Mainland Chinese family businesses are more optimistic than their Hong Kong peers and the global average in terms of their growth aims in 2021 and 2022. 73% of family businesses in Mainland China expect to see their business grow in 2021 (Hong Kong: 53%; Global: 65%) while 89% expect to see growth in 2022 (Hong Kong: 83%; Global: 86%), according to the Global Family Business Survey 2021 - China Report, released by PwC on May 18th.

The report found that the 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. Survey results show that 54% of family businesses in Mainland China saw 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%).

During this period, most family businesses in Mainland China and Hong Kong took measures to tide over their employees and the community. 75% of Mainland China respondents enabled their staff to work from home (Hong Kong: 68%; Global: 80%) while 70% sought to retain as many staff as possible (Hong Kong: 64%; Global: 71%).

The survey shows that the key priorities facing Mainland China family businesses over the next two years include expansion into new markets/client segments (63%; Global: 55%), increasing investments in innovation and R&D (51%; Global: 28%) and introducing new products/services (49%; Global: 50%). The pandemic has enhanced family firms’ focus on adaptability, agility and digital prowess. A higher proportion of family business respondents in Mainland China have developed a clear and documented roadmap for digital transformation relative to their Hong Kong or global peers (Mainland China: 45%; Hong Kong: 9%; Global: 33%).

The report also found that family businesses value their environmental, social and governance (ESG) profiles. The public health crisis has shown how quickly a high-impact, low-probability event can disrupt business as usual.

Yi Li, PwC China Tax Partner added: “Family businesses should go beyond traditional corporate social responsibility (CSR) activities, which, while unequivocally good, are not necessarily integrated into a company’s core operations. Companies that integrate ESG factors into their growth strategy and business decisions are better equipped to manage risks, capture opportunities and deliver long-term profitability. Establishing a company’s purpose can help articulate the means by which a business brings solutions to economic, environmental and social needs, and create a tangible link between business strategy and family values.”

Reporter: Olivia

Editor: Nan, Jerry