Download our publication
Family Business Survey 2023 - Vietnam Report
Transform to build trust
The post-COVID world’s optimism has been tested by geopolitical turmoil and its economic impact, leaving businesses navigating uncharted territory. Family businesses know that trust is a prized asset, serving as a cornerstone of their success and a key differentiator in today’s competitive landscape. In this context, the very nature of trust has evolved, and a new formula for building trust has emerged.
PwC’s Family Business Survey 2023 highlights a “trust gap” that needs to be addressed to ensure the growth of family businesses in the future. Family businesses are struggling to prioritise the things that are fundamental to building trust with all stakeholder groups, including the general public.
In this report, we share a new formula for building trust, which involves prioritising what matters most to all stakeholders, including transparency, communication, and accountability. By prioritising what matters most to all stakeholders, family businesses can enhance their reputation, drive growth, and ensure a bright future.
The message from this year’s survey is clear: family businesses not only need to make transformative changes to build trust, they also have to show and tell-by making their efforts visible and communicating them clearly to all stakeholders. In today’s world, that means not just their customers, employees and family members, but also the public at large.
Johnathan Ooi
Partner, Entrepreneurial & Private Business Service Leader, PwC Vietnam
Part 1: Family businesses in Vietnam are facing a trust gap
Family businesses in Viet Nam know that trust is essential. Customers (75%), followed by employees (61%), and investors (61%) are the most important stakeholders for family businesses to build trust. Unsurprisingly, earning the trust and loyalty of customers, the lifeblood of any business, is crucial for long-term success.
However, it is worth noting that trust from family members is considered significantly less
important (28%), much less than the global (63%) and APAC average (54%).
Trust gap between business and key stakeholders
Our survey reveals that family businesses in Viet Nam, similar to their global and regional peers, also face a trust gap. They prioritise trust from customers, employees and investors, but they believe that they are not yet fully trusted by these key stakeholders. There is a clear need to bridge the trust gap between family businesses and the key stakeholder groups. We must not neglect the significance of trust within the family business itself. Our survey found that generally about 40% of respondents admitted to lower levels of trust between family members. In particular, trust is significantly lower between generations such as Next generations (NextGens) - Current generations (CurrentGens), and between board members - others.
Part 2: Building trust with key stakeholders
In order to bridge this gap, family businesses need to be able to understand the needs of
their stakeholders and prioritise fundamentals to building trust with each group. They will also
need to take into account different stakeholders who have different expectations in order to build trust in different ways.
When it comes to these new measures for earning trust, family businesses need to do a
better job at taking action and communications. The goal is to increase the visibility of their
efforts and delivering consistent message to key stakeholders.
Building trust with Customers
Rethinking ESG priority to grasp green opportunities
Although family businesses actively listen to their customers, they need to demonstrate that they are meeting customers’ expectations beyond the baseline i.e. quality products and services only. Our survey shows that family businesses in Viet Nam have yet to place emphasis on ESG issues and DEI matters.
When family businesses were asked to rank their top five priorities in the next two years, ESG and DEI were ranked low as a priority:
- Only 17% of respondents chose to increase the organisation’s social responsibility; and
- Only 6% chose to improve performance on diversity and inclusion
- No respondents chose reducing the organisation’s carbon footprint and support local community
Building trust with Investors
Meeting the expectations of investors requires a balancing act with short term KPIs
PwC’s Global Investor Survey found that investors prioritise innovation and financial performance as the two highest priorities for businesses. However, over the next five years, expectations of climate change and cyber threats have increased significantly. Investors believe that companies can improve their management of climate change and innovation and reporting on these efforts.
The key priorities of Vietnamese family businesses over the next two years are improving digital capabilities (58%) and rethinking the business - changing/adapting the business model (50%). Both are much higher than the global average at 44% and 34% respectively. However they admit little focus on ESG and innovation / R&D.
Building trust with Employees
Strengthening internal trust
Trust is built from the inside out. A company will not be trusted by its customers without trust from its employees. According to our Future of Work and Skills report, companies that actively create opportunities for their employees to build skills have greater earnings resilience and demonstrate a superior ability to attract and retain talent.
Similarly, Vietnamese family businesses recognise the importance of trust from their employees with 50% saying that they are fully trusted by them and 39% saying increasing trust with employees is within their top five priorities in the next two years. They have actively taken steps to build trust with employees especially through staff incentives and creating a culture of accountability.
Building trust with Family members
Strengthen trust through formal family governance and transparent communication
Family businesses need to create a clear system that allows family members to discuss openly and manage the conflicts within the family. This can be done through:
- A formal family governance structure: The good news is that 83% of respondents shared they have some form of governance policy in place within the business. However, only half think they have a clear governance structure. There is room for improvement such as with formulating family constitution/protocols (only 28%) and conflict resolution mechanism (only 25%).
- Transparent communication: Communications between family members is quite high but only 42% say relevant information is shared in a transparent and timely way between family members (vs. global average: 65% and APAC average: 58%)
Part 3: New ways family businesses can transform to build trust
Today’s formula for building trust requires a transformative approach.
The good news is that trust is tangible and can be systematically built. But if family businesses are to protect their trust advantage, it will require transformation - a reality that many business leaders are already acknowledging.
In order to safeguard family legacy, family businesses need to expand their focus and get familiar with a new transformative approach to build trust.
Related Content
Get in touch
Get in touch
Johnathan Ooi Siew Loke
Partner, Entrepreneurial and Private business Leader, PwC Vietnam
Tel: +84 28 3823 0796
Hoang Viet Cuong
Partner, Entrepreneurial and Private Business, PwC Vietnam
Tel: +84 24 3946 2246