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8/16/2019 50-50 Family Business Conference Victorzheng
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50-50 Family Business Conference
Four Generations of Leadership Competition
Dr. Victor ZhengCUHK Hong Kong Institute of Asia-Pacific Studies
CUHK, 10 December 2013
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Introduction
* Networking as consumption or investment?
* Wedding banquet and birthday party are common
social gatherings but can achieve different results
* Sabrina Fung’s wedding vs a Dutch teenage girl’s
birthday party
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Network Capital for
* Different nature of ca ital: economic ca ital human ca ital
social capital, cultural capital and moral capital
* “
structure” (Coleman, 1990: 302).
* ’
importance to economic capital affect social relations, life
chances social class and more im ortantl social
reproduction.
* Coleman’s ar ument: social ca ital and cultural ca ital as
resource. The way to cultivate the resource varies and is
enforced through repeated exchange. Social class
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etwor ap ta or
* Social capital and cultural capital are generic ideas
w c canno e use o s ngu s peop e rom esame social group or with a similar background.
o orrow e concep o soc a cap a an cu uracapital but with emphasis on personal network weaved
network capital, a kind of “idiosyncratic investment”(Williamson, 1979: 242), is suggested for
analysis/discussion.* Network capital is used to explain the growth,
expansion, division and control of the Li & FungGroup, a globalised family-controlled firm based in
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Dynamic Forces for Development
* Every family/business/individual is organised like a
“ ” “ ” .* There is a saying that every individual is at the centre
“ ” .
* In the Chinese philosophy, there are two forceswor ng ns e: y n an yang
which can be seen
as cen r uga an
centripetal forces.
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Dynamic Forces for Development* If centripetal force is more dominant, family members and/or
business artners can work to ether or live harmoniousl to achieve
common goal.
* If centrifugal force is more dominant, family members and/or
business partners may find autonomy/interest hampered and mostly
seek for splitting.
’- – ,
centralization, segmentation and disintegration – is one of the key
explanations which has absorbed these two forces into
consideration.
* Li & Fung’s story over one century clearly shows how the families
and continuity.
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House United, House Divided
* The firm was founded by Li
- -Guangzhou with equal sharein 1906.
* So they named it “Li & Fung”.
* export trade, especiallyporcelain to the US market.
* Business grew well.* Established a branch in
Hong Kong in the late 1910s.
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r e s ory o ung:
House United House Divided
* In 1937, set up Li & Fung Limited in Hong Kong and
moved their families and their major business to HK whenthe Anti-Japanese War broke out. In 1944, Fung Pak-liu
.
* After the war, Li & Fungre-starte ts us ness
in Hong Kong.
* But in 1946, Li To-mingsold all the shares and
left.
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Cultivation and Transmission of the
y ung sp an e n o e an s o eFungs in 1946?
- ,generation more senior, not to mention wealthier at
* Network capital is one of the explanations.
* - ’ “ ,
cradle of elites in Hong Kong”, who once got theMorrison Scholarshi and had s ent one ear in theUS for further study.
* Some hints to illustrate how network capital work.
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Cultivation and Transmission of the
to “Dr. G.H.B. Wright”, by“Fung Pak-liu”
* This plate was presented in
the early 20th
century.* Wright was the headmaster
of Queen’s College from
* It seemed to be an souvenirafter a key event.
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Cultivation and Transmission of the
* Fun Pak-liu “was asked to oin” the
Panama-Pacific InternationalExposition in San Francisco in
.
* Chan Kam-tao, an old boy of QC,,was head of the Chinese delegationto liaise China’s art on the fair.
* After the event, Li & Fung got a bigorder and its trade expanded toHong Kong. Thus, the businessrelied more on Pak-liu’s personal
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Cultivation and Transmission of the
* Li & Fung became a business solely owned by the Fungfamil .
* Under the sibling partnership, it went well after mid 1950s.
* Brothers and sisters were assi ned to different ositions anddepartments.
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u t vat on an ransm ss on o t e
Second Generation Network Ca ital
* Decided to go public in 1972 as more third generation members
joined the company.* After listing, the company expanded further.
* Internal conflicts appeared and one of the “fangs” suggested
“management buy-out” (1989).* Since then, Li & Fung became solely owned by the second fang.
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Cultivation and Transmission of the
* Wh the second brother of the second eneration ot the
controlling power?
* Network capital is still the key explanation as the second
generation brothers and sisters had got similar human capital
and economic capital.* Apart from running the family business, Fung Hon-chu once
served in the Urban Council and Legislative Council. He also
.
* Hence, he had accumulated the thickest network capital.
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u va on an ransm ss on o e
Third Generation Network Ca ital
* In 1992 the third eneration of
Fungs, Victor and William,restructured Li & Fung and
returned to the stock market.
* The company expanded moreimpressively through a series of
mergers and acquisitions.
* Not only expanded the HongKong market, but went globally.
* Below are some figures
illustrating the drastic expansion.
