A report titled Family Business: In Safe Hands? published yesterday by Barclays Wealth and the Economist Intelligence Unit (EIU), suggests that family business leaders have leadership and investment values that may position them well to ride out the economic downturn. Given their significant role in Asia's economy -- this is good news.

The report is based upon research from a global survey of more than 2,300 mass affluent people (defined as those with up to £1 million in investable assets), high-net-worth individuals (with up to £10 million in investable assets) and ultra high-net-worth individuals (with up to and in excess of £30 million in investable assets) and a series of in-depth interviews with experts on family businesses. Among these 2,300 respondents, almost 300 were family business members within a family business.

According to the survey, while retaining ownership, family businesses in Asia-Pacific are more open to recruiting outsiders than their peers elsewhere in the world -- with 19% of the Asian family business leaders saying they were open to the idea, as opposed to 17.2% from North America, 13% for the Middle East and North Africa (Mena) and 12.2% from Europe. Within Asia, Thai and Hong Kong family businesses rank highest among Asian respondents (33% and 26% respectively). In contrast, Indonesian, Korean and Japanese respondents were the least open with 7%, 12% and 16% respectively.

Asia-Pacific and Mena family business leaders place more emphasis on a strong corporate governance structure than US and European families in the survey with Indian and Hong Kong family businesses (32% and 26% respectively) paying closest attention to this among Asian respondents.

Survey participants consider a long-term perspective to be among the most important advantages of the family business model, with close to 40% of respondents globally holding this view and 50% among Hong Kong respondents. This trait, along with greater risk aversion, can help family businesses weather the current financial climate.

To be successful over the longer term, almost 44% of Hong Kong family businesses surveyed acknowledged the importance of having a clear succession plan to facilitate a smooth transition. That was about on par with family business leaders' views elsewhere in Asia and in Europe (49% of Asia-Pacific respondents held this view and 50% of European respondents said the same). Interestingly, it was well above North American family business leaders -- only 28% said they had clear succession plans, and well below Mena respondents, with 61% citing this as important. 

"Family businesses in Asia have come a long way from their entrepreneurial beginnings," says Didier von Daeniken, chief executive at Barclays Wealth Asia-Pacific. "Many such as those in Hong Kong today play very important roles in the Special Administrative Region's economy. While family businesses enjoy some unique strengths such as strong leadership, the strong identity drawn from the shared objectives of family members and their longer-term perspective, family businesses do face particular challenges such as corporate governance, succession planning and, in some instances, conflict management among family members."

There is a common perception that family businesses lack the more rigorous governance associated with companies with a more widely distributed ownership. This was born out in the survey: While the global family business members surveyed did not consider corporate governance to be an issue, and 56% felt they were doing a good job, 65% of the global non-family business respondents believe family businesses could improve on governance.

Among family business owners around the world, the views differ as well. Interestingly, a higher percentage of Asia-Pacific respondents (23%) and Mena respondents (22%), compared to 7% for North American family businesses and 17% for European family businesses, acknowledged a strong governance structure as an important attribute.  

As von Daeniken says: "2009 will be a challenging year for businesses, large and small. Those family businesses that are well managed with clear goals and strong leadership that smartly tap the best of external talent and family expertise are likely to be in an excellent position, not only to survive but also find opportunities to do well under the current economic climate."