FBM (2022) Case study #1:
Succession planning at Han Foods, Singapore
Han Foods is a Chinese family business located in Singapore. The President, Han
Hong, is sixty-two years old. He inherited the business from his father who in turn
inherited the business from his father. The family had come originally from North
Central China. Han Hong’s grandfather had started in business by supplying hot food to
the Chinese workers in the then British Navy shipyards and repair docks. Han Hong is
very proud of his noble family name: Han. He is also proud of the fact that Han Foods
has expanded since his father (now deceased) handed over the presidency to him.
Han Foods is one of the larger suppliers of soya sauce and other sauces and
spices to the hotel and restaurant trade in Singapore, Johore and other towns in
Southern Malaysia. Last year Han decided to go into his first major international venture,
something his father had never tried. On the recommendation of a distant relative Han
agreed to go into business with Paradise Foods Bangkok, a large wholesale distribution
company in Thailand. The plan was for Paradise Foods to act as Han Foods’ sole
distributor in Thailand. As part of the deal Han Hong quickly expanded his processing
capacity in Singapore, taking out a large bank loan (an action he had always previously
tried to avoid) to cover the sudden capital investment. But he trusted in the quality of
his product and was confident that the business in Thailand would work out well.
Han Hong has four children. Two sons (both married) work in the family business:
one as head of processing operations and the other as head of purchasing. His elder
daughter (married and expecting her second child) helps Han with the accounts, but he
keeps a firm control of the finances of the company, just as his father and grandfather
had done.
The youngest child, Han Ying (or Nina, as everyone who knows her calls her) is
27 years old and unmarried. She was always very successful at school and at university
and often helped her father with different jobs in the family company, especially during
her study vacations. When Han had decided to go into business with Paradise Foods
Bangkok he decided to send Nina to study for an MBA in Europe. She could choose the
school and the family would pay the fees and living expenses. She chose to study her
MBA in English, but in Germany. This is because she had always dreamt of learning how
to ski.
Just before Nina had completed her studies in Germany, Han Foods was hit by
bad news: Paradise Foods Bangkok had gone bankrupt. The main reason for failure was
that a food processing firm based in the Philippines, backed by a US American multinational corporation, had expanded aggressively into the Thai market and taken away
Paradise Foods’ business when it was financially weak and could not promise on delivery
dates to its customers. Han was angry that Paradise Foods had not recognised the threat
from the Philippines / American company. The result was that Han Foods was left with
an expensive bank loan and high overcapacity. Han also felt embarrassed. The father of
Han’s son-in-law worked in the commercial loans section of the bank and he had helped
Han secure the loan. Furthermore, the son-in-law also worked in the bank, but Han knew
from others that the young man was not very talented and really only kept his job
because of his father’s influence in the bank.
And then Han received some further troubling news. Nina had done well in her
studies in Germany and he was pleased and looking forward to having her home again
in Singapore. He had missed her. But he also hoped that her MBA studies would help
the family business. He was working out already what jobs he could give her to do. In
Han’s view, further ‘bad’ news was that Nina had found a boyfriend - ‘a German guy’ who was five years older than her and worked in marketing at the company Knorr, a
famous and long-established manufacturer of foods - including branded sauces - in
Europe (www.knorr.com/de), and now a global brand as part of the Unilever Group
(www.knorr.com/us/en/home.html).
Han was worried. Would his daughter come back to stay in Singapore? And if she
did, would she want to bring her boyfriend with her? Would she be more interested in
him (he expected them to get married, of course, if the relationship was serious) rather
than the family business?
Nina did come home, without her boyfriend. She did want to help the family
business and she did want to get married to her German boyfriend. Nina and her father
spoke openly and frankly for some weeks about the family business, including what
could be done to ease the burden of the debt and try to make some use of the
overcapacity without laying off workers and selling off equipment. Fortunately, the core
business in Singapore and Malaysia was strong enough to keep the company in profit.
However, after his experience with Thailand, Nina noticed that her father had become
cautious, and even a little nervous about the future.
After long discussions Han decided that he should offer his son-in-law a job in
the family business. He was clearly not very successful as a banker; perhaps he would
be more successful in some role in marketing or ‘public communications’ - Han showed
that he had been listening to what he called his daughter’s ‘MBA talk’. More importantly,
this solution would save face with the son-in-law’s father in the bank, and probably
secure better prospects for the servicing of Han Foods’ loans with that bank.
As a daughter, Nina felt that she should agree with her father. However, in
business terms she believed that this might not be the best solution. A further worry for
Nina was that her father appeared increasingly worried; he was talking repeatedly about
retiring from the role as President of Han Foods. Nina wondered whether the Paradise
Foods experience had tired him out. Her father had begun talking about how he
‘dreamed’ of spending more time with his friends at the Country House Golf Club. “It’s
probably time that I started thinking of choosing my successor”, he told the family over
dinner one evening, before silently smiling towards Nina.
© Keith Jackson (2021)
Han Foods: Exercises
Questions for discussion
Social, cultural identities and sub-cultural identities
•
Building on our discussion thus far on this FBM course, what range of social,
cultural and sub-cultural identities could we attribute to Nina?
•
Which of these identities might her father perceive to be particularly difficult to
manage as he prepares to decide who should succeed him as President of Han
Foods?
Questions for reflection (role play)
Imagine yourself in the position of Han Hong:
•
What is your feeling towards preparing Nina to take over the family business
when you retire? In your current view, what other succession possibilities are
there?
Imagine yourself in the position of Nina:
•
•
What is your feeling towards preparing to take over the family business if and
when your father asks you to do this?
In your current assessment of the situation at Han Foods, what other career
opportunities appear open to you, and why?
Imagine yourself in the position of Nina’s German fiancé.
•
•
What is your feeling towards becoming part of the Han family if and when Nina’s
father asks her to succeed him?
In your current assessment of the situation at Han Foods, what other career
opportunities appear open to you, and why?