Viren Wong: Between East and West

Viren Wong is musing about the differences between Asian and Western family offices. As Chairman of this year’s "Asia Pacific Family Office and Investment Forum" it is a theme that he expects to discuss in Hong Kong at the end of June. 

It is hard to think of someone better placed to discuss the differences between offices in different parts of the world. He has unique experience and insight into both. As President of Trillyan Investment Limited, a Canadian-Chinese single family office in Hong Kong and Toronto, he is responsible for the entire spectrum of managing the family’s assets. This is everything from capital allocation to start-up investments, and from tax planning to legal structuring.

Here, in an exclusive interview, he talks about the differences between Asian and Western family offices, but also the issues that they have faced and how they are dealing with them. 

What kind of themes are likely to emerge from the Asia Pacific Family Office and Investment Forum? 

One of the big issues these days is about transitioning wealth from one generation to the other. Everyone says that they want to carry the legacy but there’s no legacy barometer you can measure to sustain your legacy. I was thinking recently about the ride-hailing app called Grab. The founder is Next Gen because he comes from a very successful family. His family background is in car dealerships. Their old business is encouraging people to buy cars at the same time, the Next Gen business is discouraging people from buying cars and use their ride sharing app instead. The two businesses are quite opposite. But the legacy that they are carrying is entrepreneurship which is the core of any business. Something that I want to explore is how to define legacy because a lot of families are if not confused then not sure how to make it efficient.

Do you see real differences between Asian and Western family offices? 

The first generation in China appears similar to the first generation in the US – back in the days of Rockefeller – with the same kind of risk-taking mindset. 

But there are differences on the macro level. Most obviously, mainland China used to have the one-child policy which created problems for single family offices if that child was a maverick. That’s unique for Asian family offices. 

Another issue is that almost two-thirds of the families in mainland China have two or more marriages which means that the father has two family trees with some family members active for both families. 

And finally, there is the case that Asia is just starting out. Some European and US family are up to their fifth or twenty-fifth generation or even more. That means that there could be more than 100 family members who all want a voice. In Asia, particularly in mainland China, you are rarely talking about more than 10 to 15 family members. 

In short, while there is a lot of overlap between Asian and Western families they are not completely aligned. 

Would you say then that Asian and Western single family offices are homogenizing? 

A family’s first generation is almost always an entrepreneur. Now as they move on to the third and fourth generation, families evolve into passive investors. They buy stocks or bonds and the original business, say shipping or a coal mine, is either sold or sidelined. The challenge for a family is how to encourage wealth creation in each generation, ideally, every generation is the first generation. 

Single Family Offices in both Asia and the West are facing that same problem because once you lose your skills as an entrepreneur it is difficult to get back. It is a major issue for both on whether they should be purely passive, or whether there should be an active component in the families as well.

The problems that families across the world face seem to be fairly universal but is there a difference in the way that they are addressed between Eastern and Western families? 

There’s no right answer to these kinds of issues. Some of the issues are quite unique for Asian families. There is something called Identity Management. What that means is that the father sends the oldest son to the US, then he sends his daughter to the UK and the second son to Australia. Each of them gets a passport in the new country and assets are bought in that country under the new passport even though behind the scenes the money might be coming from the financial trust in China. All of this means that globalisation can mean something different from an Asian perspective. 

What do you see as the challenges of Asian entrepreneurs setting up overseas family offices? 

This is a really interesting topic. When you bring a Chinese way of conducting business to North America, then there is a balance between how much you should be disrupting the system versus how much you should be respecting local traditions. 

In North America, a transaction could take seven weeks to go through all the approval processes, whereas in China, there is often a reverse approval process which means that if you don’t disagree with something within 24 hours it means that you have agreed to it. 

That disruptive force worked well when I was looking to do a deal in Canada several years ago. The other party took seven weeks to get through the approval process, we did it in seven days. 

How do you see Asian families dealing with legacy? 

I don’t think that they are there yet. There is a whole mental shift that needs to emerge as the owner steps away from his money. At the moment, it is difficult to have a functioning investment committee, for example, if the first generation always has the final say in yes or no. 

There is another issue too. If the first generation has made its money selling pork, for example, that may not be the most exciting business for the next century. The next generation should see this as importing something from China and selling to Hong Kong, and the previous generation seizes that opportunity. That kind of move is the crux of the origin of the new business, not the pork itself. The point is about observing the market, being prepared to take educated risks, and then starting a new business. That’s the fundamental issue that the first generation needs to understand. At the same time, the father needs to be respectful in terms of how things should be transformed from one generation to the other. 

There are two schools of thought about legacy. One is where the family carries the wealth and values, passing it on to the next generation, and the other is where the family is making sure that each generation can create their own wealth and keep as many values as they can, but create some values on their own.