Professor Richard Lyons,

Bank of America Dean of the HaasSchool of Business
 
Distinguished guests and participants
 
Ladies and Gentlemen
 

Good morning.
 

I am very pleased that UC Berkeley’s Haas School of Business has chosen to hold its inaugural Asia Business Center Conference and Gala here in Singapore.I would like to extend a warm welcome to all participants, especially those from abroad.
 

Prevalence of family businesses
 

This conference’s focus on family owned businesses is apt. Family businesses account for a substantial part of the global economy. More than a third of the Fortune 500 companies are family-controlled. In Asia, the majority of publicly owned companies are family controlled, and a large proportion of the region’s workforce is employed by family businesses.
 

Several traits emerge as advantages for family-controlled businesses.Families, typically, have a longer time horizon than most investors because they aim to build wealth to pass on to succeeding generations.Family-owned firms tend to have a high level of trust and commitment – to employees, customers and partners – because how the company behaves reflects on the family’s integrity and value systems.Such firms tend to be more stable and make less radical cutbacks in times of recession.
 

Challenges faced by family businesses
 

While family businesses are important economic drivers, especially in Asia, they also face significant challenges.Most start as small businesses and grow in tandem with the ambition, ability and resources of their founders.Studies have found that less than one third of family businesses survive successfully to a second generation; 12% go on to the third, with only 3% making it to the fourth generation.
 

Several factors have been cited as reasons for this high attrition rate as family businesses grow and make the transition across generations.The inability, or reluctance, to complement a family owner’s vision and drive, with competent professional management is one.The lack of capital for growth because of an unwillingness to accept new money and ownership dilution is another.
 

In an era of globalization, the challenge for family businesses is to retain their traditional competitive advantages, that stem from the owner’s active management and focus on long term rather than near term performance, while inducting and harnessing new talent and partnerships, in order to scale up and keep abreast of emerging opportunities and rising standards in corporate governance, finance and HR practices.
 

Today’s inaugural conference will see a gathering of top business leaders and renowned academics who will offer valuable insights on the subject of family owned businesses, and serve as an excellent platform for an exchange of perspectives on this important topic.
 

 Singapore’s winning characteristics
 
I believe there are several compelling reasons why Singapore is well suited as a venue for the discussion of the challenges faced by family owned businesses.Firstly, Singapore is at the crossroads of the East and West.Here, the best of western norms in corporate governance and operations co-mingle with the age-old traditions of Asian business practices.It is a unique lens through which to contemplate the contemporary context of family businesses.
 

Secondly, as a competitive and dynamic economy, Singapore accommodates a diverse range of enterprise models, including family businesses and multi-national corporations.The World Bank has recognized Singapore as the city most conducive for business. Separately, a KPMG survey of 260 leading global companies conducted in September and October, rated Singapore as one of the top four places in the world to invest in during these turbulent times. The companies surveyed cited Singapore’s political stability, rule of law, friendly tax regime, and proximity to the China and India markets as key factors.
 

Singapore as a Trusted Exchange Portal
 
Thirdly, Singapore’s extensive connectivity and quality business services, renders us a virtual exchange where new and productive collaborations occur. Our professionals understand the characteristics and needs of MNCs and Asian family businesses well, and are trusted intermediaries for transactions. One can think of Singapore as a portal that MNCs access to do business in the rest of Asia, and that regional family businesses use to develop networks. Singapore’s status as a business and financial hub enables regional businesses to secure the capital and talent necessary for successful expansion.
 

Enabling family businesses based in Singapore
 
Fourthly, there is a plethora of government initiatives and programmes to help the consolidation and expansion of businesses.For example, through SPRING Singapore (which focuses on SMEs) smaller family businesses can obtain assistance to support the development of leadership and HR capabilities within their businesses.
 

Another agency, IE Singapore, is dedicated to helping Singapore-based companies to internationalize. It provides support for companies exploring emerging markets like – Latin America, Middle East, and Russia — which despite the current global uncertainty, may present new opportunities for businesses used to operating only in this region.
 

Global Schoolhouse – Supporting Businesses
 
Finally, Singapore’s evolution as a world-class education hub, through our Global Schoolhouse initiative, offers a range of quality education which caters to the needs of individuals and businesses alike.

Companies have conducted management education and research activities in Singapore, often with a distinct Asian element. Top MBA schools like INSEAD, ESSEC and the Chicago Graduate School of Business have set up campuses here. Watson Wyatt set up its Asia-Pacific research & information centre here to develop and provide human capital management strategies for the region. We are also glad that the renowned Haas School of Business has established joint Advanced Management Programs with NUS and NTU, and is working on a collaborative education program with the Singapore Human Resources Institute.

Conclusion

The theme, timing and venue for this conference could not, in my opinion, be more appropriate.I welcome and thank UC Berkeley’s continued commitment to Singapore, and look forward to more of such collaboration.I wish all of you a productive and rewarding time at this conference.