It is almost accepted wisdom that wealth does not survive until the third generation. As the saying goes, the first generation works extremely hard to build the family fortune, the second generation reaps the benefits and the third generation squanders the wealth.

Or as Jack Donaghy, the fast-talking ultra-capitalist CEO of the hit situational comedy 30 Rock once put it: “The first generation works their fingers to the bone making things. The next generation goes to college and innovates new ideas. The third generation … snowboards and takes improv classes.”

Malaysia is at a point where there are many fortunes being moved into the hands of the third generation. This Chinese New Year, Personal Wealth thought it would be a good idea to see what some scions of wealthy Chinese families think about the idea and how each of them has chosen to address it in their own particular circumstances.

For instance, Tan Kai Hee of Hai-O Enterprise Bhd is a socialist through and through. He believes that by educating and teaching his children about life, he has given them all the resources they need to make their own fortune rather than wait to inherit his. Consequently, he has placed all of his shares in the company in a trust fund that will be used to support the Chinese community and other philanthropic purposes.

Ekovest Bhd managing director Datuk Seri Lim Keng Cheng believes that it is the values you impart to your heirs that matter, rather than your money. Bring your children up properly and they will not grow up to fritter away your wealth.

Ee Soon Wei, whose grandfather started The Royal Press, and who now runs the famous Asian Printing Works in Bangsar, among others, has a modern take on the third generation wealth curse. He believes that instead of forcing your children into the family business, you should look at what their natural strengths are and encourage them to grow accordingly.

Gabby Tan, the daughter of IGB Corp Bhd group managing director Datuk Seri Robert Tan, has a quieter take on it. She believes it is important to work for one’s supper and wants to bring up her children to value what matters, not just financially but also emotionally and spiritually.

The founders of successful businesses tend to pass on their hard-earned wealth to the next generation. But Tan Kai Hee, executive chairman of Hai-O Enterprise Bhd, is taking the path less travelled.

At his 80th birthday dinner, held at the Hokkien Association Hall in Klang last month, Tan announced to a thousand friends and relatives that he would donate all of his Hai-O shares to a trust fund he has set up.

His shares, worth more than RM100 million, will be used to support the Chinese community and other charities. Only a small portion of the returns will be distributed to his family. 

“My children always knew they would not inherit anything from me. I have given them all the resources they need to make it on their own. I hope they will have the courage to explore new things in life and be more successful than their father,” Tan said at the dinner. Earlier that day, he had donated RM2.27 million to 38 Chinese schools and organisations. 

In an interview, Tan admits that he is an atypical parent, as most Chinese pass on their wealth to their offspring. Unfortunately, it is true that most of the time, the subsequent generations fail to preserve that wealth and deplete it by the third generation — hence, the “the third generation wealth curse”. He quips, “As the Chinese say, ‘When the founder is in heaven, the money is in the bank and the children (and grandchildren) are in court.”

This is part of the reason he decided to establish a trust fund and donate all of his shares to it. “Not many people would think of preserving wealth this way. But I thought it would be a good idea to be one of the first to do so. Maybe others will follow in my footsteps.”

Tan does not see wealth as something to be privately owned. Rather, he sees money as a sort of “fertiliser” to nurture society. “If it is applied in the right places, the plants will grow and yield good fruit. That will be something positive for the community,” he says.

What are the plants? It varies, Tan says. It can be a person or group of people doing something positive, or fighting for a good cause, for the community or the country. They do not have to be related to him by blood. As his wealth has been accumulated by doing business in public, it is only natural for him that it not be hoarded but contributed to society. 

Wealth for the public

Why is Tan so different from the generality of Chinese businessmen? It is important to understand his background and how his experiences have shaped his philosophy on wealth.

Not many know that before he became a successful entrepreneur, he was deputy secretary-general of the Labour Party of Malaya and a member of the Malayan Peoples’ Socialist Front in the 1960s. Tan says it was the hardship that he endured while growing up that was responsible for his leftist leanings.

His parents brought him and his siblings to Malaya. But when he was 13, his parents had to return to China because of financial problems and left him and his siblings here. 

