AML: An Unusual Family Succession System
Traditional Chinese family businesses prefer to pass direct management control to strictly family members, but one company, AML, has gone against the grain.
Topic: Chinese Business Succession – Part 1
Featuring: Prof. Joseph FAN
Prof. Joseph FAN is a Professor at the Department of Finance and School of Accountancy and Co-director of Institute of Economics and Finance. His research and teaching focuses on corporate finance and he has undertaken extensive research on Chinese Family business governance. He is also an expert in finance and entrepreneurship in China.
Recent incidences of family court business disputes in Hong Kong are increasing at an alarming rate with poor succession planning as a root cause of the problem. The impact of poorly managed succession and family infighting can be significant both for the family business and investors. Based on his research of 250 Chinese Businesses, Prof. FAN shows that there is a steep decline in stock value both before and after a succession date.
In this video - Part 1, Prof. FAN outlines why family succession planning is such a big issue for Chinese families and provides actual examples of family succession. Prof. FAN says that the most challenging task in family succession is to pass on the intangible assets such as relationships with important stakeholders, government staff, non-family managers, banks etc.
In this video Part 2, Prof. FAN outlines 3 important institutional tasks, essential for succession planning in Chinese businesses. These include: family governance, ownership structure and corporate governance. He uses Sun Hung Kei Properties which is a major property developer in Hong Kong as an example of family trust.
Prof. Joseph Fan & Prof. Kevin Au shared their views on Asian family businesses with Coutts Institute in March 2012