HKUST Business School Magazine

From personal experience and close observation of others in a similar position, Dr. Vincent Lo Hong-sui has learned that passing on the wealth, assets, values and culture of a family- centered business to succeeding generations is never easy. Differences of opinion are bound to occur in a situation where big decisions must be made about everything from corporate structures and strategies to investment priorities, management philosophy, timescales, and the assignment of individual responsibilities. But all those matters can be discussed and resolved, with the avoidance of acrimony and angst, if the parties involved can agree on a basic set of ground rules. These guidelines should be realistic, practical, forward-looking, and formalized. They should recognize a clear distinction between the operating business and the family. They should also allow for the possibility of evolution and change as the next generation comes into the picture and naturally assumes more influence over day-to-day calls and the direction of the business. “Every family is different,” says Lo, the founder and Chairman of Shui On Group, the Hong Kong-based property firm which, over the past few decades, has done much to transform the urban landscape of central Shanghai. “But it is important to plan early, so things can be in place and the younger generation can understand and participate in the process.” A broad consensus A good starting point, Lo suggests, is to find a broad consensus on principles, targets and goals. There is no cause to rush such talks, which should also deal with fundamentals like who can participate in decisions, requirements for working in the family business, causes or charities to support, and values to uphold. “With my own family, I put the emphasis on integrity and being able to contribute to society,” he says. “We have written our own family constitution to iron out the principles and the sensitive issues and agree on shared values.” Such discussions usually start at home. At some point questions will inevitably arise about who will lead the business in the future — for instance, whether seniority or merit will be the determining factor — and when and how any transfer of control will happen. “On the asset side, you have to put in a fair and transparent system on choosing the right family member to lead or participate, so family members can accept it is the best choice,” Lo says. “Obviously, a lot of the older generation want to see everything done their way, but they have to accept that the future is going to be different, and you need to establish a mechanism to deal with that.” Biz@HKUST 17