Congratulations to the Ayala Corporation, the 180-year-old, seventh-generation Philippine conglomerate that has won this year’s IMD-Lombard Odier Global Family Business Award. No doubt the gong, designed by family-owned luxury goods firm Chopard, will take pride of place on the family mantlepiece.
But what is the really meaning of this award? A glance at the list of the 18 previous winners, which includes firms like Lego, Hermes, pasta-maker Barilla, and the French cheese giant Bel Group, suggest that the 2014 vintage is a recognition of the importance of East Asian family firms in the world economy, and the rise of that part of the world.
Most of the award’s previous winners have been European. Three were from emerging markets: the Muragappa Group from India, and two Brazilian firms, the Odebrecht Organization and the Votorantim Group. East Asia has so far been represented only by Japan’s Yazaki Corporation, a maker of auto-parts, and the Lopez Group Foundation, the charitable wing of a Philippine family, which shared the award with two others in 2006.
It would be easy to say that the award’s Swiss sponsors IMD, a Swiss business school, and Lombard Odier, a seventh-generation private bank, as dusty old Europeans who are just waking up to the importance of Asia.
After all, it’s no secret that family firms are a big deal in Asia. According to a Credit Suisse report released last year, in China 61% of businesses are family-owned, while in Hong Kong and Singapore the figure is 49%. It’s over a third in Taiwan, South Korea, Indonesia and Thailand.
In India, the Philippines, Thailand, Singapore, Malaysia, Indonesia and Hong Kong over 60% of businesses with a market cap of over $500m are family-owned, says Credit Suisse. Amazing numbers, and it might make you wonder why the award hasn’t gone to East Asia before.
Until you see an even more eye-opening figure: that 38% of Asian family businesses have started since 2000. The rise of Asian family firms has been amazingly fast. True, Ayala has been around a long time, since 1834 actually, but the Asian family business story – or at least this chapter of it – has developed very quickly. The list of the award’s previous winners is in fact a snapshot of the dizzyingly fast change of the world economy’s centre of gravity, from Old Europe to New Asia.
Another temptation might be to see European interest in East Asia as a new thing. It isn’t, as the story of Ayala shows: it was founded by two Spanish immigrants to Manila, one of whose daughters married a German immigrant. The other meaning of this award is a recognition that global business families are the secret drivers of the world’s economy, whether they move from West to East, or East to West.