Business and wealth is heavily intertwined in Hong Kong – the special administrative region of China that operates under its “one country, two systems” principle. The statement is particularly true of family businesses in the region, where up to 60% of all business are family controlled. Among the best known are Hutchinson Whampoa, owned by Li Ka-Shing, the richest man in Asia, and Chow Tai Fook, a conglomerate with interests in jewellery and property.
Many of these businesses are relatively old in comparison to those in mainland China, where communist rule meant that businesses were state owned until the 1980s. There, many businesses are still in the hands of the founder, but in Hong Kong many family businesses are tackling succession in the third and fourth generations. Thanks to a lack of legal framework for such issues (see Government Policy section overleaf), family businesses are increasingly looking to the West for best practice.
On the other hand, traditions like respecting one’s elders and complex business structures are deeply entrenched and exacerbating family dynamics. Patriarchs are reluctant to handover to the next generation and Hong Kong is at the point of a forced demographic shift. Nearly a third of the members on the 2013 Forbes Hong Kong rich list are more than 70-years-old and a significant transition of leadership is expected in the next decade.
However, the biggest problem facing family businesses in Hong Kong is increasing competition from Beijing and Shanghai, as well as nearby financial centre Singapore. As a result, many families are seeking to globalise their operations and are increasing transparency to assist with the process. The flexibility of Hong Kong’s business community, as seen in the district’s shift from manufacturing to services, suggests that family businesses are likely to move with the times, even if they are reluctant to hand over control.