Author 丨 Liu Qinwen
Source 丨 Mustang Finance
The kingdom of 100 billion sauces - Lee Kum Kee's "third generation successor" Lee Wen Da passed away.
There are thousands of stories of Hong Kong's rich people, each with its own high profile.
Founded 133 years ago, lee kum kee group is completely differently low-key, with assets of 100 billion yuan, forbes once listed the Lee Kum Kee group as the "most successful family business in Asia" 30th. Group Chairman Lee Man Tat has also been listed in Hong Kong's RichEst People Rankings many times. In the 2019 Forbes China Hong Kong Rich List, Li Wenda ranked third with US$17.1 billion (111.2 billion yuan), behind Li Ka-shing and Lee Shau Kee.
On 27 July, Lee Kum Kee issued an obituary, and the Chairman of the Group, Mr Lee Man Tak, passed away peacefully accompanied by his family at the age of 91.
▲Image source: official website
In 133 years, the "Sauce Kingdom" was born
Do you know how oyster sauce was born and who invented it?
In fact, oyster sauce did not appear for a long time. In 1888, Lee Man Tat's grandfather Lee Kum Hee invented oyster sauce in Nanshui Town, Zhuhai, Guangdong Province, and founded Lee Kum Kee. After a century of development, Lee Kum Kee has developed from a single oyster sauce and shrimp paste to more than 200 kinds of sauce condiments, and the products are sold all over the world, known as the "sauce kingdom".
▲Mustang Financial Photo
Lee Kum Kee has experienced four generations of operations. Shortly after Lee Kam Tong's founding, in 1920 the second generation of Lee Siu Nam took over the family business, compared with Lee Kam Tong's small shop, Lee Siu Nam gradually scaled it up and began to sell oyster sauce to the United States.
What really developed Lee Kum Kee was after Lee Wen Da took over in 1972.
In the same year that Li Wenda took over, a major event occurred in China, that is, Nixon's visit to China and the icebreaking of Sino-US relations. In order to enhance friendship, China gave two pandas to the United States at that time, the Forestry Department wildlife officials used the term national treasure for the first time, the panda's cute posture made it popular with overseas people, and Lee Kum Kee's products were mainly sold in the United States, Lee Wenda immediately launched the "panda brand" oyster sauce, successfully opening up overseas markets.
In addition to overseas markets, Lee Kum Kee has not spared the vast space of the mainland market. In 1993, Lee Kum Kee set up a processing plant in Huangpu, Guangzhou, and in 1996 set up a production base in Xinhui District, Jiangmen, Guangdong Province, which has become the largest production base of Lee Kum Kee Group, covering an area of more than 2,000 acres, which can produce oyster sauce, soy sauce, shrimp paste, sesame oil and other products at the same time, and employ more than 2,000 people.
Subsequently, it gradually expanded the market to Japan, Southeast Asia, the Middle East and Africa, and became the "top stream" of the sauce industry.
In 2008, it became the designated catering supply enterprise for the Beijing Olympic Games; in 2010, it became the official catering raw and auxiliary materials supply enterprise of the Shanghai World Expo; in 2012, 2013, 2015 and 2016, Lee Kum Kee sauce went into space four times, and its sauce became the sauce of the astronauts.
In 2010, at the celebration of the 15th anniversary of the establishment of the China Condiment Association, Li Wenda was awarded the "China Condiment Industry Lifetime Achievement Award" in recognition of his contribution to Chinese condiments.
Set up family rules and insist on family control
Despite its glory to this day, in the course of a century of development, the family business has also brought many problems to Lee Kum Kee and has even stagnated.
In fact, Lee Wen-da also had a younger brother named Lee Boon-lok, and at first, Lee Kum Kee was run by two people. In the 1980s, Li Wenle suddenly proposed retirement, and Li Wenle's wife asked for the liquidation of the equity. Lee Wen Da was faced with the situation of either borrowing money to buy his brother's shares, or an outsider buying his brother's shares, and the two sides had court court for this, and Lee Kum Kee was even ordered by the court to suspend business for half a year.
In the end, Lee Boon Lok borrowed 8 million yuan to sell his brother's shares, and Lee Kum Kee was greatly hurt.
Li Wenda once said in a public speech, "In my experience, families have to pay a heavy price for family disputes. My brother disagreed with me because of the family business, so he did not interact with me, and I am still very sad. ”
"The usual trajectory of family businesses is that in the start-up period, the cost of trust is relatively low, which facilitates the rapid development of enterprises. When the family business runs to a relatively mature stage and has a certain profit or profit margin, the family enterprise should improve the corporate governance structure, improve the incentive mechanism, improve the supervision and constraint mechanism, continuously improve the management level of the family business, and avoid the rent-seeking risks brought about by the participation of family members in the operation of the enterprise. Cheng Wanfang, managing director of the family trust, told Mustang Finance.
