The third generation of family-run businesses in Thailand are experiencing mounting challenges as the business landscape changes, but building trust and bridging the communication gap can help propel growth going forward, says PwC Thailand.
Citing Credit Suisse research, the consultancy found Thai family businesses have a combined wealth of 30 trillion baht, ranked No.8 globally and seventh in Asia-Pacific for 2018, said PwC.
Thai family businesses play a pivotal role in driving the Thai economy, accounting for more than 80% of all businesses and varying from small to large-sized firms, said the consultancy.
Some ¾ of listed companies in Thailand are also family-run businesses.
But the third generation of family-run businesses have challenges and pain points, defined as real or perceived problems, in driving their organisations, said PwC.
These range from building trust to bridging generation and communication gaps to good corporate governance, digital technology adoption and funding sources.
"What happens now is many of these Thai family businesses are increasingly passing the baton from second-generation leaders to the third generation, which are sharing similar pain points in driving their organisations," said Niphan Srisukhumbowornchai, family business leader and tax legal partner at PwC Thailand.
To overcome these challenges, both generations must open their minds and increase communication to reduce tensions and ensure a smooth business transition, said Mr Niphan.
A family charter is another tool to build a sustainable future, he said. It will help set common rules and conditions so that family members understand their roles and responsibilities, while reducing tension-related issues for the next generation of leaders.
Family business values will be reflected in a strategic plan that is clear and balanced between the goals of the business and the needs of family, said Mr Niphan.
The key criteria for the success of family businesses revolve around clear communication of values, focusing on recruitment and human resource management, and sharing the company's standards, he said.
PwC wants to establish a "Next Gen club" to gather some 10-15 third-generation family business leaders for a training camp, intending to strengthen business connections for each family in the future.
PwC would select the third-generation leaders, aged 20-35, from family companies having annual revenue of 2-3 billion baht. There are around 2,000-3,000 Thai families whose annual revenue meets this threshold.