At age 14, Kenneth Lo began working in his family’s small garment business. Later, with the help of his wife, Yvonne, he went on to build one of the world’s largest ready-made clothing manufacturers, employing 70,000 people across five countries. Family-run, with a corporate culture emphasizing equality, teamwork and the greater good, Crystal International Group Limited has received numerous awards for its corporate citizenship.
Core values of fairness and transparency
Of Kenneth Lo’s four children, two work for Crystal International Group Limited—Andrew, the eldest, and Howard, the youngest. Though family-run, the business strives to treat all employees fairly, rewarding them according to merit.
“An enterprise is made up of people. It can only thrive if it cares for its employees and cherish[es] them as the greatest asset,” says Lo. “A fair and transparent appraisal system coupled with competitive remunerations and benefits will promote those who are capable and foster a harmonious working relationship among all.”
Every employee, including the CEO, is required to fly economy class. Management turnover is low, with many executives serving for decades.
Allowing children to choose their own path
Understanding that his children might have different goals, Lo had no expectation that they would succeed him at Crystal International Group Limited. Says Lo, “I favor handing over the business to the capable, and I do not recommend forcing the family as successor. The last thing I want to impose is pressure on my children to follow a certain path. Without free choice, they would lack commitment and passion to follow through.”
Andrew Lo, who ultimately succeeded his father as CEO, says he never felt a sense of obligation from his father. “Father never forced me to join the family business. In fact, he never mentioned it, not even in passing. His attitude was that his children should take their interests into consideration and decide freely what they would want to do for a career. If none of us were to work in the family business, he would hire professionals.”
Candid communication about succession
“In our family,” the elder Lo says, “succession is not a sensitive topic. Everyone in the family has a common understanding of how, when and to whom the baton should be passed.” He made his views plain many years ago. “I called for a family meeting. Then and there, I clearly explained my criteria for selecting a successor: virtue and ability. Only the person with the proper character and skills would be able to lead.”
To avoid conflict, Kenneth and Yvonne Lo also decided that only their children would join the business—no relatives, spouses or other children. If none of the Lo children proved a worthy successor, family management would come to an end. “Those who are not interested in the business can be company shareholders and choose to pursue a career elsewhere. To prevent a power struggle from ruining family relations, we would be happy to allow outside professionals to run the company. We do not even mind selling the company to maintain the family harmony. After all, it is not worth fighting over something as transient as wealth.”
While his father’s blunt message worried Andrew Lo, he agreed with it, and simply worked harder to earn the CEO position. “The family name ‘Lo’ would not be the primary criteria in considering whether or not someone should succeed [as CEO]. Only ability would be a contributing factor as we climbed the internal family ladder. Naturally, I would be a bit lost in stepping aside, but for the good of the company, having a capable person at the helm would be the most appropriate arrangement.”
Mentoring and training the next generation
While Lo did not ask his children to succeed him, he believed in mentoring those who showed interest. “If a next-generation family member possesses skill, ability, good character and visionary excellence, they should be groomed for business handover. During this time, development should be observed to determine suitability for the role.”
Andrew Lo learned the business from the ground up, overcoming numerous challenges under his father’s watchful eye. “I was hoping that by letting him stumble, he would further develop his confidence and courage,” says father Kenneth.
When Howard Lo—Andrew’s younger brother—left a position at Citibank to join Crystal International Group Limited, he was posted to a factory compound at a second-tier city in mainland China. His training is rigorous. “Howard is put under a tough character within the company,” says his father. “This person is in reality not just our youngest son’s supervisor, but his ‘mentor’ as well as a ‘buddy.’”
Emphasizing the personal touch in business management
While both sons have learned the business, their father has sought to impress upon them the importance of human relationships. He says, “I strongly believe that the most important part of family succession is to instill the correct core values in the next generation, and educate them on interpersonal skills and practical matters of operating in this world.”
Howard Lo recalls receiving the same advice from his father, mother and brother when he joined Crystal International Group Limited: “All three of them mentioned that learning interpersonal skills was most important. Mom said to me once: ‘That you are the boss’s son is a fact that cannot be denied. However, you must take care to let people treat you not just as Mr. and Mrs. Lo’s son but as Howard Lo—a person.’ I bear this piece of advice in mind all the time.”
A graceful transition
Kenneth and Yvonne Lo no longer run the company and serve, respectively, as chair and vice-chair of the board. Their roles are limited to strategic planning and policy, and Andrew is free to name his own successor. Kenneth is confident that his youngest son will be ready to take over in 15 years, though Howard knows he must earn the position. “My father and Andrew would certainly not put me in a position of power simply because I share their surname,” he says.
After Howard, Kenneth Lo is not sure. “Will our grandchildren take over? Time will tell.” One thing is certain: The future CEO will have to work hard to win the job.
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