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Family affairs

Published on Friday, 11 Apr 2014
James Chen
Photo: Berton Chang

James Chen has developed an unconventional way to look after his legacy

Since James Chen Yue-Jia took over his father’s role as non-executive chairman of Wahum Group in 2004, he has had little involvement in his family’s manufacturing business operations in Nigeria. Instead, he spends more of his time on what he calls “family enterprise”.

Chen’s main focus is on managing both Legacy Advisors, an office responsible for overseeing his family’s assets that he founded in 1995, and the Chen Yat-Sen Family Foundation, a charity named after Chen’s father Robert Chen Yat-Sen and founded in 2003.

The family operating company, now called Wahum Group of Companies, was founded by Chen’s grandfather Chen Zhaomen in Shanghai in 1929. Today, it is engaged in the production of enamelware, building materials, power cables and cardboard packaging. While assuming the role of non-executive chairman, Chen has no operating responsibility in the company, which is effectively managed by his uncles based in Africa.

Chen never felt any pressure to take over the running of his family’s business. “To my father’s credit, he gave me the freedom to go on my own. In fact, he didn’t want me to work in the family business, partly because it was not clear to him that it would exist for very long. [He] encouraged me and the next generation to find our own way.”

Given the freedom to pursue his own career path, after graduating from the University of Chicago, Chen joined Prudential Insurance as an accountant. He left after only 15 months, knowing he was “not an accountant by temperament”. He then studied for an MBA in Columbia University in New York, but left after a year to pursue his dream of starting his own restaurant – which turned out to be “a complete failure”.

He next worked in a real estate venture, which is when he realised there were more opportunities back in Asia. Returning to Hong Kong, he continued to work for a US-based real estate firm, a unit of the Trammel Crow family business. He saw the concept as a good model for his family to consider and convinced his father to do so. From that moment on, he has been working for his family, but “not in a traditional way”.

Chen says he never expected the accounting skills he learned at Prudential would prove so useful. “Even though I found that it was a boring job, it ended up being very useful after 20 years. I could understand what had to be done,” he says.

As MD and chief investment officer at Legacy Advisors, he is responsible for asset allocation and risk management. “With the family office, we are investing the family’s financial wealth for long-term capital preservation,” he says. The 30 to 50 year investment horizon is a big advantage in the current high-risk climate, he adds.

The concept of a family office is still new in Asia compared to the West, where many families have multi-generational histories. “There’s a tradition of family stewardship. They consider that they don’t own the assets for their own benefit. We are custodians only, because this is not the money that I made, but that my grandfather and father made. They passed it on to me and I feel the obligation to pass it on to my children.”

The fund will be 20 years old next year. While it has been underperforming the market recently, Chen says he is willing to give up some short-term performance returns to meet its long-term generational capital protection mandate in what he perceives to be an extremely risky market environment.

In 2003, Chen set up the Chen Yat-Sen Family Foundation in honour of his father. “My father did many good projects, especially in his hometown [Qidong in Jiangsu Province]. He spent a lot of his money and time there. That’s the big message we have here in the foundation. We don’t just give our money, but our family members devote time towards foundation activities. Only this way can we feel we have the greatest impact.”

The Hong-Kong based foundation focuses on challenging the deeply ingrained concept of exam success being the goal of education in Chinese society today. This mission has been expressed through the development and support of the Stone Soup Happy Reading Alliance Project, a growing network of innovative school libraries in China. It has also borne fruit through early childhood literacy projects such as Bring Me A Book Hong Kong and the Feng Zikai Chinese Children’s Picture Book Prize. 

Chen has three young children and he will certainly give them freedom. “If the family is supportive of you, it’s a powerful asset. But if you become dependent, it’s a liability for you and the family. Giving the next generation different roles within your family enterprise will help them to develop themselves.”

Chen says that over the course of his career he has had the opportunity to do many different types of jobs and work with many different people, but “within the family, I really did create my own role. Before me, there was no family office and no foundation.”

Besides his responsibility in his family enterprises, Chen also continues to pursue another dream, one that was interrupted by his early failure in the restaurant industry. He is a shareholder in two very successful restaurant operations: Sevva in Central and Momofuku, which has outlets in New York, Toronto and Sydney.

He is grateful to have had the experience of failure in his first venture into the industry. “It was a good time to fail back then because it was cheaper to fail. To learn how to deal with failure is something very invaluable.”


PROVIDING FOR THE FUTURE

James Chen details the connection between philanthropy and wealth
Pass it on “I don’t feel I’m entitled to the wealth. It’s my obligation to take care of it in the best way that I can and pass it on to the next generation.”
Celebrate difference “Not everyone is suitable for working in a family business. The ability to create other types of role, whether family office or philanthropy, means we can all add value, but in different ways.”
Be open-minded “In a time when the pace of change is increasing, sticking to one set of beliefs may be dangerous to your family’s well-being. You need to be open-minded and evaluate other types of value.”
Leave a legacy “If I have a role model, it is the Rockefeller family. What they are proud of is the legacy of philanthropy, not the family business.”


 

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