What was the impact of COVID-19 on sales?
Pre-COVID
55% Sales growth
55% Sales reduction
COVID Impact
55% Sales growth
55% Sales reduction
The world is changing, and so is the winning formula for enduring family business success. The unprecedented events and disruptive impact of the pandemic have compelled family business leaders to respond with agility and embrace new approaches to sustaining their legacy. In fact, Asia Pacific family businesses have shown significant resilience and are optimistic about growth through 2022.
In PwC’s Family Business Survey 2021, we learned about the current thinking and future outlook of 2801 family business leaders across 87 territories worldwide, of which over 800 were from the Asia Pacific. Our findings indicate that family business leaders can no longer rely solely on their values and legacies to propel their business forward. Asia Pacific’s family businesses of tomorrow need a new game-changing approach to achieve lasting success—one based on accelerated digital transformation, prioritisation of sustainability goals and family continuity plans.
Key takeaways
The time to act is now if family businesses want to keep their legacy for future generations. Watch an overview of the key findings from the Family Business Survey 2021.
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Explore the data
Filter the data by territory and compare it to the APAC average.
What are your key priorities over the next two years?
55% Expansion and/or diversification
55% Digital, innovation, technology
55% Evolving/new thinking
55% Sustainability and/or local community
What are your digital capabilities and priorities?
55% Strong, no longer a priority
55% Strong and still a priority
55% Not strong but is a priority
55% Not strong and not a priority
Which of the statements below best describes the way you feel about the role of your family business today?
Delivering sustainable business practices
55% We want to lead the way
55% We are unlikely to lead, but we will play our part when required
Delivering benefits for the planet and human society
55% We need to lead the way
55% It is the role of the government to lead the way
What governance policies do you have in place?
55% Shareholders’ agreement
55% Dividend policy
55% Testament/last will
55% Family constitution or protocol
55% Family employment policy
| Questions and Answers | Asia Pacific | Australia | Mainland China | Bangladesh | Hong Kong | India | Indonesia | Japan | Malaysia | Papua New Guinea | Singapore | Taiwan | Thailand | Vietnam | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Q10. Looking back over the last financial year BEFORE THE COVID-19 PANDEMIC would you say your sales have been | |||||||||||||||||||
| Sales growth | 51% | 63% | 65% | 52% | 50% | 60% | 51% | 38% | 47% | 38% | 49% | 43% | 39% | 33% | |||||
| Sales reduction | 21% | 16% | 19% | 17% | 15% | 18% | 25% | 23% | 29% | 35% | 21% | 22% | 31% | 24% | |||||
| Q11. And what do you think the impact of the COVID-19 pandemic will be on your sales? | |||||||||||||||||||
| Sales growth | 26% | 42% | 32% | 43% | 14% | 32% | 15% | 18% | 24% | 12% | 23% | 38% | 11% | 24% | |||||
| Sales reduction | 48% | 32% | 38% | 31% | 56% | 40% | 60% | 62% | 53% | 65% | 56% | 41% | 61% | 42% | |||||
| Q21. Which, if any, of the following are the company's TOP FIVE priorities for the next two years? | |||||||||||||||||||
| NET: Expansion/Diversification | 82% | 83% | 84% | 78% | 73% | 85% | 80% | 87% | 86% | 68% | 91% | 86% | 86% | 79% | |||||
| NET: Digital, innovation, technology | 77% | 76% | 73% | 67% | 74% | 87% | 71% | 78% | 90% | 59% | 84% | 70% | 83% | 82% | |||||
| NET: Evolving/new thinking | 66% | 58% | 54% | 59% | 58% | 76% | 71% | 57% | 69% | 76% | 84% | 70% | 72% | 67% | |||||
| NET: Sustainability/local community | 30% | 34% | 37% | 35% | 26% | 33% | 19% | 20% | 27% | 41% | 25% | 35% | 33% | 21% | |||||
| Q28.SUM. We have strong digital capabilities | |||||||||||||||||||
| Digital strong and no longer a priority | 18% | 24% | 21% | 7% | 20% | 15% | 17% | 28% | 8% | 32% | 13% | 11% | 17% | 9% | |||||
| Digital strong and still a priority | 16% | 21% | 14% | 31% | 14% | 11% | 8% | 13% | 16% | 6% | 16% | 16% | 11% | 21% | |||||
| Digital not strong but a priority | 31% | 28% | 32% | 19% | 24% | 46% | 32% | 28% | 43% | 26% | 38% | 24% | 31% | 21% | |||||
