Noychi Family Values: Understanding Fil-Chi Businesses

One day my daughter was laughing as she said, “Dad, I just realized I have been working with you for eight years. I have first-hand experience working for the family business.”

She says: 

• The advantage of working in a family business is that you can wear pajamas while attending the board meeting. 
• You are on call 24/7. 
• There is no paid leave or vacation leave, and you cannot leave. 
• Business is always open, even when others are closed.
• Conversations along the dining table are always business topics, or on rare occasions when gossiping about others; it still is talking or gossiping about other people’s business—especially the competitors.

The new generation of young people handling the family businesses would laugh at this because they know it is true. Many new generation owners are growing their businesses, and modern-day thinking parents have given them significant leeway to do business how they want to. All of my kids are entrepreneurs. To assign them a moniker, they are our modern-day “chinoy-preneurs.”

Chinese family businesses have significantly impacted the country’s economic development. They have generated employment, and while most of them would have started with mom-and-pop operations, they have grown, expanded, and shaped into huge business entities, and many have listed their companies publicly.

One major characteristic of Chinese family businesses is their emphasis on maintaining continuity and stability. Families often prioritize passing the business down to the next generation rather than maximizing profits or growth. They do not start the business, scale it and flip it though some are doing this; the more traditional Chinese family businesses want to grow their businesses organically so that one day the founders will pass it on to the next generation. This mindset can lead to a focus on preserving the status quo and a reluctance to take risks or embark on innovative endeavors. The younger generation of business owners is more adept with technology and is excited to explore and exploit the benefits that tech can do to grow and even scale the business. Noticeably, businesses that have grown are founders or parents that have allowed their children to usher their businesses into digital transformation. 

In the Chinese circle of business, establishing and maintaining good relationships is crucial for success in both personal and professional contexts. Another important aspect of Chinese family businesses is their strong emphasis on “guanxi,” or personal relationships. Family businesses often rely on their owners’ networks to secure deals, resolve disputes, and navigate the complex regulatory environment. The role of women in Chinese family businesses is also noteworthy. The women in the family usually take the role of finance or administration, leaving the men to handle operations, production, and sales, but this is also changing. More and more women are taking on leadership roles and making significant contributions to the growth and success of their family’s businesses. However, it is still a norm that men are prioritized in terms of inheritance and succession. Despite these dynamics, Chinese family businesses continue to thrive and play a significant role in the country’s economic development. They are known for their resilience, adaptability, and long-term vision, which is essential for sustainable growth and stability.

It is worth noting that for the Chinoy Family businesses, many still follow the philosophy that says: “When a Chinese individual is honored, his whole family is honored; when he is condemned, his entire family is. There is a premium paid for shame and pride; thus, the practice of “saving face ” is almost an integral part of doing business.

The family is the foundation of Chinese businesses. Rather than creating wealth, the Chinese tend to see their business duties more as responsibilities to the family. And this in itself gives a stark contrast to western companies. Here are the differences:

• Western companies maximize shareholder value, while Chinese family businesses serve family interests.
• Western companies have public financial reports, while Chinese families are secretive when it comes to their financial information.
• Western companies deal with Public Self securities, and Chinese businesses mainly deal with family, friends, or family.
• Western companies are involved with mergers and unfriendly acquisitions, why Chinese companies are not sold due to family obligations. 
• For western companies, the brand is promoted by advertising, but for Chinese businesses, their advertising sales are made via the family network.
• In the West, professional management recruitment or qualifications are required. In Chinese families. Senior managers are recruited from within the family.

Another thing to remember is that Chinese family businesses often have a strong sense of values based on respect, especially for the elders. This emphasizes the importance of family, relationships, and obligations. This may require finding a balance between business goals and family values, which could be an opportunity for unique culture inside the business, or also be a source of tension.

My own personal observation and practice is that the best way to run the family business is to adapt the winning practices from the West but to maintain the conservative values of respect in terms of relationship with each member of the family.

To all the readers out there and specifically to all the Chinoy-entrepreneurs, Gong Xi Fa Cai!