World Family News

Family businesses share secrets of their success

By Cheang Ming

A small number of family businesses in Asia and Europe continue to thrive despite fierce competition from larger corporations with deeper pockets .

Besides the usual challenges confronting any enterprise, family businesses have also had to tackle obstacles unique to them, from family tiffs to planning the transition to the next generation.

CNBC spoke to several family-run businesses over the past two seasons of "Lasting Legacy" to uncover insights on not only overcoming the increasingly competitive business environment but also prospering.

Starting young

In many family-run businesses, younger generations often grow up around the business without being directly involved in business operations until much later.

Anderson Tanoto, a director at family-run resources giant RGE (Royal Golden Eagle), told CNBC he frequently spent time at the company's plantations in Indonesia as a child. RGE began as as a plywood-focused business in the 1960s before it expanded into palm oil and pulp.

"I spent four or five summers actually, in Kerinci, in Riau for example or in the plantations ... It was fun as a young kid being in nature, being fascinated by large structures, wearing hard hats and going through different canals and rivers," Anderson said.

His sister, Belinda, recounted how spending time in the fields gave the younger members of the family a "strong emotional connection" to the family business.

All in the family

At the Chateau de Beaucastel winery in France, the Perrin family has chosen to keep its business completely family-owned.

"We are 100 percent family-owned, so it's never even been discussed to even give one percent outside of the family for shareholding," said Marc Perrin. He is part of the fifth generation of the family involved in the operation of the vineyard.

The reason for doing so? The family wants to provide a foundation for future generations.

"You don't plant a vineyard for you, you plant a vineyard for the next generation," Francois Perrin told CNBC, "It's important to know that your work ... is not for you, it's for the next generation."

Close, but not too close

While keeping the family close has been a common theme in some of the oldest family-run businesses, Italian coffee business Illy operates on set of rules that ensures family members do not report directly to somebody they are related to.

"We have very strict family rules, we could not have more than one (person)... per family branch within the same company or area," said Daria Illy, a fourth generation member of the family responsible for new product development.

"You would not find two brothers working in the same department, for sure, and for sure not under the direct responsibility of a family member," she added.

Family feudEven though some families have chosen to keep matters relating to the management of the business within the family, members don't always see eye to eye.

Indian fashion designer Ritu Kumar acknowledged that she has had arguments with her son Amrish, the chief executive officer at the Ritu Kumar company. Kumar is best known for her luxury designs that showcase Indian craftsmanship and the doyenne counts everyone from Bollywood star Aishwarya Rai to the late Princess Diana as patrons.

Amrish is currently attempting to adapt the company to cater to a more contemporary audience, but he acknowledged that it isn't always easy. "There is a generational shift along with a massive growth in the size and scope of the organization. This will always bring some turbulence," Amrish told CNBC.

Still, even with the occasional disagreement, Kumar remained appreciative of her son's contributions to the business.

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