| Digital not strong and not a priority | 35% | 28% | 33% | 43% | 42% | 27% | 43% | 30% | 33% | 35% | 34% | 49% | 42% | 48% | |||||
| Q33a. Which of the statements below best describes the way you feel about the role of your family business today? | |||||||||||||||||||
| There is an opportunity for family businesses like ours to lead the way in sustainable business practices | 52% | 36% | 65% | 67% | 35% | 68% | 59% | 60% | 49% | 53% | 46% | 46% | 56% | 45% | |||||
| Family businesses like ours are unlikely to lead, but we will play our part when required | 38% | 54% | 29% | 26% | 52% | 29% | 33% | 13% | 43% | 38% | 48% | 41% | 39% | 45% | |||||
| Q33c. Which of the statements below best describes the way you feel about the role of your family business today? | |||||||||||||||||||
| In order to succeed going forward, our business is going to need to deliver greater benefits for the planet and human society | 52% | 33% | 71% | 54% | 41% | 68% | 60% | 62% | 57% | 44% | 55% | 49% | 53% | 30% | |||||
| We will play our part, but it is the role of government not businesses like ours to deliver greater benefits for the planet and human society | 31% | 42% | 13% | 31% | 30% | 24% | 31% | 12% | 33% | 44% | 33% | 43% | 31% | 55% | |||||
| Q15. Which of the following policies and procedures, if any, do you have in place? | |||||||||||||||||||
| Shareholders’ agreement | 39% | 41% | 56% | 31% | 50% | 32% | 48% | 27% | 37% | 41% | 35% | 43% | 25% | 39% | |||||
| Dividend policy | 30% | 28% | 57% | 17% | 36% | 30% | 29% | 15% | 27% | 21% | 28% | 57% | 33% | 18% | |||||
| Testament/last will | 22% | 58% | 6% | 7% | 24% | 17% | 12% | 20% | 18% | 53% | 13% | 5% | 8% | 6% | |||||
| Family constitution or protocol | 16% | 18% | 3% | 17% | 8% | 27% | 17% | 7% | 20% | 26% | 13% | 11% | 17% | 21% | |||||
| Family employment policy | 11% | 9% | 5% | 13% | 6% | 13% | 16% | 5% | 12% | 32% | 8% | 8% | 17% | 12% | |||||
Explore key Asia Pacific findings
Despite slower growth in 2020 compared to global counterparts, Asia Pacific’s 2022 growth expectations are high
Asia Pacific family businesses have seen a mixed performance over the last financial year (pre-COVID-19), with 51% experiencing growth and 21% seeing reduction in sales. This is slightly less positive than the global scene where the majority of family businesses experienced higher growth (55%).
However, growth aims in Asia Pacific are ambitious for 2022, with 87% expecting growth to surge in 2022 (Exhibit 1). The outlook for 2021 is albeit cautious as 65% of Asia Pacific family businesses expect to see growth, much in line with family businesses worldwide.
When asked to name their top priorities for the next two years, family businesses in Asia Pacific listed expansion and/or diversification (82%) as their top priority, followed by digital, innovation, technology (77%) and improving evolving/new thinking (66%).
The priorities of the Asia Pacific family business leaders resonate with business priorities of their global counterparts. However, issues related to sustainability (Exhibit 2) remain at the bottom of the priority list of Asia Pacific family businesses (30%). This is considerably lower compared to Europe (47%) and North America (37%).
Exhibit 2: Key priorities over the next two years
Only a third of Asia Pacific family businesses feel that they have the digital capabilities needed for a rapidly changing world
Digitalisation has been on the agenda in recent years. Now, the pandemic has made digitised services a norm overnight. However, Asia Pacific family businesses are still lagging with only 33% (globally 38%) acknowledging that their digital capabilities are strong.
This is despite their adaptability and agility consciousness, as the majority of them believe they have strong leadership teams (64%), clear and flat governance structure (58%), with clear roles and responsibilities for those involved in running the business (66%) (Exhibit 3).
Exhibit 3: Agility and adaptability of Asia Pacific family businesses
So what are Asia Pacific family businesses doing about it? 70% say they use technology to drive efficiency and collaboration while 61% leverage on technology to access relevant data for improved decision-making. However, there’s still room for improvement, as only 47% invest in upskilling their employees. And less than one-third (28%) have developed a clear and documented roadmap for digital transformation.
