Family businesses in Hong Kong underperform their world counterparts and have lower confidence about their future prospects, according to a study by PricewaterhouseCoopers (PwC).
Only 37 percent of family businesses in Hong Kong reported growth in the last 12 months, compared with two-thirds of such businesses worldwide. Meanwhile, 73 percent expect their operations to expand in the coming five years, compared with 85 percent globally, the study showed.
The findings came after PwC conducted telephone interviews with 2,378 family business executives in more than 40 countries worldwide between May and August.
Three-fifths of the Hong Kong respondents said the key challenge in the next 12 months is uncertainty in the world market, while more than half of them said staff recruitment poses a big challenge for them.
A whopping 17 percent of the respondents also said technology, such as digitalizing their business, is a big challenge, compared with only 4 percent in a previous study in 2012.
Driven by competitive pressure, many family-run businesses want to professionalize their operations – including establishing an infrastructure for decision-making and putting in place formal channels for communication, but 46 percent of the respondents say this will be a challenge.
“Family businesses are generally more optimistic than non-family businesses in their sector. But in Hong Kong this confidence is relatively low,” said Richard Sun, PWC’s head of entrepreneurial group for Hong Kong and China.
Hong Kong businesses are more likely than the global average to want to pass ownership and management of their business to the next generation. But only 4 percent say they have a robust succession process, while 27 percent say they have succession plans in place for some senior roles.
Kitty Chung, assurance and business advisory services partner in PwC Hong Kong, said many family businesses in Hong Kong will carry on even though the operations may not be very profitable. Maximizing profits may not be their top priority.
“Family businesses tend to carry on in difficult times. They won’t stop because of poor business. They will think of other ways to manage the business or add some new elements, because they have to take care of their family members,” she said.
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