NewFamily-owned businesses outperform others, says Credit Suisse report
Credit Suisse study finds family-owned firms outperform in terms of share prices and sales growth
Stable management and long-term strategies have allowed family-owned businesses to outperform other companies over the past decade, but a study by Credit Suisse said succession planning is going to be a key challenge for these outfits going forward.
Billionaire tycoon Li Ka-shing's CK Hutchison Holdings, the Kwok brothers' Sun Hung Kai Properties and Lee Shau-kee's Henderson Land Development are some of the Hong Kong blue chips that were covered in a Credit Suisse report on the world's largest 920 family-owned listed companies in 35 countries, with a market capitalisation of at least US$1 billion.
"Family-owned businesses tend to take a longer-term view in running their business than other companies. They would be willing to invest in projects that may not be able to bring an immediate benefit but long-term gains for those companies," said Bernard Fung Chi-chung, the head of family office services and philanthropy advisory in Asia-Pacific for Credit Suisse.
The share prices of Hong Kong and mainland Chinese blue chips and other giant family-owned businesses had outperformed the MSCI All-Countries World Index at a rate of about 47 per cent over a nine-year period to the end of April this year, the Credit Suisse study showed.
The 920 family-owned businesses posted average annual sales growth of 10 per cent since 1995 to this year, compared with 7.3 per cent for firms on the MSCI index. The US has the largest number of family-owned businesses, followed by mainland China. Hong Kong is ranked fifth.
"Many family-owned businesses show they have a stable management for many years and they can make business decisions quickly in times of crisis or new business opportunities, and thus are likely to run their business well," Fung said.