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Taking the Beat Further Afar: The Globalization of Family-Linked Enterprises

This presentation explores the internationalization of family-linked enterprises (FLEs), focusing on the challenges and solutions they face in foreign markets. It examines the role of prior knowledge of foreign markets, the major challenges encountered by FLEs, and the solutions adopted to overcome these challenges. The conclusion discusses the limitations of FLEs' growth and the need for strategic measures in their international expansion.

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Taking the Beat Further Afar: The Globalization of Family-Linked Enterprises

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  1. Taking the Beat Further Afar: The Globalization of Family-Linked Enterprises Henry Wai-chung Yeung Associate Professor in Economic Geography Department of Geography, National University of Singapore (Email: HenryYeung@nus.edu.sg; Homepage: http://courses.nus.edu.sg/course/geoywc/henry.htm)

  2. Taking the Beat Further Afar: The Globalization of Family-Linked Enterprises • Outline of Presentation • Introduction • Prior Knowledge of Foreign Markets • Major Challenges and Solutions in the Internationalization of FLEs • Conclusion

  3. 1. Introduction • Some examples of famous family-linked enterprises • > 75% of all registered companies in developed countries = family businesses • 30% of listed companies in the Fortune 500 have families at their helm • Ford, Fiat, Porsche and Michelin in automobiles • Ericsson and Hutchison Whampoa in telecommunications • News Corp. in media • Wal-Mart Inc. in retailing • Hutchison Whampoa and OOCL in ports and shipping • Samsung in electronics • Examples of early regionalization of family-linked enterprises from Singapore • Hock San Yuen Food Manufacturing in Qingdao as early as in 1975 to manufacture food and beverages • Sunwa Construction & Interior Pte Ltd. (formerly Siew Yong Garments) established a garment factory in Guangzhou in 1979 and subsequently moved it to Shenzhen in 1981

  4. 1. Introduction • The internationalization of family-linked enterprises during the 1980s and the 1990s • Results from my survey of 54 family-linked enterprises in Singapore (see Table 1) • Concentration in Hong Kong, Indonesia, Malaysia before 1985 • Continual focus on the Asian region in the 1990s

  5. 2. Prior Knowledge of Foreign Markets • Incremental learning of foreign markets • Developing prior network relations with foreign customers, suppliers, trading partners and so on • Gradual entry into foreign markets: knowledge accumulation • Capitalizing on network connections in internationalization • Examples of 73 FLEs from Hong Kong and 54 FLEs from Singapore (see Table 2) • Heavy reliance on business connections • Declining significance of family networks • Major advantages of prior network connections - access to local information and knowledge - easier coordination with local operations - access to new distribution channels and markets

  6. 3. Major Challenges and Solutions in the Internationalization of FLEs • Major problems encountered by FLEs in foreign markets (Table 3) • Lack of home government support • Host government regulation in Asia: opaque rules and restrictive regulation • Lack of personal experience (Europe) and sufficient financial assets (North America): the role of open and competitive business environments

  7. 3. Major Challenges and Solutions in the Internationalization of FLEs • Different solutions for different problems (Table 4) • Reliance on local partners and adopting local practices in Asia • Professionalization of management: the role of trusted managers and their adaptability to different business environments

  8. 4. Conclusion: Can We Take the Beat Further Afar? • Growing beyond three generations of FLEs • Inherent limits to the growth of FLEs beyond three generations are misleading and misplaced: paternalism, nepotism, personalism and fragmentation • Challenges to FLEs when they go international • Balancing the equity share, form, and structure of ownership in foreign affiliates • Identifying different ways of establishing foreign operations and the need for nonfamily members to deal with day-to-day management issues • Empowering local affiliates in areas of marketing, sourcing, and human resource management practices • Transferring technology and managerial expertise from parent firms and their local development in host countries • Diversifying the sources of finance beyond the family pool

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