Vietnamese NextGen family businesses to focus on growth, digital and sustainability
The PwC Global NextGen Survey 2022 was conducted online in collaboration with The Family Business Network.
Nearly 70% of the next generation (NextGen) of family business leaders in Vietnam believed they have a responsibility to fight climate change and related consequences, three times as much as the current generation’s result.
The finding was highlighted in the PwC Global NextGen Survey 2022, a global market survey among next generation members in family businesses across 68 territories including Vietnam.
| Vietnamese family business’ NextGen focus on growth, digital and sustainability. Photos: PwC |
Compared to the current leaders, Vietnamese NextGens differ significantly in terms of their sense of responsibility when it comes to tackling climate change.
Nevertheless, the survey showed they need to step up their actions in the near term. While 77% expected to be involved in increasing their family business focus on investments for sustainability in the future, only 11% are doing this now.
Besides, about 58% also showed a strong interest in reducing their family business environmental impact in the future. However, they also need to step up this commitment and proactively take steps to achieve this (current level: 21%).
Nguyen Hoang Nam, Partner and ESG leader of Assurance Services at PwC Vietnam shared about the prominence of ESG and that the move to embrace ESG goals is already a seismic shift for businesses, powered by massive expectations from stakeholders, ambitious commitments from government and a tidal wave of capital investment.
“Put simply, there’s no contradiction between profit and purpose. Family businesses have a golden opportunity to take ESG as a matter of urgency - for the good of the planet, humankind and their own future success,” he underlined.
| Source: PwC |
Jonathan Ooi, Partner, Entrepreneurial and Private business Leader, PwC Vietnam said after over two years, Vietnamese NextGens are now facing a new reality, with new challenges such as a stronger need for growth, transformation and learning while the prospect of succession becomes ever more present.
He added: “More than ever, they have the capacity to shape their family businesses and make an impact as they take up responsibilities as stewards of their business.”
Growth as top priority
About 53% of Vietnamese NextGen members said achieving business growth is a top priority and they have identified technology as a key enabler to this goal.
| Source: the PwC Global NextGen Survey 2022 |
Indeed, their engagement in technology and digital-related areas is revealed to be higher than the global average on all four counts: adopting new technology, digital upskilling, investing in research and development (R&D) and focusing on cybersecurity.
They also want to play the role of catalyst for change as they see a significant gap in current generation’s knowledge when it comes to opportunities and/or risks associated with digital capabilities compared against global and regional peers.
The pandemic brings family businesses closer
The survey shows the pandemic has actually brought family business generations closer together. It has strengthened communication between generations and centered NextGens around a common goal: driving growth to secure the stability and sustainability of the business.
About 71% said that communication about the business between family members increased during the Covid-19 pandemic, much higher than the global and regional averages (56% and 57%, respectively).
While communication across all generations has enhanced significantly during the pandemic, there is still room for further improvement in communication between NextGens and the current generation. The survey shows that only 42% of NextGens believe that communication with the current generation is improved.
Succession: A transition challenge
The good news is that the pandemic has focused the minds of family businesses on succession planning. About 58% of Vietnamese NextGens are aware of a succession plan. Of those, the majority were involved in its development.
| Source: The Global NextGen Survey 2022 |
Hoang Viet Cuong, Director of Entrepreneurial & Private Businesses, PwC Vietnam said: “Generational transition, albeit a challenging process, should not be done solely by the current generation. While often feared, the process of “managing up”, on the basis of respect and good communication, will be crucial for NextGens by allowing them to proactively affirm their identity, status and carve out fulfilling career aspirations.”
However, Vietnamese NextGen also shared the challenge of taking the leading role while the current generation is holding onto control. As such, about 61% of NextGens find it difficult to prove themselves as new leaders or board members, which is much higher than the global and regional averages (both 45%).
