This Millennial Business Exec Sees a Big Future for Family Businesses
There are probably only a handful of people in the history of the world who have ever turned down $2.5 billion. My father is one of them, and I was standing beside him when he did it. I was stunned.
Coca-Cola wanted to enter into a partnership with my father’s Vietnamese beverage company, but he didn’t feel that it was a good fit. How can $2.5 billion not be a good fit?
If the deal had gone through, it would be have been the largest foreign acquisition in Vietnam’s history at the time it was presented in 2012. After the elevator door closed and the stunned Coca-Cola executives were gone, my father gave me some advice that I will never forget. “Never show emotion; never show your hand,” he said. Talking about our family as well as our business, he said, “Proud we stand, as we always have and always will.” He told me the partnership offer presented by Coca-Cola “was not a meeting of the minds.”
Our company was one of the first in Vietnam to show that family businesses could compete with the big boys when it came to fighting for a share of a lucrative, rapidly emerging market like Southeast Asia.
There are many other pearls of wisdom my father gives me about the business in his current role as chairman and CEO. The ability to pass down knowledge from one generation to the next is one of the biggest advantages family businesses have over big international companies that want to gobble them up.
According to a study by McKinsey and Company, a global management consulting firm, in emerging markets like Southeast Asia, approximately 60 percent of private sector companies with revenue of $1 billion or more were owned by founders or families in 2010. By comparison, less than one third of the companies that large in the S&P 500 are founder- or family-owned.
Family businesses also have a reputation that goes beyond brand loyalty. My father is relentless about protecting our reputation personally and professionally. He makes sure every day that the family and the employees know that our reputation is the most important thing we own.
According to the McKinsey report, “Doing business on behalf of a family can signal greater accountability -- the family’s reputation is at stake, after all -- and a stronger commitment. In some cases, a personal commitment from the owner of a family business was as powerful as a signed contract.”
While multinational corporations with their power and prestige have huge clout, family businesses also have advantages when competing with these behemoths. Those advantages include:
- Speed: Family businesses typically do not answer to a board of directors that must approve every move. If the market suddenly changes, a family business has the ability to change quickly.
- Adaptability: A family business is more likely to move into new lucrative territory faster than a large bureaucratic business.
- Knowledge of local markets: Locally run family businesses are more connected to the community.
- Ability to achieve long-term goals: Local family businesses do not have to worry about quarterly profits like most major companies. They can take a longer view of the business and do not feel as pressured to react to short term issues.
- Buy in: If the family’s name is on the door, they are going to try to make sure every customer is happy.
Family businesses are not the past, but the future of business in Southeast Asia. American family-owned businesses that are struggling might want to examine our success to see if there is something they may benefit from.