More than 110 years ago, Fung Pak-liu, an English teacher, and Li To-ming, a local merchant whose family owned a porcelain shop, started an export trading company in Guangzhou, shipping porcelain, fireworks, jade handicrafts and silk, mainly to the United States.
The Fung family have steadily built the company into one of the world’s largest global supply chain firms, while at the same time contributing to the spectacular development of Hong Kong.
For long-lasting, successful firms such as Li & Fung, the role that founders play is critical to the longevity and leadership of the family and business. Without visionaries, their companies and successors can falter for lack of direction. And yet many owner-managers focus their attention on short-term goals instead of thinking long-term.
Every long-lived family-run business combines four common themes in their heritage.
- Using family assets: Utilise the special, tangible or non-tangible contributions and resources that families deliver to their firm within and across generations. Typical examples are strong values, powerful networks or something as simple as the name and reputation of the family and the firm.
- Solving roadblocks: Most long-lived firms have good track records of eliminating roadblocks or reducing their impact on family and business. Roadblocks can arise from internal and external sources, but getting round them is the key to success.
- Not all roadblocks are institutional; they can arise from powerful market forces. Consider what happened to the Fung family in the 1970s, when a shift in low-cost commodity production put their export business on the line. Third gens William and Victor Fung hastened back from their studies in the United States to work on transforming the business into a global supply chain manager. The rest is history. Today, Li & Fung employs over 22,000 people worldwide, has over 250 offices in 40 markets, and connects 15,000 suppliers with 8,000 customers through its sourcing services.
- Planning succession: Succession planning consists of four challenges:
- Understanding succession culture: aligning succession models with the cultural and institutional environment of the firm, the family and the country.
- Transferring family assets: ensuring that assets are transferred across generations efficiently and transparently.
- Preparing the next generation: setting goals and objectives for higher education and management experience outside the family firm.
- Planning in due time: taking 20 years to plan a succession is the norm, not the exception.
- Continuing innovation: Successful family-run firms reinvent themselves in each generation.
- Fung Pak-liu, and especially his son, would have been proud that their descendants have turned a family vision into a global reality. Their focus on transforming both their firm and their beloved Hong Kong into modern powerhouses were instrumental in creating a long-lasting family business whose current fourth-generation leader, Spencer Fung, continues to set high standards and make dreams come true.
Source: Bennedsen, Morten., and Henry, Brian., South China Morning Post, December 02, 2016;
