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Family business in Asia

Petrina Faustine is a professor at Magister Management of Administration and Technology Program at Bandung Institute of Technology in Indonesia.

PT GISTEX: professionalism at play

On 9th March 2001, Mrs Kwee, a middle-aged business lady, who is also a shy mother of five, came out of the production area and showed me into the office of PT GISTEX. I tried to explain to her the purpose of my visit, but she kept saying: "Oh fine, you can talk about that with my son Henry". Only later did I understand that this lady and her husband, Mr Kwee, are a very good model of wise second generation owners. They have "passed the baton" to their successor, their son Henry Wargana, and given him a full sense of authority while they continue to supervise him amicably.

The company
PT GISTEX, located in several places around Bandung, West Java, Indonesia, has 4,600 employees and has been in business for over 30 years. The main businesses of PT GISTEX are: textile processing, dyeing, weaving, polyester yarn texturising, garment manufacturing and garment retailing. Henry's late grandfather started the small manual weaving factory before 1970, and in 1975 Henry's father, as the second generation, expanded the business into a limited company with modern mach­ines, and started to hire professionals and expatriates.

The transition
The company is now in the process of transitioning from Mr Kwee to Henry (21 years old), who is the eldest of five siblings. Henry was educated for many years in Singapore private schools and graduated in 1997 from Ohio State University with a degree in finance. Henry returned to Indonesia in a time of trouble: there were national as well as international monetary crises, as well as a strike by the production employees against the expatriate management. In fact, the company was in deep trouble when this third generation successor joined it, unlike so many other successors who join the companies in the time of glory. Henry's willingness to join PT GISTEX at this time demonstrates the strong bond between the two generations, despite the differences in education and environment in which they were brought up.

Henry's father tried to implement professionalism and strict management in the company and consequently hired a Korean manager. Unfortunately, the manager was not very successful due to his lack of knowledge about cultural differences between Indonesian and Korean employees. His ignorance resulted in the employee strike and almost caused the company to go bankrupt. Luckily, Henry showed up in time.

Being a humble, flexible and brilliant young owner, Henry demonstrated his capabilities in managing the chaos by embracing the unhappy employees. Although he was inheriting the ownership of the company from his father and was used to a good life himself, he decided to start working at the company from the bottom up. He worked in the production plant 12–14 hours a day, 6–7 days a week, learning everything in the manufacturing process, including sewing.

Outside support
Henry, however, was not alone in
re-engineering the company. He was backed up by a loyal professional and non-family member, Irwan. Irwan is older than Henry and had been a reliable employee of Henry's father. The respect for each other is mutual and obvious; Henry and Irwan include each other in company discussion and decision-making.

Respect seems to be a family trait, as Irwan said that Mr and Mrs Kwee also respected the professionals in the company. Henry however, being educated in Singapore and the USA for so many years, brings with him the complementing professional cultures from both countries in which he has lived. It appears that Singaporean professionalism, with the Asian nuance, and the strict western ­professionalism of the USA, turned Henry into a wise Indonesian professional: Henry seems to be very adept in managing the professionals in Indonesia.

Keeping it alive
As shown by the empirical study in this company, delegation and decentralisation of authorities to the professionals, without losing the distinctions of the family business identity, make it possible for the third generation to bring the family business into the next phase of its development, flourishing and prospering even more, despite the turbulent Indonesian economic crises. By managing the company prof­­ession­­ally, Henry has broken the myth that the third generation is always the one who puts the family business out of business.

Asia, Indonesia, kwee, pt gistex
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