Taiwan’s Family Business Succession Issues
Taiwanese family businesses face a severe succession issue. The vast majority (56%) of family-owned corporations in Taiwan are still owned by the original founder. These aging first-generation entrepreneurs must now seek their successors in a wave that could transform Taiwan’s economy.
Much of the country’s economic progress has been driven by this first wave of entrepreneurs. Per-capita gross domestic product jumped from only $3,200 in 1984 to $25,500 today as Taiwanese entrepreneurs launched companies and expanded their empires across the world. Today, 70% of the publicly listed firms in the country are family-owned, compared to just 33% in China and 40% in Hong Kong, according to the Economist.
The best example is Terry Gou’s multibillion dollar electronics juggernaut Foxconn. 46 years after he created the company, Gou still serves as chairman and general manager of the firm. Other examples include Taiwan Semiconductor Manufacturing Co. (TSMC) founder Morris Chang and Quanta Computer’s Barry Lam.
Unlike their western counterparts, Taiwanese business families have been reluctant to reach out to non-family professionals to take over the reins. Instead, Taiwan’s eventual solution to its succession issue could be modeled after other Asian countries. In Japan, family business ownership is often passed onto a son-in-law or an adopted son without blood relationship, on the condition that the successor adopt the family name. With 25,321 family businesses that were started over 100 years ago, Japan has more century-old family firms than any other nation in the world, as per data collected by the South China Morning Post.
Meanwhile, Singapore has eased its succession crisis by encouraging more female leaders to take over their family businesses. There are twice as many women on the boards of family firms, compared with non-family firms, according to data from researchers at National University of Singapore’s (NUS) business school.