Asian Billionaire Family Businesses Laid Bare – Forbes Study

Tara Loader Wilkinson

27 April 2012

Hong Kong and India have the highest percentage of family-run billionaire fortunes, while China has one of the lowest, according to a new survey which lays bare some surprising facts about the world’s richest families.

According to ‘Global Wealth and Family Ties’, a survey conducted by Forbes and commissioned by Societe Generale Private Banking, three quarters of billionaire fortunes in Hong Kong are family run, and 73 per cent in India – the highest proportion in the world.

At one third, China has one of the lowest percentages of family-run billionaire companies, only surpassed by the UK at a quarter, and Russia, at 19 per cent.

Hong Kong and Singapore firms have a strong sense of Confucian values, with high rates of family involvement, said the report. This can be partially attributed to the strong rate of real estate fortunes in these two countries, which were made a couple of generations ago, right after World War II. Real estate fortunes tend to be founded and managed by family members.

A unique characteristic of these two countries is the way they manage their wealth, said the report. “Families don’t trust one banker with all their money and invest conservatively. In most Asian countries there is a very strong sense of providing for family members. You trust members of your family very highly, so they are the people you want to bring into the business,” said Justin Doebele, chief editorial advisor at Forbes Indonesia.

India, like East Asia, has a high percentage of family wealth. Indian business was all tied up in red tape until 1991, when economic liberalization unleashed the country’s entrepreneurial energy and hundreds of first-generation businesses sprung up. In India, maintaining strong family ties in all facets of life is a social expectation, as is providing the best possible education for the children. These two strong social undercurrents combine to create the foundation for qualified family management for family fortunes, said the report.

Family members in India are often sent abroad for education and some work experience before being inducted into the family business.

At the other end of the spectrum, China’s decades-long communist regime and its influence on the mentality of people is clearly reflected in the structure of the current fortunes, said the report. In China, two thirds of businesses surveyed are non-family owned. In China there are a lot of self-made billionaires who run their fortunes individually.

Overall, non-family-run fortunes performed better over a three year period, showed the study, which used Forbes Rich List information on billionaire families across 12 markets. Non-family-run fortunes gained 9 per cent in aggregate net worth, while family fortunes grew 4 per cent within the last three years.

Seventy-seven per cent of fortunes are self-made in emerging markets, versus 65 per cent in mature economies, a surprisingly small difference, said the report.