More than 50 percent of Taiwanese firms have to deal with succession planning in the next decade, as their owners are older than 60, PricewaterhouseCoopers (PwC) Taiwan said yesterday.
Most local firms are small and medium-sized enterprises and 55 percent have to tackle the issue in light of their current owners’ age, reluctant as they might be to face the issue, PwC Taiwan said, citing a survey of 305 family-run businesses.
Taiwan’s family businesses are fledglings, compared with their peers in the US or Japan, as 56 percent are run by first-generation owners and 35 percent the second generation, PwC said.
Only 9 percent are in the hands of the third generation or later, it said.
Hoshi Ryokan, a Japanese inn chain, has been run by the same family since 718, while the Merck family in Germany established the world’s oldest pharmaceutical company, which dates to the 17th century, PwC Taiwan said.
The survey found that 44 percent of Taiwanese business owners plan to pass their company on to the next generation, while 33 percent have not thought about the matter.
Only 13 percent would allow professional managers to run their business, the poll found.
In the absence of professional managers, children must take over the family business regardless of their competence or willingness, PwC Taiwan said.
Family-run businesses place more importance on their children’s financial management ability than their professional training and achievements, it said.
Most family businesses seek to cultivate a sense of mission in younger generations through family gatherings or moral preaching rather than subject them to a formal course of governance preparations, it said.
Family businesses need to establish a sound governance system with a focus on a family constitution, family offices and family equity, so that family members can better communicate with each other and keep their company competitive and sustainable, PwC Taiwan said.
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