Next generations get into pole positions to run Vietnamese family businesses

Sixteen percent of next generations in Vietnamese family businesses are currently executive directors while 38 percent are poised to be in similar positions by 2025, according to a survey conducted by consulting firm PricewaterhouseCoopers (PwC).

It found that 28 percent of Vietnamese NextGens were currently in management roles and 41 percent of surveyed respondents want to be in management roles within five years. 

The estimated 44 percent of Vietnam’s next generations who are already engaged in their family enterprise reflects a much lower number than the Asia Pacific average of 73 percent and the global figure of 70 percent, the survey said. 

However, the survey also found that 27 percent of those who have not yet joined their current family business plan to take over in the next five years, twice the global and regional ratios of 13 percent. The majority of the next generations in Vietnam are between 21 and 34 years old.

The survey was joined by 950 family business leaders from 69 countries and territories, including first-timer Vietnam, with 81 percent of Vietnamese respondents being from the second generation.

Industrial manufacturing and retail are the two major sectors the surveyed Vietnamese family businesses are engaged in, followed by construction and real estate, the survey found.

The report showed 22 percent of Vietnamese NextGens want to create their own enterprises over the next five years with support from their family business, compared to only six percent in 2019.

But only 6 percent of Vietnamese NextGens are interested in having their own business without financial support from the family, lower than the figure 9 percent in 2019.

Yet another salient fact that came out in the survey was that only around a third of the Vietnamese NextGens were being given the opportunity to lead.

The NextGens perceive that the top two major constraints holding them back from making a desired impact are lack of experience (41 percent) and the current governance model in their own family business (33 percent).

Family businesses are a core economic factor in any country, including Vietnam. The 100 largest family businesses contribute about 25 percent of the country’s GDP, Vu Tien Loc, Chairman of the Vietnam Chamber of Commerce and Industry (VCCI), had noted at the Vietnam Family Business Forum 2019 in Hanoi.

Among the 50 best listed companies in Vietnam are many family businesses and some are even blue chip stocks, like Vingroup, Vietjet Air, Thanh Thanh Cong, and Kido, he said. 

As many as 95 percent of Vietnamese enterprises are family businesses and the majority are led by the first generation or the first two generations, Loc added.