Mr. Lee himself has four sons and a daughter and 14 grandchildren, and in order to avoid the same family strife, Forbes reported that Mr. Lee set up a family council in 2003 and also formulated a family constitution. Lee Kum Kee also organizes family trips every year, which all family members must attend.
The Family Council has 5 departments, namely: Business (Sauces and Health Products) Family Office, Family Fund, Family Investment and Family Learning and Development Center. Each project is divided into four separate projects for a two-year term of office and can be re-elected.
The family constitution on the inheritance and transfer of equity clearly stipulates that shareholders must have Lee Kum Kee family blood, regardless of men and women. Shareholders want to exit, and the shares are bought back by the company.
"The advantage of family businesses over non-family businesses is that family businesses pay attention to long-term interests, consider intergenerational inheritance, and have a long-term foundation; the disadvantage is that enterprise management is patriarchalized and authoritarian, which is not conducive to the introduction of external talents by enterprises." Liu Yongbin, a lawyer engaged in family inheritance and governance law, told Mustang Finance.
I don't know if I was injured by my brother and sister-in-law, and there are media reports, but Lee Kum Kee's family rules also contain a three-point non-standard, that is, no late marriage, no divorce, and no extramarital affairs. Violators automatically withdraw from the board of directors and do not have the right to speak and make decisions.
▲The picture shows Li Wenda and his wife
In order to maintain the family business, Lee Kum Kee did not choose to go public despite its establishment for 133 years, and Lee Wenda's son Lee Huimin once said, "We have always felt that the listing should be based on the need for funds to make this decision." Judging from the development of our Lee Kum Kee, there is no need for financing at this stage, so why should I go public? ”
"Listing has advantages and disadvantages for enterprises: the advantages are that they can be financed in the capital market, and corporate governance can be regulated; the disadvantages are that once they are listed, they become public companies, and they need to disclose and disclose important information, and more importantly, the capital market is king, and once the 'barbarians' invade successfully, the family business may change owners and change hands." Liu Yongbin analyzed Mustang Finance.
The "four brothers" of the Li family perform their respective duties
In fact, under the century-old foundation, Lee Kum Kee's business development has long been not limited to the scope of sauces.
In 1992, the Lee Kum Kee family founded the Health Products Group, which currently owns four parts: Infinitus, Tianfangjian, Shuang Capital and Infinitus Property Investment.
According to Forbes in 2018, the eldest brother Li Huimin is responsible for family affairs and investment; the second son, Li Huixiong, is responsible for managing the foundation, who previously served as the chairman of the sauce group; and the younger brother Li Huizhong is the current chairman of the sauce group. According to the official website of the Health Products Group, Lee Huisen is the chairman of the Health Products Group.
Infinitus in the Health Products Group is a Hong Kong-funded enterprise engaged in the research and development, production, sales and service of Chinese herbal health products, and in recent years, it has quickly opened up the situation by relying on the "direct sales model".
In 2017, the value of the Infinitus brand reached RMB65.869 billion, as assessed by the World Brand Lab. In Chinese mainland has set up 30 branches, 30 service centers, and more than 7,000 stores.
The other two health products group, Tianfangjian and Infinitus Property Investment, are also closely related to Infinitus. Among them, Tianfangjian was founded in 2015, and its main business is the cultivation management and sales of Chinese herbal medicines, which intersects with Infinitus' business.
In 2009, Infinitus Property Investment invested heavily in real estate projects, and in 2009, it purchased the core location of the central axis of Zhujiang New Town in the central business district of Guangzhou for about 300 million yuan, with a total floor area of about 12,000 square meters.
In August 2010, it purchased Vader Plaza from Macquarie for approximately $4 billion and renamed it Infinitus Plaza on December 17 of the same year.
In December 2015, a joint venture was established with 90% of the shares of Lee Kum Kee Health Products Group and 10% of the shares of Vanke Real Estate (Hong Kong) Co., Ltd., and the purchase of Building 168 Hubin Road, Huangpu District, Shanghai at a cost of RMB 5.7 billion from Shui On Land Limited, named Infinitus Building.
The remaining Shuang Capital, according to the official website, is an investment institution that mainly invests in start-ups and young enterprises, involving industries including food, agricultural technology, health, medical technology and others. However, the cooperation method is uniformly named after the partner, and the specific cooperation method is not disclosed.
In 2013, Li Wenda said in an interview with Global Charity, "I don't believe in religion, I believe in enguo. Doing good deeds, you are not necessarily good; but doing bad things, you must be bad. Life, fate comes and goes, things are man-made. Don't wait for luck, don't talk big. For more than eighty years, I have no regrets, and my life is very complete. ”
Compared with li ka-shing, Ho Hung-sun and other family businesses, the Lee Kum Kee family has few scandals, and has even entered the fourth and fifth generations of smooth participation in the operation, what do you think of this century-old family business? Welcome to leave a message below to discuss.