The sour smell of fermenting soy beans hangs in the air at the Lee Kum Kee (李錦記) sauce factory as company chairman Eddy Lee (李惠民) explains why he's haunted by a old Chinese saying: "Wealth doesn't go beyond the third generation."
The family firm -- which began making sauces more than 100 years ago and is now a major global brand -- is already being run by the fourth generation. And the fifth wave is showing no interest in taking over, Lee says.
"There are so many family businesses that fail to continue. We want to break that curse," Lee, 50, says from a sofa in the living room of his bungalow on the factory's grounds, with a huge green lawn and a grove of banana trees.
PHOTO: AP
It's the classic succession issue -- one of the most serious challenges facing family businesses around the world. How do you groom the next generation, restructure the company for new leadership and avoid the familial feuding that has sunk so many others?
The Lee family has decided to take a bold step: hiring an outsider to be the chief executive officer by the end of this year. Until now, most top management spots have been filled by family members or longtime employees.
"We believe the company is becoming big enough that it's not an easy job to do anymore. It requires more management skills," Lee said.
It's a huge move for a company founded in 1888. The firm's first product was oyster sauce.
Lee's great grandfather developed the sauce recipe by accident. The restaurateur left a pot of oyster soup boiling too long and discovered the broth had been reduced to a thick, dark brown sauce that was tastier than the soup.
The company moved to Hong Kong in 1946 and began quickly expanding its global business, selling its premium sauces to wealthy Chinese living in San Francisco, London, New York and Hawaii. Now Lee Kum Kee sells nearly 300 sauces and condiments, including chili garlic sauce, minced ginger, sesame oil and soy sauce, in grocery stores worldwide.
Lee is tightlipped about the company's financials and only shares vague figures about sales and production: "Every year, we have 15 percent to 20 percent, at the most 25 percent, growth ... But this is not what we want. We want breakthroughs all the time."
Lee said the company is making a big push to become the leader in China's huge soy sauce market.
"I think if we can be No. 1 in China, we have a good chance to be No. 1 in the world in Asian or Chinese sauces ... We're currently No. 2," he said.
Lee Kum Kee produces about 100,000 tonnes of soy sauce each year, he said. The company has a factory in Hong Kong, two in China and distribution centers and sales offices in the US and Europe.
The plant in Xinhui employs about 1,400 people and has several football field-sized spaces with rows of silo-like fermentation tanks that each hold enough soy sauce to fill 100,000 bottles.
Lee said the firm tries to work out problems by having regular family retreats. The family -- four brothers, a sister and two parents -- also holds an election every two years for the chairmanship, said Lee, who will serve until 2008.
Lee said the company has had a difficult time searching for a CEO. It needs someone -- preferably ethnic Chinese -- with global experience who understands Chinese food culture and the sauce business. The person also has to understand how to work with the family, he said.
This is a tough time to be looking for such a person, said Maris Martinsons, associate professor of management at City University of Hong Kong: "The Chinese economy is booming and lots of other companies are looking for the same profile."
He said Lee Kum Kee was smart to be seeking leadership from the outside, but said there were risks for executives considering the job.
"If the company is not publicly listed, it hasn't been properly vetted by the outside investment community," he said. "There may be skeletons in the family business' closet and that would make the executive think twice before he or she takes the job."
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts