7 days ago
Why are more wealthy mainland companies coming to Hong Kong for mediation?
An increasing number of wealthy mainland families have been opting to come to Hong Kong for mediation services to solve disputes instead of going to court, according to an expert.
'There is an increased demand for family mediation services in Hong Kong in recent years, particularly from [mainland] Chinese families,' said Ann Cooley, founder of Hong Kong-based Cooley Family Office, which has offered mediation services to help family offices handle their disputes for three decades.
'Hong Kong is going to benefit from such a trend because the city is an international mediation centre with many experts in this area,' Cooley said in an interview on Thursday.
'Being part of China and the Greater Bay Area means that many wealthy mainland families can take the high-speed train to travel to Hong Kong within an hour to meet their bankers to manage their wealth, as well as to find experts to resolve their family disputes,' she said.
The hidden disputes of wealthy mainland families have come under the microscope recently with the legal battle surrounding the family of Zong Qinghou, the late founder of China's biggest beverage company, Hangzhou Wahaha Group, barely 12 months after his death.
Three plaintiffs claiming to be his children sued chairwoman and CEO Kelly Zong Fuli in Hong Kong and Hangzhou in eastern Zhejiang province, demanding her to honour the late founder's will, which promised them trusts valued at US$700 million each. Before the lawsuit was filed, Kelly, 43, was known as the billionaire's only child.
On Friday, the lawsuit by Jacky Zong Jicang, Jessie Zong Jiele and Jerry Zong Jisheng will come before the High Court in Hong Kong.
Cooley said she believed similar court cases would be brought to Hong Kong, as many affluent families on the mainland had not prepared for a smooth transfer of wealth.
'We are living through an unprecedented wave of wealth transfer in Asia, particularly in mainland China, where first-generation entrepreneurs are passing the baton to the new generations,' she said.
'Many of these families have no experience in how to prepare for succession planning, which is why we are going to see more disputes in the years ahead.'
Cooley said mediation was preferable to litigation because the cost was lower. Mediations allow for closed-door meetings to seek solutions that are accepted by all parties and there is no need for public disclosures.
'Mediation puts families in the driver's seat,' she said. 'I do not believe families should go to court unless it is the last resort.'
In addition, many wealthy mainland families like to come to Hong Kong instead of litigating closer to home.
'These families do not want their friends in Beijing or Shanghai to know about their finances or their personal affairs,' Cooley said. 'Mediation can prevent their family matters from getting into the ess.'
Some families use mediation to reach decisions on when and how to sell the family assets and how to move companies forward.
'Sometimes the younger generations want to use artificial intelligence or other technology in the operation of the companies, while the older generations want to do things in their own ways,' she said. 'Mediation can also help them find a solution.'
And while court decisions had a stronger enforcement element, mediation agreements were reached voluntarily, which meant families were usually more committed to following through with them, she said.
'Most families are looking for harmonious outcomes rather than vengeful and destructive ones,' she said. 'That is why mediation, even without traditional enforcement power, often works better for keeping families together and moving forward.' - SOUTH CHINA MORNING POST
