Opinion

Power of families

BREAKTHROUGH - Elfren S. Cruz - The Philippine Star

October 20, 2016 | 12:00am

It is surprising to most people who are beginning to see that the political environment in the United States has many similarities to the rest of the world, including the developing world. Listen to the political pundits. Money has become the major factor in winning elections; and a select group of rich billionaires are infusing huge amounts of money into the campaigns in order to buy political influence. There are widespread accusations of voter fraud and the rigging of the electoral system to favor specific candidates.

Another thing that is surprisingly familiar is the power of families in both politics and business. The Clinton and Trump families are obviously elite families. Contemporary American political history is filled with political families including the Kennedy families with four generations of powerful politicians; and, the Bush family with two presidents and a member of the fourth generation is now running for a state wide office in Texas.

For those who have followed American politics, there are other dynasties in American modern history: the Udalls of Arizona and Colorado; Browns of California; Rockefellers of New York and Arizona; Tafts of Ohio; Roosevelts of New York; Pauls of Texas and Kentucky; Daleys of Illinois; Romneys of Michigan and Utah. In Canada the present Prime Minister is the son of Pierre Trudeau, a former Prime Minister. President Park Geun-hye of South Korea is the daughter of Park Chun-hee who was a South Korean president, dictator and military general of South Korea from 1961 until his assassination in 1979.

In China, the children of veteran communists who were in power during the first year of the Cultural Revolution are called “princelings”; and, they now control China. President Xi Jinping is the son of Xi Zhongxun who served as secretary general and vice premier of the State Council in the 1950s and 1960s. Yu Zhengsheng, another Politburo member, is the son of Huang Jing, first communist mayor of Tianjin. He was once married to Li Yunhe (Jiang Qing) who later married Mao Zedong.

A political family becomes a political dynasty if it lasts for three or more generations. This phenomenon seems rare in the political arena. However, in the field of business, family dynasties are more common.

Family business dynasties

In his book, Centuries of Success, William O' Hara wrote: “Before the multinational corporation, there was family business. Before the Industrial Revolution, there was the family business. Before the enlightenment of Greece and the empire of Rome, there was family business.”

The oldest existing businesses in the world are family businesses. The Hoshi Ryokan inn in Japan was founded in 718 by the same family. The Antinori family has been growing and selling wine in Tuscany since 1385. The oldest gun making company was founded 1526 by the famed Beretta family. The oldest existing European company was founded in 1000 A.D. Chateau de Goulaine, owned by the Goulaine family, continues to sell wine at its vineyards and hosts functions at its castle. Barovier & Toso is a glass making company founded in 1295 and is still controlled by the 20th generation of the Barovier family. The company produces crystalline glass, mother of pearl and gold free cornelian red on Murano Island which is a ten-minute ferry ride from Venice.

The oldest existing family conglomerate in the world is Sumitomo Corporation in Japan which was founded in 1630. Founded by Masatomo Sumitomo as a medicine and book shop in Kyoto, it is today one of the world’s largest business conglomerate engaged in banking, shipbuilding, mining, glass, electronics, cement, lumber and chemicals.

The oldest existing family businesses in the Philippines are Destilleria Limtuaco and Ayala Corporation. In 1850 Lim Tua Co migrated from China to the Philippines. In 1852, he opened a shop in Binondo, Manila that sold medicinal wine that was supposed to improve physical stamina. This was known as Sioktong and became very popular. Over the years, it expanded and diversified its products. Today the company is still managed by the fifth generation of the family.

In 1834, Don Domingo Roxas and Don Antonio Ayala established Casa Roxas, engaged in sugar, coffee, and indigo cultivation and the manufacture of liquors, castings and gun powder. The two also started a distillery which eventually became Ayala y Compania, now Ayala Corporation, the largest Philippine conglomerate in terms of assets.

All these examples reveal that the oldest surviving businesses in the world are family businesses. In Asia, it is the accepted fact that family businesses are also the largest businesses. But this phenomenon is not limited to Asia. Only six of the 21 largest family businesses in the world are Asian family businesses.

The top 12 are: 1. Novartis ( health care),Switzerland, Sandoz family; 2. Roche (health care) Switzerland, Hoffman-Oeri family; 3. Walmart (consumer staples) United States, Walton family; 4. Facebook (information technology) United States, Zuckerberg family; 5. Anheuser-Busch INBev ( consumer staples) Belgium, Lemann family; 6. Oracle (information technology ) United States, Ellison family; 7. Samsung Electronics (electronics) South Korea, Lee family; 8. Volkswagen (automotive) Piech-Porsche family; 99. Kinder Morgen (energy) United States, Kinder family; 10. Nike (footwear), United States, Knight family; 11. Tata Consultancy Services (information technology) India, Tata family; 12. Softbank (telecommunication services) Japan, Son family.

Family businesses make up more than 90 percent of the world’s business. They will continue to flourish in the foreseeable future for as long as families are more intent on preserving businesses for the next generation to take over than for short term profits.