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COVER STORY

difficulties and accumulate resources they efforts from both incumbent and incoming
need support from their family, such as leaders. In addition to open communications,
spouses, siblings, and close relatives. “Together it is also important for family businesses to
they build up a business, possess values and have proper preparations and alignment.”
business know-how, and lead the business
through difficulties,” said Mr. Nghia. Major constraints
Passing on the family legacy to subsequent Vietnam’s “Doi Moi” economic reforms,
generations, he explained, creates a strong introduced in 1986, paved the way for the
bond. Most family businesses are in the tran- establishment of an initial group of Vietnamese
sition stage to the F1 (second) generation, family business, including Biti’s, Minh Long,
whose challenge is to step out from the An Phuoc, Thanh Thanh Cong, the Nova
“shadow” cast by the founder. To take over Group, and Anphanam, just name few. Viet-
successfully, this generation needs to demon- namese family businesses have endured their
strate skills in five business and family pillars: fair share of disadvantages and their progress Considered the
protecting the core of the business / products has been slower compared to their contem- oldest business model
and creativity; protecting the family’s repu- poraries throughout Asia and the world. in the world, family
tation in business and social relations; leading In addition, Mr. Nghia sees that many of
the business; managing people across gener- these companies do not have systematic suc- businesses have always
ations; and optimizing business relationships cession planning in place to develop the next played a pivotal role and
between the family and the company. generation. Moreover, most successors are generally account for more
The fundamental factors boosting local the F1 generation, whose capabilities and than 60 per cent of all
family businesses are their inherently entre- long-term vision are still young and limited. enterprises. They contribute
preneurial nature and ability to make quick Also worth noting is that the ability of Viet- to the development of a
decisions and adopt long-term thinking, Mr. namese family businesses to reach out to the country’s dynamic and
Ooi from PwC said. “These factors, along with world remains at only the “path-finding”
the implementation of ongoing policies from stage due to their limited capacity and adapt- creative economy, and in
the government to create an enabling envi- ability, and some are even becoming more terms of global integration
ronment for domestic enterprises, have allowed cautious in their internationalization process also help preserve the
local family businesses to thrive and become and about bringing in external executives to national culture.”
an integral part of the economy,” he told VET. share ownership and management.
There is always a learning curve for family PwC’s NextGen Survey identified three MR. HUYNH PHUOC NGHIA,
businesses and the next generation in aligning major constraints holding them back from Senior Consultant at Global Integration
their personal values and business purposes. making their desired impact: a lack of experience, Business Consultants (GIBC)
It is also important for future leaders to have a current governance in the business, and limited
deep understanding of their unique needs and opportunities for development inside their
ambitions early on. The NextGen Survey, con- family businesses. Other findings reveal a high said, delays in this key stage mean limiting
ducted by PwC recently, identified four distinct level of ambition and commitment among the prospects for the next generation to
NextGen personas - Transformer, Steward, Vietnamese NextGens. Over 70 per cent of grow within the company. Current manage-
Intrapreneur, and Entrepreneur - based on NextGens surveyed already play an active part ment needs to find more effective ways to
their skills, contributions, and career goals. or plan to be involved in the family business help NextGens make the transition to lead-
“Each persona calls for different over the next five years. Only 31 per cent, how- ership positions. Without well thought-out
approaches to build their own paths to success ever, are given an opportunity to lead. and executed succession planning, such obsta-
and drive their family business forward in an It is true that identifying potential can cles only become larger.
increasingly complex future,” Mr. Ooi be a delicate process for the older generation The succession period is, in fact, one of
explained. “A successful transition needs a in a family business, and it can be tempting the most vulnerable times for family busi-
continuity plan, shared vision, and sustained to continue to put it off. However, Mr. Ooi nesses, as in some cases the young successors
are largely unprepared to take over the
empire passed on by their parents or grand-
OWNER’S AGENDA
parents, according to Mr. Le Duy Binh, Man-
aging Director of Economica Vietnam. “The
governance structure and corporate culture
of family-owned companies make it extremely
difficult for them to resort to the services of
external professional business managers at
this critical time,” he said. “In other cases,
young and well-educated successors are
eager to push for change and the adoption
of new governance standards and new busi-
ness models, only to find that their efforts
are fruitless due to the resistance from other
family members or simply from the patriarch
who has long retired from the business.”
As a rule of thumb, succession planning
should be established ten years in advance,
Source: Family Business: Operating in the “new normal” - Pwc Mr. Nghia recommended, depending on the -

JUNE 2021 | VIETNAM ECONOMIC TIMES | 9