The rise of Asia’s next generation
If Wee Teng Wen of Singapore had come of age in the previous generation, chances are that he would have entered the family business —a bank founded by his great-grandfather more than 80 years ago and where his father is currently the chief executive.
Instead, the 41-year-old was drawn to the hospitality industry, opening a series of trendsetting bars, clubs, restaurants and hotels that have a shared goal of celebrating Singapore’s local culture and promoting its image as more than just a good place to do business.
“I was on that path to join the family business,” says Wee, founder and managing partner of The Lo & Behold Group. “But I veered off the banking track because I saw the potential in hospitality and the food and beverage sector to truly shape our culture and city. The best venues anchor neighbourhoods and unite people over food, conversation and social rituals. They give a city its soul.”
Wee is among a growing cohort of Asian next generation business owners who no longer automatically see their future in the family business, and whose priorities, outlook and aspirations can differ markedly from those of their parents.
Moreover, they are poised to take the financial reins at a time of unprecedented transformation in the region, with per-capita income on course to rise six-fold in purchasing-power-parity (PPP) terms by 2050, putting it on par with European levels today.
One factor that typically differentiates Asia’s next generation of business leaders from the previous one is an international education, in many cases at the world’s leading universities. Another related factor is that they have often gained valuable work experience at top consulting firms and other companies before returning home. By contrast, the previous generation did not grow up in today’s globalised world and therefore had fewer opportunities to travel and live abroad.
The result of such international experience is often a desire to bring a different perspective to their business operations, which can also translate into a willingness to allow non-family management to enter the fray.
In a survey by Deloitte-Singapore Management University of family businesses predominantly from southeast Asia, for example, just 24 per cent of next generation respondents said that a family member should take over the company. That compares with 35 per cent and 77 per cent, respectively, for those from the second and first generations.
Traditionalists, Global Citizens and Radical Innovators
Honora Ducatillon, head of family advisory at Pictet Wealth Management, says next generation family members should be defined less by their regional affiliation, gender or age, and more by their intrinsic values and mindsets. She says it would be a mistake to think they are a homogeneous group.
Pictet, through its work with families across the globe, has identified three main profiles:
1. Traditionalists who tend to keep a strong link with their native country, share most of their parents’ values and run the family business and/or manage the family wealth in line with what their parents had built and designed.
2. Global Citizens who see the world as their playground, enjoy an international network and who look for global players as partners. Key for them are services that are independent of time and location.
3. Radical Innovators who have the transformation of the family business at the forefront of their minds and who want to use family wealth to shape the future. For these next-generation family members, venture capital, private equity, ESG investment solutions, impact investing and philanthropy are among the priorities.
Digitalisation and diversification
A second big differentiator is the voracious pace of change in the world today, which is disrupting traditional business models and even entire sectors. As a result, many members of the next generation are anxious to avoid the so-called Kodak moment – when technological change suddenly brings a formerly profitable business to its knees.
This awareness of the need to monitor, identify and adapt to key trends often results in diversification strategies that allow family businesses to reduce risk and foster innovation.
Wee set up a venture fund that invests in businesses that support the hospitality industry and progressive consumer brands, including a technology platform that turns the bugbear of hiring part-time staff into a breeze.
He also invested in smart technology to increase efficiency across his operations. Today, the group is entirely paperless, with a technology stack covering accounting, payroll, procurement, point-of-sale and customer review management.
With the increased focus on environmental and social issues, Asia’s next generation of business owners are more conscious of the need to have both a positive impact as well as a positive return.
“We’ve long felt that we’re not in the restaurant business; we’re in the people business,” said Wee. “One of our key motivations is to redefine careers in hospitality as sustainable, desirable and deeply rewarding. After all, if our staff are happy, chances are that our guests will also be happy.”
Generalising about a group of people spread across different time zones and cultures inevitably involves caveats, and there are many differing strands within Asia’s next generation that often have little to do with the region itself.
But if there is one thing that tends to unite Asia’s next generation, according to Wee, it is the need to find what he calls “meaning” within a business.
“We derive fulfilment from knowing that what we’re doing is moving the needle beyond pure business metrics,” he says. “We are fortunate that family businesses have evolved with the times and become more open-minded, making room for this generation to create something new within a business or carve out their own path.”