Looking east, not  west

Looking east, not  west

Key points

What is the issue?

High‑net‑worth African family enterprises are embracing a turn to Asia for developing their ‘next gens’ rather than more traditional pathways to the west.

What does it mean for me?

Advisors to such families must understand and accommodate this shift by learning more about Asian and African cultural synergies.

What can I take away?

The economic rise of Africa is altering family enterprises in unexpected ways that create opportunities for skilful advisors.

 

As family enterprises become increasingly global, advisors must be alert to the role that culture can play in either disrupting or facilitating transitions within families themselves. In several recent publications,[1] the authors have presented a compelling model of global cultures to help wealth advisors understand these factors. A new trend has been emerging in Africa, where cultural influences are moving in a very different direction, literally and figuratively.

The three‑culture model

Recent research identifies three global cultural orientations with unique themes, communication patterns and positions for the individual within the collective family system. The first two roughly correspond to a traditional east/west dichotomy, while the third recognises its own unique constellation of features:[2]

  • Collective harmony: originating in China, Japan, Korea, South-east Asia and nearby countries. Emphasising the wellbeing of family and community over the individual, harmony culture favours oblique communication, hierarchical leadership respecting elder wisdom, the obligations of individuals to the family, and social and family harmony over personal assertiveness, confrontation or open discussion.
  • Individualist: identified within Australia, Canada, northern Europe, the UK and the US. Individualist culture values personal dignity and self‑actualisation over the interconnection of the family, reinforcing assertive direct communication, gender parity, egalitarian and democratic principles, rationality, analytical negotiation and collaborative decision‑making.
  • Honour: predominant in Africa, Central and Latin America, southern and eastern Europe, India, Indonesia, Russia and the Middle East. Honour culture emphasises the importance of personal and family reputation, loyalty to the needs of the extended family, protection of the family from outside threats, strong hierarchical leadership, slow trust of outsiders, male preference in leadership positions, and opaque communication and business practices.

These three orientations regularly interact in global commerce and in the common dynamic where prosperous family enterprises send the younger generation (or ‘next gens’) of family members abroad for education, career development, social interaction, partnerships and even marriage. As next gens encounter foreign cultures, their exposure can either reinforce or challenge the perspectives of their heritage, impacting the family system at home.

Typically, honour and harmony families have sent their offspring to prominent educational centres in Canada, the UK and the US; all are individualist countries. Next gens are also encouraged to work abroad for a few years before returning home to family leadership. They learn in their western business schools and internships about global alliances, innovation, openly discussed succession planning, collaborative partnerships and the radical disruption of old business models.

For resilient families, the new cultural influences are able to be integrated in adaptive new ways, leading to productive innovation and family collaboration. However, in many non‑western honour and harmony families, next gens reshaped by individualist culture return home to face frustrating conflicts with their deeply traditional families and the legal systems, governments and business practices of their homelands. The gap between cultures can sometimes be too large to bridge. As a result, serious conflicts may arise within family enterprises.

Africa’s ascent

The continent of Africa is poised to become a major player on the global economic and political stage. Currently predicted to contain the youngest population on the planet and possessing the vast majority of remaining arable land and mineral resources, it is by far the last frontier in the future of world development.[3]

Although political unrest and internecine wars still capture the evening news, the long‑term trend is of expanding prosperity and increasing centres of influence. The AfrAsia Bank Africa Wealth Report 2021 (the Report)[4] documents that the major wealth markets of Egypt, Kenya, Morocco, Nigeria and South Africa currently account for over 50 per cent of Africa’s total wealth, with South Africa home to more than twice as many millionaires as any other African country. The Report predicts that total private wealth held in Africa will rise by 30 per cent to USD2.6 trillion by the year 2030, less than a decade away. Within another generation, the numbers will be even greater.

Behind this growth is a profound shift in the political and economic environment impacting the continent. Increasingly, the east (largely China, India and South‑east Asia) is Africa’s new partner in long‑term trading and development, not the west.

East challenges west in African family business

As mentioned above, for well over 100 years, affluent African families would send their children to the west for an assumedly superior education, much like their peers around the globe. Now, with fewer regulations and increased business and trading opportunities arising from the east, more families are engaging in the ‘look east policy’ advocated by governments in India, South‑east Asia and now Africa. African family enterprises are feeling kinship with the Asian cultural traditions of shared wisdom, respect for elders, social harmony, restrained communication and a focus on collective success. As a result, they are shifting to sending their offspring to China, India, Korea, Malaysia and Singapore for education.

