About 7 in 10 of them are planning to go abroad or are already doing it.
About 70% of Singapore family businesses are planning to expand overseas or are already doing it, PwC Singapore revealed. They view ASEAN (36.1%) and China (25.7%) as key markets that will be critical to the growth prospects of the business over the next five years.
Its study with the Singapore Chinese Chamber of Commerce & Industry (SCCCI) and UBS cited that with Singapore’s limited market size, businesses recognise the need to look beyond local shores for new markets, customers, and revenue streams to remain competitive.
Moreover, the preferred locations are “unsurprising” due to Singapore’s close proximity to ASEAN, as well as China’s increasing importance as a global economic powerhouse, it said.
The study also found out that navigating foreign markets can be complex and the top few challenges faced by family businesses surveyed include unfamiliarity with local rules and regulations (20.8%), identifying the right business partner (18.3%), and acquiring the right talent to develop the overseas markets (16.1%).
Meanwhile, 86.2% of family businesses polled plan to participate in the digital economy, more than a third are still yet to have any concrete plans (34.7%). Of the families surveyed, 36.2% cited finding a way to transform the business through technology as their top challenge. This is followed by the financial costs of digital transformation at 28.7% and competitors with first-mover advantages at 26.1%.
SCCCI president Roland Ng commented, “To improve their competitiveness in this digital economy, family firms need to transform themselves by developing innovative capabilities, leveraging on digitalisation and venturing overseas to capture a bigger market. Those that are prepared to evolve, innovate and reinvent themselves will be the ones that achieve long-term prosperity in the business.”
The study suggested that hiring external talent could also bring non-family objectivity to the company, although their main concerns are in attracting new blood (44.4%), restrictions on hiring foreign talent (32.8%), and retaining talent (29.1%).
“Family business owners should also not rule out letting the most capable person rule the business, even if this is an external professional,” the study said. About 55.4% of family businesses polled placed leadership as the most important attribute next gens should have to take over the business, followed by financial management (52.4%) and emotional intelligence (50.3%).
“Finally, parents can also consider letting next gens establish greater credibility by developing a career and specific skillsets outside of the family firm before bringing their expertise back to the family business,” it added.
UBS Global Wealth Management Singapore market head Eddie Gan noted that generational transfer of wealth and succession planning are important twin issues that family businesses have to deal with. “Today’s next gen have a suite of options at their disposal. They can take over the family business, blaze their own trail by becoming entrepreneurs, engage in philanthropy by running family foundations, or become a steward by becoming an owner rather than a manager of the company,” he added.
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