Taking the Beat Further Afar: The Globalization of Family-Linked Enterprises

1
Taking the Beat Further Afar The Globalization
of Family-Linked Enterprises

• Henry Wai-chung Yeung
• Associate Professor in Economic Geography
• Department of Geography,
• National University of Singapore
• (Email HenryYeung_at_nus.edu.sg
• Homepage http//courses.nus.edu.sg/course/geoywc/
  henry.htm)

2
Taking the Beat Further Afar The Globalization
of Family-Linked Enterprises

• Outline of Presentation
• Introduction
• Prior Knowledge of Foreign Markets
• Major Challenges and Solutions in the
  Internationalization of FLEs
• Conclusion

3
1. Introduction

• Some examples of famous family-linked enterprises
• gt 75 of all registered companies in developed
  countries family businesses
• 30 of listed companies in the Fortune 500 have
  families at their helm
• Ford, Fiat, Porsche and Michelin in automobiles
• Ericsson and Hutchison Whampoa in
  telecommunications
• News Corp. in media
• Wal-Mart Inc. in retailing
• Hutchison Whampoa and OOCL in ports and shipping
• Samsung in electronics
• Examples of early regionalization of
  family-linked enterprises from Singapore
• Hock San Yuen Food Manufacturing in Qingdao as
  early as in 1975 to manufacture food and
  beverages
• Sunwa Construction Interior Pte Ltd. (formerly
  Siew Yong Garments) established a garment factory
  in Guangzhou in 1979 and subsequently moved it to
  Shenzhen in 1981

4
1. Introduction

• The internationalization of family-linked
  enterprises during the 1980s and the 1990s
• Results from my survey of 54 family-linked
  enterprises in Singapore (see Table 1)
• Concentration in Hong Kong, Indonesia, Malaysia
  before 1985
• Continual focus on the Asian region in the 1990s

5
(No Transcript)
6
2. Prior Knowledge of Foreign Markets

• Incremental learning of foreign markets
• Developing prior network relations with foreign
  customers, suppliers, trading partners and so on
• Gradual entry into foreign markets knowledge
  accumulation
• Capitalizing on network connections in
  internationalization
• Examples of 73 FLEs from Hong Kong and 54 FLEs
  from Singapore (see Table 2)
• Heavy reliance on business connections
• Declining significance of family networks
• Major advantages of prior network connections
• - access to local information and knowledge
• - easier coordination with local operations
• - access to new distribution channels and
  markets

7
(No Transcript)
8
3. Major Challenges and Solutions in the
Internationalization of FLEs

• Major problems encountered by FLEs in foreign
  markets (Table 3)
• Lack of home government support
• Host government regulation in Asia opaque rules
  and restrictive regulation
• Lack of personal experience (Europe) and
  sufficient financial assets (North America) the
  role of open and competitive business environments

9
(No Transcript)
10
3. Major Challenges and Solutions in the
Internationalization of FLEs

• Different solutions for different problems (Table
  4)
• Reliance on local partners and adopting local
  practices in Asia
• Professionalization of management the role of
  trusted managers and their adaptability to
  different business environments

11
(No Transcript)
12
4. Conclusion Can We Take the Beat Further Afar?

• Growing beyond three generations of FLEs
• Inherent limits to the growth of FLEs beyond
  three generations are misleading and misplaced
  paternalism, nepotism, personalism and
  fragmentation
• Challenges to FLEs when they go international
• Balancing the equity share, form, and structure
  of ownership in foreign affiliates
• Identifying different ways of establishing
  foreign operations and the need for nonfamily
  members to deal with day-to-day management issues
• Empowering local affiliates in areas of
  marketing, sourcing, and human resource
  management practices
• Transferring technology and managerial expertise
  from parent firms and their local development in
  host countries
• Diversifying the sources of finance beyond the
  family pool