To survive, Tan worked in a rubber estate, a pineapple canning factory, a bicycle shop and at a night market. He did anything that would earn him some money and put food on the table. It was these tough times that gave him empathy for his fellow workers and others who were scraping the bottom of society’s barrel.

Later on, when he was a bit better off, he started to educate himself. He was drawn to socialist literature and agreed with its ideals. So, he joined the Labour Party and moved up the ranks as he was actively involved in labour and worker movements.

Tan would eventually pay the price for his political affiliation in the 1960s because of the Malayan Emergency and Communist insurgency. He was arrested under the Internal Security Act and languished in prison for eight years. 

“When I got out, I could not find a job. Nobody wanted to hire me. I had to work for my siblings, helping them to rear chickens. I was so poor that I did not even have enough money to buy cigarettes,” he says.

It was poverty that pushed Tan into business. He started by trading Chinese herbs and medicines and managed to turn a profit. But his real break came in the 1970s when Tun Abdul Razak, Malaysia’s second prime minister, called for the “neutralisation of Southeast Asia”. Tun Razak made a trip to China and became the first leader in the region to normalise relations with the country.

Socialism was no longer a bad word in Malaysia and there was no longer a stigma attached to Tan’s leftist past. He was able to build ties with people in China and his businesses benefited from that.

Did his early beliefs impact his ability to run a business? Not at all, Tan declares positively. 

“I imported Chinese herbs and goods at very low prices and sold them cheaply to my clients. My products were priced much lower than the other Chinese herbs in the market back then and I made sure not to mark up my prices as I could have done. I was an honest businessman and my trade benefited the people,” he says.

More importantly, Tan held on to his ideals even after he became wealthy. He has been a philanthropist for years and is well known for contributing to the Chinese community and other charities. “I still believe socialism is the way forward for humans to create a better world,” he smiles.

Grooming the next generation

Tan has built a sizeable company at Hai-O Enterprise Bhd, which has a market capitalisation of more than RM800 million. As his shares have been donated to his trust fund, the sustainability and profitability of the company will be tied to his legacy. That is why it is important that his successor continues in his footsteps by guiding the staff and growing the business. 

Tan’s eldest son, Kang Keng, took the helm as managing director in February last year. And Tan has expressed his full confidence in his son’s ability to lead the company and preserve the trust fund and family wealth. That is because Kang Keng has worked for the company for more than 20 years and has risen through the ranks.

“He had to know when the lorries would come in and how to take down the goods and arrange them accordingly. When there were deliveries, he had to know how to send them out. The company follows certain operating procedures and he had to start from scratch and learn all these,” says Tan.

Being young and ambitious, Kang Keng was not very happy with his father’s decision but was forced to accept it. While Tan may give the impression that he is an amiable fellow to the rest of the world, he is a very strict father at home. “I know he had complaints sometimes, but there was nothing he could do about it,” Tan chuckles.

There was also friction between them, especially when Kang Keng first joined the company. It took a year or two to smooth out.

“I had to be tough. I was not just his father, but the leader of the company. I could not show favouritism just because he was of my blood. I told the management early on that I would only pick the most capable and respectable person to lead the company,” says Tan.

However, outside his role as company leader, Tan does not hide his deep affection for his eldest son, who has always had a desire to learn. “He was always curious about everything and used to read a lot to understand the world around him. He read books on Buddhism and Taoism, among others. Later on, he picked up an interest in doing business. While studying at a university in Beijing, he earned his own money and did not rely on me for his expenses.”

This early independence was why the rest of the family listens when Kang Keng has something to say. It was also why he was pretty rebellious when he first joined the company.

“But that is not enough. He had to broaden his views and enhance his capabilities to be able to guide the people in the company. He also had to put in a lot more effort to win the respect of the employees,” says Tan.

Children of wealthy businessmen tend to lead a lavish lifestyle, but Kang Keng is not one of them, says his father.

Tan has groomed the second generation with tough love and a dose of his own ideals. That is why he has full confidence in their ability to run the company and preserve its wealth, not only for themselves but also the community.

When asked what advice he gives his son the most, Tan says he does not speak so much through words as through his actions. “This is known as shen jiao (teaching by example). I do not lecture him much.”

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