Family ties will not hold in global e-business

The traditional strengths of Chinese family businesses may not be flexible enough in a global arena.

KUALA LUMPUR - The traditional foundations of Chinese businesses--personal relationships and their role as middlemen--will have less relevance as companies strive to be global, according to Andersen Consulting and Economist Intelligence Unit (EIU).

EIU's report entitled, "Beyond The Bamboo Network" released yesterday said that with the dissolution of trade barriers under the Asean Free Trade Area, Chinese Family Businesses (CFBs) would have little choice but to compete with a larger market.

"The practices and values that have made multinational business strong will become much more important to CFBs as globalization opens up Asian markets to more competition," said Andersen Consulting managing partner Larry Gan. "Those not fully prepared internally to face the onslaught of competition will find it difficult to survive," he added.

Historically, family ties were the roots of an business empire which had control of an extremely large percentage of Asia's economic wealth. This family-focused, hierarchical management style that places strong emphasis on family status seals critical information among top management keeping corporate operations less transparent.

Andersen Consulting said these factors, which had accounted for previous successes, would be irrelevant in the new economy. The CFBs also need to seek alliances with international partners to take advantage of the global marketplace, it added.

The report also noted that Malaysia's economy was beginning to embrace the idea of developing flexible, agile and transparent organizations.