Family-owned businesses flourishing in Kingdom

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Updated 12 April 2016

Family-owned businesses flourishing in Kingdom

JEDDAH: Family businesses will grow further and flourish in the Kingdom, says a top Saudi industrialist.

Anees Ahmed Moumina, CEO of SEDCO Holding Group, expressed this optimism on the sidelines of the Family Owned Business Forum at the Jeddah Hilton on Monday.
The most important element of family business is corporate governance and this forum talks about this issue, Moumina told Arab News.
Eihab H. Abou-Rokbah, chairman of Arabian Mehad Excellence (AME) and the driving force behind the forum, said family businesses have always been there. “The good thing is that they adapt to changes better than the companies not owned by families.”
The chairman added: “I do really believe family businesses should have strong management and financial foundations. With these two, there is no doubt about solid growth. And if family businesses have good corporate governance in place, then they will sustain for a very long time."
Mark Goyder, founder director of Tomorrow’s Company, said a number of family business owners and people from each generation could benefit from the deliberations.
“There was valuable discussion where we talked about the principles of corporate stewardship. The discussion also focused on how the younger generation learns the tools of the trade. The workshop explored how to preserve the values in a dynamic market,” Goyder said.
Tarek Alnabulsi, managing partner of Institutional Sustainable Growth (ISG), said the participants at the forum shared their experience and focused on succession planning.
He said family businesses represent 90 percent of the enterprises in Saudi Arabia. So sustainability of these businesses is very important for the Saudi economy.
The key challenge facing the family businesses is succession planning, he said, adding that family businesses in Saudi Arabia will continue to show better performance than other companies globally.
He said there are some challenges facing family businesses in Saudi Arabia. “Entrepreneurship is very important in family businesses,” he said.
Adib Haroun Rashid, Ernst & Young’s MENA family business centre of excellence leader, said: “Ernst & Young created the family business center of excellence to focus on issues facing family businesses and how their families can deal with those issues. When we looked at the issues, we found common themes that successful families have done to ensure successful transition between generations.”
According to him, the first and foremost is to set up proper governance rules that enable family members to have clear roles and responsibilities, and segregate business and family issues.
This will help create forums for dealing with family topics outside the business and also establish clear communication channels related to business and family issues.
“The second issue is related to succession. We found that around $1.6 trillion will change hands from one generation to the other over the next 10 years globally,” he said.
Accordingly, a clear succession plan for ownership and management is needed to be put forward in order to ensure smooth transition between generations and ensure continuity of business.
Adib said in Saudi Arabia, the family businesses will continue to contribute to the economy even during the transitional phases between generations.
“They thus need to start planning on succession and proper governance structures to ensure the continuity of their businesses and the unity of the family,” he added.


Samsung chairman Lee Kun-hee, head of South Korea’s biggest conglomerate, dies at 78

Updated 25 October 2020

Samsung chairman Lee Kun-hee, head of South Korea’s biggest conglomerate, dies at 78

  • During his lifetime, Samsung Electronics developed from a second-tier TV maker to the world’s biggest technology firm by revenue

SEOUL: Lee Kun-hee, the charismatic leader of Samsung Group, South Korea’s biggest conglomerate, died on Sunday, the company said, six years he was hospitalized for a heart attack.
Lee, who was 78, helped grow his father Lee Byung-chull’s noodle trading business into a sprawling powerhouse with assets worth some $375 billion, with dozens of affiliates stretching from electronics and insurance to shipbuilding and construction.
“Lee is such a symbolic figure in South Korea’s spectacular rise and how South Korea embraced globalization, that his death will be remembered by so many Koreans,” said Chung Sun Sup, chief executive officer of corporate researcher firm Chaebul.com.
He is the latest second-generation leader of a South Korean family-controlled conglomerate to die, leaving potentially thorny succession issues for the third generation.
Lee’s son Jay Y. Lee has been embroiled in legal troubles linked to a merger of two Samsung affiliates that helped Lee assume greater control of the group’s flagship Samsung Electronics.
The younger Lee served jail time in his role in a bribery scandal that triggered the impeachment of then-President Park Geun-hye. He is facing a retrial over the case, and a separate trial on charges of accounting fraud and stock price manipulation kicked off this week.
The death of Lee, South Korea’s richest with a net worth of $20.9 billion according to Forbes, is set to prompt investor interest in a potential restructuring of the group involving his stakes in key Samsung companies such as Samsung Life and Samsung Electronics.
Samsung Life is the biggest shareholder of the group’s crown jewel Samsung Electronics, and Lee owns 20.76% of the insurance firm.
Lee died with his family by his side, including Jay Y. Lee, the Samsung Electronics vice chairman, the conglomerate said.
“Chairman Lee was a true visionary who transformed Samsung into the world-leading innovator and industrial powerhouse from a local business. His 1993 declaration of ‘New Management’ was the motivating driver of the company’s vision to deliver the best technology to help advance global society,” Samsung said in a statement.
During his lifetime, Samsung Electronics developed from a second-tier TV maker to the world’s biggest technology firm by revenue — seeing off Japanese brands Sony, Sharp Corp. and Panasonic Corp. in chips, TVs and displays; ending Nokia Oyj’s handset supremacy and beating Apple Inc. in smartphones.
“His legacy will be everlasting,” Samsung said.
Chung at Chaebul.com said, “Immediate attention will be given to the roughly 5% stake Lee has in Samsung Electronics,” and how this will be distributed to his family.