Family-owned firms to have opportunities under AEC: academics
Thai family-owned businesses will see greater opportunities for growth as the Asean Economic Community (AEC) becomes a reality, academics believe.
Akachai Apisakkul, dean of the School of Business at the University of the Thai Chamber of Commerce, said family-owned enterprises would benefit greatly from the regional integration as they tend to have strong fundamentals.
"Family-owned business that have entered the second or third generation and have young people with high education to operate the firm will have a better chance to expand overseas, starting in Asean nations," said Akachai, who is also a director of the Family Business and SME Study Centre at the UTCC.
He pointed out that about 70-80 per cent of businesses in Thailand are owned by families. These businesses will have greater opportunity to grow in other countries if they have adopted knowledge of young generations to manage the firm, while remaining loyal to the principles of their founders and older people.
Family enterprises with potential for growth in Asean include farming, processed-product manufacturing, "local wisdom" goods, handicrafts, and services.
Akachai said family firms wanting to expand needed to study the market opportunities in Asean and form partnerships with local enterprises so they could easily access each market.
Yamato Sato, a professor of the management faculty of business and commerce at Tokyo's Keio University, said family businesses had the opportunity to grow both in their own markets and in the international arena if they had combined traditional knowledge with new ideas.
He said an increasing number of Japanese family-run companies, mostly small or medium-sized enterprises, had expanded overseas, including Thailand and |other Asean countries, amid closer relations between Japan and the region. Family-owned Japanese businesses are largely involved in foods, handicrafts, souvenirs, spirits and hotels.
"Family businesses could expand continuously if they have not relied solely on siblings or other relatives for their management. The adoption of professional executives would encourage new business growth. However, family businesses could also run smoothly if the young generation has good knowledge and entrepreneurial spirit," he said.
Sato said that since the 1970s, family-owned companies in Japan had employed more professional executives to drive business growth. However, a study in 2010 by Keio University found that family businesses that had been managed by younger members of the founding families had created better profits than professional executives. This may be because these younger people have an entrepreneurial spirit and are also familiar with the company, he said.
In Japan, about 42 per cent of registered companies are con-sidered to be family-owned. However, family businesses there have tended to be carried on less by younger generations because of a high legacy tax.
Such firms are subject to a 50-per-cent legacy tax if they generate annual revenue of more than 300 million yen (Bt95 million).