a problem, but our experience of the “next generation” suggests that they are finding ways to bridge the gap.
Creating the right structure – one that preserves both wealth and family harmony – is a challenge. Issues within a family, such as how assets and responsibilities are allocated, can be contentious. What is the most appropriate form of ownership and management that reflects the different roles and talents of family members? If a framework can be found in which these issues can be resolved fairly, the potential for conflict can be reduced.
These issues have sparked debate on family governance, which can include guidelines and even a “constitution” on how to deal with different interests or conflicts. While some families thrash out their differences, others find it helpful to use a third party to facilitate conversations that can be sensitive.
Asia’s new generation also want to go beyond defending their existing legacy. They are aware of their responsibilities to the less fortunate, to the environment, and to societies that are still in transition.
This means that they are open to philanthropic ventures. These ventures, particularly when they are large, are about more than good intentions. Rigorous checks are required to avoid the dangers of wasted or misplaced donations. More philanthropists are prepared to join projects to achieve a greater impact. For example, one donor might improve health facilities, while others focus on sanitation and education.
Asia’s new business leaders are seeking solutions that bridge the gap between generations, and in doing so, are laying the foundations for future success.
This article was first published on http://www.hsbc.com/news-and-insight on 30 October 2013.