HR—keep it in the family?

With many in HR working in larger organisations, it is easy to forget that the majority of businesses in Hong Kong are SMEs, and many of these are family run enterprises. But what options do family businesses currently have in the face of globalised competition? Aside from conducting traditional export-related trades, more and more family businesses are now committing themselves to direct investment in foreign markets to help secure a more competitive position.
The Chinese University of Hong Kong (CUHK) recently organised a workshop to help family businesses and their staff to make more informed decisions on ‘going global’.“ Family businesses face critical choices in the face of globalised competition and can choose to: sell the family firm, accept business decline, go public, or grow their existing business,” said Kevin Au, Director, Centre for Family Enterprising and Business Advising, CUHK.
“Unlike western MNCs which are built on their ownership, location and internalisation advantages; Chinese family firms become dragon MNCs through the so-called 3Ls: linkage, leverage and learning. Chinese family enterprises, despite their success, need new resources to internationalise their operations,” added Au.

The oft-cited financial and human resources are important, but many family firms fail in their global expansion in the competitive world because of a lack of cultural and institutional appreciation in the new market. Michael Segalla from HEC described a disastrous advertising campaign in the Middle East. “In the ad, baby food was placed between two babies. On the left, the thin, unhappy baby is ‘transformed’ into the happy, fat baby on the right. Nothing wrong with that in Hong Kong or China—but as Arabs read from right to left—the baby food became a poison!”
Segalla specified four specific areas in his cultural risk model that should be examined before moving products, people or processes to other countries. These are the risk of false communication, preference hesitation, value rejection and cultural infrastructure adaptation. In the workshop, participants including lawyers and private bankers collectively analysed these cultural risks for expansion plans of their clients or their own firms.