Asia’s Family-run Conglomerates Drive Regional Growth
With deep pockets and extensive networks, big family conglomerates continue to boost their clout in the Asian markets. In an interview with Nikkei Asian Review, Prof. Joseph Fan says family-run businesses “usually do better than state-owned enterprises or diffusely held corporations in terms of sustainability and profitability”. This story was also reprinted by Financial Times.
Family conglomerates in Asia use deep pockets and extensive networks to open new markets.
In China, the strength of Asian family conglomerates has long been demonstrated. At the end of 1978, Deng Xiaoping, then China’s absolute leader, called for foreign direct investment in a 180-degree shift to reform and opening up after decades of self-inflicted chaos under dogmatic political and social campaigns.
In the early days, global business largely remained on the sidelines. But overseas Chinese either directly invested or led the investment of about US$417bn from 1978 to 2005. This was about two-thirds of total FDI into China during the period, according to a paper published in 2011 by Ren Guixiang, a researcher at the Chinese Communist party’s history research institute. Bangkok-based family conglomerate Charoen Pokphand Group, Chinese-Malaysian tycoon Robert Kuok Hock Nien and his Kuok/Kerry Group and CLP Holdings, a power company controlled by the Kadoorie family, were among the early investors.
Along with the dynamic way they conduct their businesses, big family enterprises tend to make better investments. Credit Suisse, which tracked the share price movements of more than 900 listed family-owned companies with market capitalization of over US$1bn, found that they have outperformed the MSCI All Country World index since 2006.
The majority of this group are from Asia, including Lee Kun-hee’s Samsung Electronics and Li Ka-shing’s Cheung Kong Property Holdings. Market capitalization of major listed companies under Lee’s Samsung group adds up to US$278bn and Li’s Cheung Kong group to US$142bn as of 25 November last year.
In an interview with Nikkei Asian Review, Joseph Fan, Professor of School of Accountancy and Department of Finance and Co-director of Centre for Economics and Finance at The Chinese University of Hong Kong Business School, says family-run businesses “usually do better than state-owned enterprises or diffusely held corporations in terms of sustainability and profitability”. He attributes this to “intangible capabilities” such as relationships, trust, networks and values that are “very difficult to buy and sell in the marketplace”… Read More (screen capture)
This article was also reprinted by Financial Times (PDF) on 5 December 2016.
Source: Nikkei Asian Review / Financial Times
Date published: 1 & 5 December, 2016
Photo: Nikkei Asian Review