expect to see their business grow in 2021 while 89% (Mainland China) and 83% (Hong Kong) expect to see growth in 2022
hope to expand into new markets/client segments in the next two years and 51% (Mainland China) and 44% (Hong Kong) will prioritise increasing their investments in innovation and R&D
enabled their staff to work from home once the pandemic hit while 70% (Mainland China) and 64% (Hong Kong) sought to retain as many staff as possible
report that the family that owns the business has a clear set of family values. Only 19% (Mainland China) and 20% (Hong Kong) have a robust, documented and communicated succession plan in place
have developed a clear and documented roadmap for digital transformation
engage in some form of philanthropy such as contributions to the local community and charitable donations
The prevailing COVID-19 pandemic has forced family businesses to make vital strategic decisions both to survive the current crisis and to grow their business over a longer time horizon.
In the PwC Global Family Business Survey 2021, we look at family business priorities in the short and medium term and tracks corporates’ progress in key areas such as succession planning and digital transformation. The study also revisits the importance of values and corporate purpose for family firms particularly in light of the current health and economic crisis. Our 2021 global survey captures the insights of 2,801 family business leaders across 87 territories. Of which, 129 executives in Mainland China and Hong Kong have also been interviewed for the China report.
The China report reveals that tomorrow’s family business requires a new approach for lasting success—one based on accelerated digital transformation, prioritisation of sustainability goals and professional family governance.
It’s time to act now!
Family businesses in Mainland China performed better than the global average with regards to their sales turnover in the last financial year (before the onset of the outbreak). 65% of mainland family businesses saw their sales grow in 2019 (prior to the COVID-19 outbreak) relative to the global average of 55%. This is not surprising given that the contribution of the country’s private sector to the national GDP has increased in recent years, and is estimated to be over 60%, out of which 85% comprises family-owned businesses. Family-owned firms have flourished in recent years on the back of supportive economic policies and are driving technological innovation and job creation in the country.
The public health crisis has caused widespread disruption resulting in staggering socio-economic consequences for all sectors of society including family businesses. Survey results show that 54% of family businesses in Mainland China have seen a reduction in profits in 2020 (Hong Kong: 59%; Global: 51%) and 27% have seen a need for additional capital (Hong Kong: 18%; Global: 21%). With regards to sacrifices they have made or are planning to make in light of the public health crisis, 49% of family firms in Mainland China expect a reduction in dividend pay-outs (Hong Kong: 41%; Global: 57%) and 44% will inject capital into the business (Hong Kong: 17%; Global: 37%). Fewer respondents in Mainland China have taken or expect to take salary or bonus cuts relative to their Hong Kong or global counterparts.
By going above and beyond to protect their staff and support their local communities amidst the pandemic, family businesses have reinforced their values and sense of purpose. 65% of Mainland Chinese family firms state they have a clear sense of values and purpose as a company (Hong Kong: 53%; Global: 68%) and 51% found that this helped them during the ongoing health crisis ( Hong Kong: 30%; Global: 52%). Additionally, only 38% of Mainland Chinese respondents and 32% of Hong Kong respondents have their values and company mission articulated in written form (lower than the global average of 44%).
While succession planning has not been impacted significantly, the pandemic has definitely enhanced family firms’ focus on adaptability, agility and digital prowess. 35% of Mainland Chinese survey respondents “strongly agree” or “agree” that they have strong digital capabilities, which is not very different from the proportion of Hong Kong respondents with this view (33%) or the global average (38%). This group were also asked what steps they have taken to ensure they have the digital capabilities they need going forward. 64% of respondents in Mainland China state they have used technology to drive efficiency and collaboration in the business (Hong Kong: 45%; Global: 74%) and the same proportion state they have used technology to create a superior customer experience (Hong Kong: 45%; Global: 58%).
Entrepreneurial and Private Business Lead Partner, PwC Hong Kong
Tel: +[852] 2289 1304
