Family Businesses in Asia Lack Succession Planning, Survey Reveals

Low Preparedness Among Family Business Owners

A comprehensive survey conducted by Sun Life Asia has found that only 27% of family business owners in Asia have developed a comprehensive succession plan. Despite 94% of respondents expressing their intention to prepare inheritance arrangements, the majority have not taken concrete steps to ensure the continuity of their businesses. This gap between intention and action poses significant challenges to the long-term sustainability of family enterprises, which are crucial to Asia's economic landscape.

Regional Variations in Succession Planning

The survey highlighted significant regional differences in succession planning readiness. Indonesia showed the highest level of preparedness among surveyed countries, with 39% of family businesses having structured succession plans. In contrast, Vietnam had the lowest rate, with only 14% having formal plans. Hong Kong and Singapore recorded 20% and 28% respectively. These variations underscore the diverse challenges faced by family businesses across different markets in Asia.

Communication Gaps in Succession Planning

The survey also revealed significant communication gaps between generations regarding succession plans. Among family successors involved in business operations, only 44% reported that the previous generation had fully communicated their inheritance plans. This figure dropped to 27% among successors not directly involved in the business. The most preferred methods for discussing succession included formal family meetings (57%), one-on-one formal discussions (52%), and informal discussions (43%).

Priorities in Succession Planning

Family business owners identified financial protection (69%) as the most critical factor in succession planning, followed by clear communication of inheritance plans (54%) and building sufficient wealth for future generations (51%). The majority (68%) expressed a preference for their legacy to be invested in financial assets, life insurance, or family businesses to ensure long-term growth.

Challenges in Succession

The survey identified significant generational differences as a major challenge. Key reasons cited by successors for not taking over family businesses included desire for independence (50%), fear of responsibility (42%), lack of interest (28%), and differing values or visions (27%). Only 40% of current owners believed that the next generation was fully willing to continue the business, while the figure was even lower (31%) among successors not directly involved in operations.

Expert Insights

Maika Randini, Chief Marketing Officer of Sun Life Indonesia, emphasized that many family businesses are at a critical juncture due to growing generational gaps. She noted that younger generations prioritize independence, personal goals, and work-life balance, necessitating more robust succession planning and open dialogue about the future of family businesses.