Taiwanese family businesses are taking a hit from the COVID-19 pandemic, as 41 percent reported declining revenue, although the effect on sales has been uneven across sectors, a biannual report released yesterday by PricewaterhouseCoopers (PwC) Taiwan showed.
The revenue slowdown was already evident in 2019 due to US-China trade disputes, when the number of family businesses with sales growth fell from 55 to 43 percent and weakened further to 38 percent amid the pandemic, the company said in a survey.
Family businesses with declining revenue increased from 14 to 22 percent in 2019, rising to 41 percent last year, it said.
Photo: Claire Cheng, Taipei Times
Globally, 46 percent of family businesses expect sales to fall this year, but 86 percent are looking at a return to pre-pandemic growth next year, according to the survey of 2,801 business leaders and top executives from 87 countries.
Unsurprisingly, 84 percent of hospitality and leisure firms expect a contraction, followed by 64 percent in automotive sectors and 63 percent in entertainment and media, the survey showed.
Family businesses are complex, given the nature of the personal relationships on which they are built. They have proven robust and adaptable, and are taking a people-first approach, prioritizing the well-being of their employees and supporting their local communities throughout the crisis, the report said.
However, the same relationships that allow the businesses to adapt quickly can also slow their decisionmaking and hold them back, it said, adding that communication among family members and across generations is not easy.
To cope with the pandemic, 34 percent of surveyed businesses worldwide have had to cut dividends, and 31 percent of family members have taken salary cuts, PwC Taiwan said.
Overall, 21 percent needed to access extra capital, 15 percent were putting in more of their own cash and 23 percent said they were prepared to do so, if necessary.
Taiwan’s family businesses are more conservative in raising capital, which they mainly do by taking bank loans, adjusting operating funds and seeking help from family, the company said.
PwC Taiwan urged them to explore other channels, such as capital markets, private equity and the introduction of strategic partners.
Funding flexibility is necessary and pressing when competition from China looms, the consultancy said.
Compared with global peers, local family businesses assign more importance to the need to strengthen their product line-up and diversify their source of income, which is positive, PwC Taiwan said.
The trend suggests share concentration in the family could drop from 43 percent to 5 percent in five years, making inheritance planning and share transition important to ensure smooth operation and avoid management disputes, it said.
A considerable number of family businesses in Taiwan and abroad said they still do not have strong digital capabilities, although the issue is a major concern.
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