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u , –
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King Lun Holdings Limited
Fung Holdings (1937)
Li & Fung Limited(0494.HK)
Fung Retailing Limited
Convenience Retail AsiaLimited (0831.HK)
Trinity Limited (0891.HK)Branded Lifestyle Holdings
Limited LiFung Kids (Holdings
Limited)Toys “R” Us Asia
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Li & Fung’s Staff and Offices, 1990–2012
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u va on an ransm ss on o e
Third Generation Network Ca ital
* Apart from building economic capital and human capital, they
also spent lot of their time on public services and voluntaryworks.
* The following are some of the key positions held by Victor Fung.
1991–2000 Hong Kong Trade Development Council Chairman
1999–2008 Air ort Authorit Hon Kon Chairman
2001–09 Council
of
The
University
of
Hong
Kong Chairman
Present Asia Advisory Board of Prudential Financial, Inc.
(USA) Chairman
CUHK Business School Center for Family Business 50-50 Family Business Conference Copyright©Victor Zheng 2013
resen rea er
ear
ver
e a
us ness
ounc a rman
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Cultivation and Transmission of the
* In the turn of the new millennium, the fourth generation
mem ers o ne ung.* Succession process has been activated.
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Cultivation and Transmission of the
* A art from buildin the next eneration’s economic
capital and human capital, network capital started to beinculcated.
* Will there be another splitting of the family business?
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Discussion and Conclusion* Business growth clearly follows the pattern of:
orma on, v s on an recen ra sa on con ro .* Unity and solidarity is strong when centripetal force
is dominant.
* .
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Discussion and Conclusion* For whatever force is dominant, Chinese family business puts a
strong emphasis on family control, should it be full control or
partial control (models1 and 2).
* It is rare for Chinese famil business to ado t “se aration of
Model
1
Model
2
Model
3
management and control” (model 3)
oncen ra on o Management and Control
Management and Control
Shareholders ShareholdersShareholders
Management
ManagementManagement
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Discussion and Conclusion
* When the centrifugal force is dominant, splitting may
e avo e t roug prun ng o t e am y tree so toachieve recentralisation.
* For non-listed companies, sales of the controlling
stake can arranged privately.* For listed companies, sales of the controlling stake
can be b “mana ement bu -out”.
* For whatever way adopted, network capital seems to.
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Discussion and Conclusion* As Li & Fung can settle family/business dispute by
‘ ’ ,
century and maintained its business vitality.
Formation
and rowin
Competition and
1st s littin
Recentralization
and rowin
Competition and
2nd s littin
Recentralization and
rowin
Competition and 3rd
s littin ?
Family Management Business scale
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Dr. Victor Zheng
Victor Zheng, Ph.D., is currently Co-Director of the Centre for Social and Political
Development Studies, Hong Kong Institute of Asia-Pacific Studies, The Chinese University of
Hon Kon CUHK . Victor received his Ph.D. from the Universit of Hon Kon and oined
its Centre of Asia Studies in 2003 as Research Assistant Professor. His research interests
include development and inheritance of Chinese family businesses and social indicators and
soc a eve opmen n ong ong an acao. c or au ore nese am y us ness an
the Equal Inheritance System: Unraveling the Myth’ and ‘Gambling Dynamism: The Macao
Miracle’ and published a number of papers in international academic journals. He also co-authored and edited a number of Chinese titles including ‘香港華人家族企業個案研究’, ‘華
人家族企業傳承研究’, ‘家族企業與股票市場’, ‘才德之間:華人家族企業與婦女’, ‘香港大
’ ‘ ’ ‘ ’ ‘ ’ ‘ ’, , , , ,
‘一代煙王:利希慎’, ‘香港赤子:利銘澤’, ‘山巔堡壘:何東花園’, ‘滙通天下:香港如何連結中國與世界’, ‘香港身份證透視’, ‘香港米業史’, ‘香港股史’, ‘澳門社會實錄’, and ’澳門
.
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e erences
, . . .
Kegan Paul.
• Coleman, J.S. 1990. Foundations of Social Theory. Harvard, MA: Harvard University Press.
• Fung, B.Y. 2006. 100 Years of Li & Fung: The Rise from Family Business to Multinational. HongKong: Joint Publishing (Hong Kong) Limited. (in Chinese)
• ‘ ’, . . , , . ,
no. 6, pp. 1360–1380.
• Hutcheon, R. 1992. A Burst of Crackers: The Li & Fung Story. Hong Kong: Li & Fung Limited.
• Li & Fung Limited. Various years. Annual Report (including Interim Report). Hong Kong: Li &
Fung Limited.
• Lin, N. 1990. ‘Social resources and social mobility: A structural theory of status attainment’, in
Breiger, R. (ed.) Social Mobility and Social Structure, pp.247-271. Cambridge: Cambridge
University Press.
• Putnam R. 2000. Blowin Alone: The Colla se and Revival of American Communit . New York:
Simon and Schuster.
• Williamson, O.E. 1975. Markets and Hierarchies. New York: Free Press.
CUHK Business School Center for Family Business 50-50 Family Business Conference Copyright©Victor Zheng 2013
• ou na orn ng os , ep em er .
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