Going international- the business or the family?

Family Business

At the beginning of the 80´s two family businesses decided to implement a courageous strategy, entering Chinese markets. The Bernat family, owners of the brand “Chupa-Chups” seemed to have all the ingredients for success: organization and product. The Cosmen family, owner of the brand “Alsa” (bus transportation services) confronted a more complex scenario, transport being a regulated activity which needed mixed companies with Chinese governments.

“Chupa-Chups” was a well-known business with a globally recognized brand since its publicity on the TV series Kojak. “Alsa” was a local champion in Spain´s transportation market, which was going through a stage of maturity, with increased competition from EU companies. “Chupa-Chups” entered China with a full team of non-family managers, with the family not being involved in operations. On the contrary, “Alsa” sent one of the second generation family members to live in Sanghai, and he continues to live there with his family.

The Cosmen family had to wait with inmense patience until gaining the trust of local Chinese governments as business partners. The placement of the family member in China served to convince the Chinese partners of the family´s commitment to developing business in the country. With the passing of time, the family agreed that each member should spend a year living in China, in order to understand the culture of the country and its impact on their businesses.

In the end “Chupa-Chups” abandoned its efforts and closed its plants in China. The Cosmen family consolidated and diversified its activities in Asia, converting itself into an ambassador for EU companies trying to enter Chinese markets.

These two examples of European companies in China pose the following questions: what are the key points for success when a family business goes international? Is it just the company that goes international or should the family also become involved in the internationalization process?

Experience tells us that proactive involvement of family members in the internationalization process is a key factor for success. However it is vital to take into account the time and preparation neccesary for achieving international success.

Internationalization is a process that requires of the family:

Commitment with necessary investments, assuming the impact this may have on shareholder´s dividends.
Placement of family members abroad, which often implies the moving of spouses and children.
Frequent travelling of shareholders and family board members to the country or countries where the business is becoming established.
• Decision to expand the organization so as it can attract non-family talent, and the implementation of quality and financial control proceedings.
Alignment of family values with the internationalization project.

The procces of going international grants numerous advantages and benefits to family businesses, because it:

• Helps them revitalize their “know-how” and competitive advantages.
• Encourages them grow its organization, generating career opportunities for non-family managers.
• Teaches them to delegate functions overcoming the need to be constantly present in the day-to-day running of the business.
• Promotes a focus on business governance and the board of directors, which converts itself into a strategic decision-making body.
• Naturally involves family and next generation members, promoting continuity and succession.

In conclusión, those family businesses that go international must take advantage of the excellent opportunities that lie ahead. The experience and learning gained from going international can help families improve their chances of succession and continuity.

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Thank you very much and have a happy day!

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