Young African family enterprise members return from education and training in Asia with less disruption to the family system. Their exposure to harmony culture is a smoother fit with the Ubuntu principle of ‘I am because we are’. The cross‑pollination of economic development has also resulted in intermarriages from Asia that further influence African family systems. Their next gens increasingly became part of the blended ‘fourth culture’ global citizenry who seek careers, marital relationships and business ventures well beyond the borders of their African homelands.[5]

A mixed blessing

The blending of African honour culture with Asian harmony culture has both benefits and drawbacks. The benefits largely revolve around the easier integration of the two cultures compared with incorporating individualism. Next gens return with less resistance to the dominance of their elders, more accepting of gradual change and of maintaining respect for family and tradition while adaptations are implemented. There are fewer challenges to norms such as leaving contentious issues unspoken or only obliquely addressed. The focus remains on family cohesion and reputation rather than striving for individual needs or achievement.

The drawbacks are that families may be slow to adopt changes necessary for commerce in the modern world, such as:

  • positioning women for succession and including women in decision‑making;
  • creating open direct mechanisms of communication, such as family councils where all may speak up, especially next gens;
  • avoiding rigid alliances that constrain the family from productive innovation and adaptation;
  • creating explicit governance policies that ensure fair process with checks and balances; and
  • maintaining robust business practices that resist the corruption endemic to the culture.

The main downside, however, is that blending harmony and honour cultures leaves the challenge of leadership succession unaddressed. In both cultures, generational leadership transitions are often extremely difficult due to fights over a strong solo leadership position and the taboo around open discussion or coordinated advance planning.

The greatest opportunity for the expanding cohort of African family enterprises is therefore to devise new ways to approach the thorny process of transition to the next generation. The hope is that next gens will be able to borrow progressive practices from each culture without compromising or abandoning their own strong heritage and skills. By creating a functional hybrid from the three main cultural traditions, African family enterprises may be able to construct solutions beyond what each culture can contribute.

Implications for advisors

For those working with the rising tide of African family enterprises, the following recommendations may be helpful:

  • Learn more about the cultural norms and practices not only of Africa but also of China, India and the major Asian centres of influence and education. Many south Asian and east Asian financial centres have become their own hybrid of traditional and modern global influences, so the situation is increasingly complex. Familiar individualist principles and procedures may no longer be the main direction that families orient to or seek to adopt. Make fewer assumptions about the plans or family dynamics of successful African families, as they now have greater choices for their future.
  • Identify points of tension within the family, particularly around adaptations to traditional heritage, and relate them to cultural differences more than personality or arbitrary positions. Strive to find a path that integrates positions rather than either/or, ‘you or me’ battlegrounds of conflict.
  • Monitor and encourage initiatives directed at handling generational transitions in family business leadership. Business succession may be less easily accomplished than in families with a longer history of addressing this key enterprise task. At the same time, be open to African families who are navigating the transition with truly hybrid skills and perspectives. They may be the only ones who can accomplish this within their family. Use stories of successful leadership transitions to help others who may be struggling.

Family offices, wealth advisory firms, legal professionals and expert consultants can benefit from recognising this new trend specific to African family enterprises. They need to devote innovative thinking to the governance structures and processes that will assist this rising cohort of entrepreneurial families in navigating three cultural traditions. The ways in which families accommodate and blend these hidden patterns will help shape the future of global enterprise.


[1] J. Grubman and D. Jaffe (2015), ‘Culture Clash’, STEP Journal (Vol23 Iss9), pp.54–55; D. Jaffe and J. Grubman, Cross Cultures: How global families negotiate change across generations (2016), Family Wealth Consulting; J. Grubman and D. Jaffe (2019), ‘Fourth Culture Rising’, STEP Journal (Vol27 Iss6), pp.62–63.

[2] Readers are encouraged to review the literature on what is labelled the Honour‑Face‑Dignity (HFD) model.

[3] For multiple visual analyses of global data trends, visit www.gapminder.org

[4] AfrAsia Bank (2021), Africa Wealth Report 2021, Mauritius

[5] J. Grubman and D. Jaffe (2019), ‘Fourth Culture Rising’, STEP Journal (Vol27 Iss6), pp.62–63