Perspectives from ISB

Family-owned businesses reaching a milestone of more than 100 years are indeed extraordinary, and Royal Selangor, a Malaysian company of Chinese descent that started in the 1880s, has proven that with a well-crafted Family Charter (constitution) and a timely succession process, the family business can continue to survive and grow amid a complex and competitive marketplace.

The Yong brothers started out as tinsmiths who made everyday items catering to the growing mining community at that time. The company—jointly run by Yong Kong’s four sons—expanded into making cigarette boxes and tea sets in the 1900s, which got the attention of a European clientele. After World War II, family feuds tore the business apart and the brothers set up rival companies Tiger Pewter, Selangor Pewter and Lion Pewter. However, only Selangor Pewter, which was renamed Royal Selangor in 1992, survived.

What were the lessons learned that led to the break-up? “My father told me to beware of family feuds. If you have family members contesting over the pot, then nobody looks after enlarging the pot,” says Yong Poh Kon, the managing director of Royal Selangor International and third-generation leader of the family business.

Although, in one interview, he concedes that for this type of business to survive, product innovation is the key to stay in the game, he also asserts that succession planning should be given utmost attention. “It will be based upon the track record of the person and the support he will be able to derive to bring his idea into action. Maintain the family harmony so that everybody feels that they are part of the business… continue this, then you are able to have the passion to drive the business forward,” Yong said.

Another source of major conflict and possibly one of the biggest dangers faced by family businesses today is the risk of the younger generation taking it as a free ride and feeling a sense of entitlement to a position in the company purely because of his or her surname. To avoid this, Royal Selangor employs a policy wherein every family member has to work in another company for a period of time before joining the business. “The rationale behind working in another organization and the reason that rule is in place is that you have to have something to contribute and bring to the table if you want to work for the company.”

Source: Enrique M. Soriano, July 18, 2017, Sunstar Cebu,

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