An Unusual Family Succession System

Traditional Chinese family businesses prefer to pass direct management control to strictly family members, but one company has gone against the grain

By China Business Knowledge @ CUHK

Most Chinese family businesses prefer to pass their ownership and management positions directly to the younger generations of the family in order to maintain control and preserve the family culture. However, one family business in Hong Kong has gone against the grain and come up with a unique and innovative method to branch out its company while maintaining continuity with the succeeding generations.

This company is Automatic Manufacturing Limited (AML), headquartered in Hong Kong, with four production facilities in Dongguan, China. John Mok and his brother Peter and sister-in-law Meg founded the company in 1976. With the help of a group of loyal staff, the company quickly grew from a low-tech OEM to a high-tech electronics, machinery and biotech equipment manufacturer.

When the second generation of the Mok family grew up and graduated from universities, they were allowed to develop their own careers or work for AML. But before they joined AML, they were required to work as executives in other large companies so they could learn the best practices in the industry.

In their early- to mid-30s, they were encouraged to join the company and receive mentorship and coaching from the divisional top management teams, or TMTs. Each of the three TMT teams in the company is headed by an experienced and well-qualified general manager from outside the family. These managers are given the autonomy and responsibility to act as mentors for the second generation as they learn the ropes in the family business.

The second generation also receives training from the professors at the in-house university, Automatic Manufacturing University (AMU). The university was set up in 2003 to introduce modernization and new advancements in all areas of business.

So, instead of putting the second generation in high positions and letting them become the bosses right from the start, they have to earn their dues by going through a gradual learning process and are treated on equal footing with other employees.

By their mid-30s, the new generation of the Mok family had completed their EMBA and finance education and moved on to the second leg of the family “intrapreneurial program” designed for succession.

Under this program, the Mok children would come up with concepts to spin off a venture from the parent corporation, which would provide seed money to do that. The ventures are run independently of the parent and could eventually become customers of AML, leveraging on AML’s manufacturing capabilities. The second generation would then act as the executive directors of the spin-offs and start to coach new start-ups. This provides a perpetual mechanism for AML to grow in an organic way as the family continues to grow.