by Radu Magdin
True enough. But a good part of it will be decided somewhere much less glamorous: around family tables, where fathers, mothers, sons and daughters are working out who gets what, who runs what, and who has earned the right to do either.
This is no longer a private matter. A vast generational transfer is under way inside some of Asia’s most important companies, and when those companies change hands, so do jobs, supplier networks and the direction of capital across the region.
For the past few years, through Superclans (superclans.org), I have been studying major business families across Asia and other emerging markets. I did not expect to find a common model, and I haven’t, not a rigid one. What I have found is a direction of travel. The family keeps ownership and long-term purpose. Management becomes more professional. The heirs have to earn their place. And a successor is judged less and less by how faithfully they guard the founder’s company, and more by whether they can reinvent it.
China is the great test. Its private capitalism is young, built by reform-era founders who are now handing over to children raised in a richer, more global, more technological country than the one their parents started in. Midea showed one answer back in 2012, when He Xiangjian gave the chairmanship to a professional manager, Fang Hongbo, and kept the family as anchor owner. The best Chinese cases now combine that kind of ownership discipline with real freedom for the next generation to build new businesses, funds or international platforms of their own.
India plays a different game. Its business families are older and often more institutionalised, so the issue is stewardship rather than inheritance. The Tata model, with ownership held largely through trusts and the executive suite open to professionals, proved long ago that owning a company and running it are two different jobs. A family member can be an active, demanding owner without ever holding the CEO title.
Vietnam is, to my mind, the most interesting case, precisely because it is the youngest. It has become one of Asia’s great manufacturing platforms, yet much of its export engine is still foreign-owned. The next stage depends on Vietnamese companies becoming larger and more international, and family firms will be one of the bridges. China often had to institutionalise after the scale was already there. Vietnam still has the luxury of doing it while the scale is being built, before succession becomes a crisis.
When I compare the families that handle this well, I keep coming back to five things, which I have taken to calling the five Cs. Continuity of ownership and purpose. Competence, meaning leadership is earned rather than assigned. Codification, because the founder’s personal relationships must eventually become governance. Creation, giving heirs room to build and not just inherit. And connectivity, since successors will operate across countries and industries their parents never had to deal with.
Underneath all of this sits one shift: from inheritance to legitimacy. Shares can be transferred overnight. Authority cannot. Employees, markets, professional managers and, frankly, the other relatives now expect successors to prove themselves, through operating responsibility, a venture of their own, time spent outside the family firm or serious international exposure.
Asia’s first generation proved that families could build extraordinary companies. The second has a harder job: building institutions strong enough to outlive extraordinary founders. Get that right, and succession will do much more than protect wealth. It will produce the next generation of Asian capital and Asia’s next global companies.
By: N. Peter Kramer
