The ViewVolkswagen battle highlights contrast between family-run firms in Asia and Europe

Here’s a headline you won’t be reading anytime soon regarding a Hong Kong company: ‘Chairman forced to resign from firm his family controls’, however this is precisely what has happened at Volkswagen, one of Germany’s largest companies.

It’s a complicated story but has ended in the resignation of Ferdinand Piech, after losing a boardroom battle with, Martin Winterkorn, his successor as Chief Executive. Piech, a patrician corporate leader has been a towering figure in the global auto industry for decades and his family, alongside the related Porsche family, controls the majority of VW’s shares.

Under Piech’s leadership Volkswagen extended its already growing dominance of the European auto industry having acquired brands in every sector of the business ranging from the luxury end with Bentley, Bugatti and Lamborghini, to the grubbier truck business of Scania and down in the mass car market it scooped up the failing Seat and Skoda marques, transforming them into companies making infinitely better cars. And then there’s the iconic Ducati motorcycle brand.

The reasons for the conflict between Piech and Winkerton are not wholly clear but the fact that VW’s board, containing provincial government, employee and shareholder representatives, was able to force out the chairman highlights the difference in the ways that family controlled public companies conduct their affairs in Europe and Asia.

I cannot think of a single instance in Hong Kong, or indeed elsewhere in Asia, where the family controlling the bulk of a company’s shares has suffered defeat at the hands of its board of directors.

Splits within controlling families are another matter, as we have seen in the local SHK group, but it is no exaggeration to say that boards of directors in this part of the world essentially function to support the ruling families.