Understanding The Private Wealth Evolution In East Asia

by Henry Brandts-Giesen, Partner at Dentons. 

This is the first article in an ongoing series that aims to shed light on the family office world in East Asia. 

Family offices are currently undergoing a boom in East Asia, with Singapore and Hong Kong vying to attract wealth from around the region.

But the demographics of wealth have undergone incredible changes here since World War II. 

Significant new wealth was created in the past 70 years and is mostly concentrated in the hands of a small percentage of the population. 

Now, children of these wealth creators are inheriting assets and control - with varying degrees of success.

For family offices exploring opportunities in the region, understanding how this new world of private wealth came about can add valuable perspective on how the next few decades will play out.

Here are eight key shifts that contributed to the evolution:

1. Post-war Recovery and Industrialisation: After World War II, many East Asian countries, particularly Japan and South Korea, embarked on rapid industrialisation and economic development. As a result, these countries experienced substantial economic growth, leading to a rise in wealth and living standards.
   

2. Japanese Economic Miracle: Japan emerged as a major economic power in the post-war period, experiencing an economic miracle from the 1950s to the 1980s. The country’s rapid industrialization transformed it from a war-torn nation to one of the world’s largest economies, with a significant increase in wealth among its population.

3. Tigers and Dragons: Other East Asian countries, including South Korea, Taiwan, Hong Kong, and Singapore, also experienced rapid economic growth during the latter half of the 20th century. Often referred to as the “Four Asian Tigers” or “Four Asian Dragons”, these countries implemented similar strategies of export-oriented industrialisation and attracted foreign investment. 

4. China's Reform and Opening Up: Under the leadership of Deng Xiaoping, China embarked on a path of economic reform and opening up to the world. This involved liberalizing the economy, attracting foreign investment, and embracing market-oriented policies. The result was three decades of rapid economic growth, leading to a dramatic increase in wealth for many Chinese citizens.

5. Post-colonial Era: Following the end of World War II, many countries in Southeast Asia gained independence from colonial powers. Countries like Indonesia, Malaysia, the Philippines, Thailand, and Vietnam embarked on nation-building efforts and pursued various economic development strategies.

6. Economic Growth and Integration: Several Southeast Asian countries experienced rapid economic growth in the latter half of the 20th century. Singapore, for example, transformed from a small trading port into a global financial hub. Thailand became known for its manufacturing and tourism industries, while Indonesia and Malaysia developed their natural resource sectors.

7. Regional Cooperation: Southeast Asia saw the establishment of regional organizations such as the Association of Southeast Asian Nations (ASEAN), which has played a significant role in facilitating trade, investment, and economic development between member states in the region.

8. Rise of the Middle Class: The economic growth has led to the emergence of a significant middle class in many countries in the region. This middle class has become a driving force behind consumer spending, urbanisation, and demand for higher-quality goods and services. 

With the private wealth advisory sector in the region maturing rapidly, private wealth planning is now recognised as an intellectual discipline. 

Consequently, families of wealth are being exposed to global best practice and are professionalising their private wealth. This involves them becoming more organised and strategic in the way their wealth is structured, managed, invested, and distributed.

This evolution is encouraging and necessary if wealthy families are to sustain themselves and, more critically, retain social license in a region greatly affected by wealth inequality.

And for as long as this evolution continues these families will need the ongoing support of experts in the organisation of private capital.

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Henry Brandts-Giesen is a leader in the Dentons Global Family Office (DFO) group, recognised globally for his expertise in the organisation and regulation of private wealth. 

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