Wednesday, July 18, 2018
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ALL IN THE FAMILY

Can family businesses be transparent?

I agree that family businesses are the bedrock of the global economy,” says a friend who works in a multinational corporation. “Our company started as a family business in the United States a century ago.”

“But the problem with many family businesses in Asia is they are veiled in secrecy,” she adds. “They are so paranoid the owners keep secrets from employees and from each other.

“One time I had an interview with a top local family business. The instant promotion and the bigger pay were tempting, but I was turned off by the tight-lipped attitude of the owners when I started asking about them. Many executives like me might work for family businesses in the US or Europe, but not here or anywhere else in Asia.”

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I tell my friend that businesses, whether family enterprises, publicly listed or global conglomerates, always have secrets. Nondisclosure and noncompeting agreements are standard in all industries.

But my friend’s complaints appear to have some truth. In a developing country where political, economic, social governance leave much to be desired, is it possible for a business, owned and run by a family, to be transparent about its structures, mechanisms, operations?

It turns out one such exemplar exists, albeit not here. Myanmar’s KBZ Group, owned by Aung Ko Win, his wife Nan Than Htwe and their three daughters, has earned a slew of banking and corporate social responsibility accolades from Euromoney, World Finance and Asean Business.

In 2014, KBZ garnered the top spot nationwide in terms of transparency by the Myanmar Center for Responsible Business, a citation seconded by international groups.

It was down to third place in 2015 and seventh in 2016, but today, it ranks third in the nation in terms of anticorruption programming, fourth in organizational transparency, fifth in health, safety, environment, human resources and land.

Take KBZ’s mining arm. “Mining in Myanmar is a murky industry marked by smuggling and payoffs to generals, and a report by London-based Global Witness in 2015 outlined the corruption,” reports Forbes Asia.

“KBZ was one of the few to cooperate in the research for the expose. The mine is still operational, according to a KBZ spokeswoman, but focus is now on reforestation and modernization.”

Its website notes: “We are committed to meeting international norms and standards in our business operations. We have zero-tolerance policies for bribery or facilitation payments.”

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KBZ Bank is also Myanmar’s biggest taxpayer, paying almost $25 million in 2016.

Aung Ko Win, with a chemistry degree from the University of Mandalay, worked as a teacher before making his fortune in trading and mining. His wife, also a former teacher, heads company finance.

In 1994, Nan’s teaching colleagues formed a credit union in the Shan State, naming it Kambawza (a Pali word for the region). Two years later, the couple bought KBZ, and moved to Yangon. The initial four branches now number 500.

Like typical family enterprises, business was conducted on the ground floor, with the family home at the top. Daughters Nang Lang Kham, Nang Kham Noung, Nang Mo Hom grew up with the business, took higher education abroad, and now own equal shares with their parents.

With 80,000 employees, the enterprise is fast professionalizing. Recently, US banker Mike DeNoma, former CEO of Taiwan’s Chinatrust, became KMZ CEO.

DeNoma tells Forbes, “Where else in the world can you find a country where 30 percent of the people have electricity, 20 percent have bank account, but 90 percent have smartphones?”

Well, perhaps the Philippines. But can our enterprises be run as effectively?

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