Exhibit 4: A majority of family businesses are investing in digital capabilities
Levels of trust, transparency and communication are felt to be quite high among Asia Pacific family businesses. However, only 55% say there is family alignment in company direction
The unprecedented events of the past year have made it clear that all businesses should have a near-term business continuity plan and a long-term succession plan, as circumstances can change rapidly and in ways that are beyond a family’s control. Yet, only 36% have their values and company mission articulated in written form and only a quarter of Asia Pacific family businesses have a robust, documented and communicated succession plan in place.
Today, having a family governance structure is a business imperative. A professional governance structure and a clear process for conflict resolution, preferably involving an independent party, removes emotional and personal bias, a common stumbling block for many business families.
Exhibit 5: Family businesses have high levels of trust, communication and transperancy but many do not have a documented successsion plan yet
While a large majority of Asia Pacific family businesses engage in activities around social responsibility, only 38% have developed and communicated sustainability strategy
Commanding a high level of trust, family businesses are well positioned to lead on sustainability practices. However, they are not making it a part of their core operations. Closing this gap between family values and demonstrating their commitment to ESG is critical to their long term success. Only 38% (Exhibit 6) of Asia Pacific family businesses have an articulated sustainability strategy, and overall, just half (54%) said sustainability was at the heart of everything they do.
Exhibit 6: A minority of Asia Pacific family businesses engage in social responsibility activities, only 38% have a developed and communicated sustainability strategy
These findings vary across Asia Pacific. In China, Japan and Taiwan, the ESG message appears to have resonated, with more than 75% of family businesses saying that sustainability is at the heart of everything they do. However, less than 50% feel the same way in Malaysia, Bangladesh and Australia. In order to maintain their high trust levels and secure long-term stability, family businesses must step up their efforts and incorporate ESG as part of their business operations and decision making process.
Exhibit 7: The ESG message resonates differently across Asia Pacific countries
Time for NextGens to drive change and ensure future generations not only survive, but thrive in the digital future
NextGen leaders will be a key driving force behind the transformational journey to propel family businesses forward. Unsurprisingly, the desire for passing on legacies among Asia Pacific family businesses is evident — 55% already have NextGens working in the business. Most likely they will become majority shareholders within the next five years.
PwC’s Global NextGen survey 2019 revealed that younger family members saw technology as one of the top drivers of change for the business, and 64% felt that this was the area they could add value. It is time for the current generation of leaders to actively involve their NextGens in driving digital change, transforming to more sustainable business practices and revisiting governance structures.
Exhibit 8: Slightly more than half of Asia Pacific businesses have next generation family members working in the business
Transform digital capabilities
According to PwC’s latest report “Hopes and fears 2021” there is a growing number of workers who are drawn to organizations that offer more digital skills, more inclusivity and more flexibility. Upskilling will help transform labour into talent and bridge the digital capabilities divide of family businesses.
Asia Pacific family businesses should draw on their experience of withstanding the pandemic and build smarter, more resilient organisations. Recent events have demonstrated that those who embarked on their digital journey early were better placed during the crisis. The 23% of respondents who are not making this a priority and have not made progress will face significant challenges in safeguarding their legacy.
Professionalise family governance
A professional governance structure and a well-defined process for conflict resolution - ideally involving an independent party - makes business sense, particularly when it comes to family businesses.
Moreover, having a written and articulated document that outlines the family business’ values helps boost clear communications and transitions. Nearly one-third (31%) of Asia Pacific family businesses have no form of governance policy in place. Thus, they should concentrate their efforts to address these key areas, which will lead to stronger outcomes.
Deliver on ESG
From lowering the cost of capital to enhancing brand value, the benefits of embedding ESG can be enormous. ESG is no longer a nice-to-have; it should be integral to every decision that family businesses make.
Asia Pacific family businesses must embed ESG into their operating model, and engage both the NextGen and their board in the process. They need to get help in measuring and meeting ESG targets and communicate their ESG position and agenda to a wider stakeholder group. Having a diverse board, with independent input, could also serve as a useful proxy and challenge thinking around sustainability.
Involve NextGen
Most family business leaders seem to be expecting the next generation to take charge within five years, so there’s a need for well-developed professionals who are ready to lead. Family businesses should focus on that goal now so they will be well-prepared for the transitions.
NextGen family members will play a vital role in pushing family business forward in policy areas that are essential to their legacy. Younger generations are the driving force behind sustainability and in family businesses, they are looking for greater responsibility. ESG is a natural fit.
Next generation leaders are also an important driving force behind digitalisation. Hence, NextGen members should work towards driving the digital path of the family business and align with the family’s shared long-term vision and values.
Contact us
Ng Siew Quan
Asia Pacific Leader, Entrepreneurial and Private Business, PwC Singapore
Tel: +65 9726 9880
