Only 7% of Indian heirs feel obliged to join the family business: HSBC report on businesses and the succession model
While India is preparing for an intergenerational wealth transfer of $ 1.5 billion, a new HSBC report revealed that only 7% of Indian heirs felt obliged to resume their family business, clearly marking traditional expectations concerning inheritance and succession.
The report, entitled of family businesses in Asia: Harmony by planning the succession, was published on May 20, which highlighted the evolution of the mentality of family businesses in the region. While 88% of Indian entrepreneurs expressed their confidence in the next generation capacity to manage family wealth, 45% said they did not expect their children to really take the business. This reflects an extended gap between the confidence and the intention of the succession of leadership.
Despite this, 79%of owners of Indian family businesses still plan to transmit their business to a family member, among the highest in the world, and tied with the United Kingdom (77%) and Switzerland (76%).
“The family businesses in India balance the preservation of heritage with modernity. Although there is confidence in the next generation to maintain the values ​​and culture of the family business, there is also a need for open communication and robust succession planning, “said Sandeep Batra, head of international wealth and the leading bank, HSBC India.
He added that a proactive approach to succession not only strengthens family obligations, but also ensures the sustainability of long -term businesses.
Family companies contribute almost 79% of India GDP, one of the highest ratios in the world. Many were founded after the economic liberalization of the 1990s and are now sailing in a change of generation.
Second and third generation entrepreneurs, often raised in cosmopolitan and educated environments abroad, bring new prospects to their inherited companies. Almost 95% of these successors in India said they felt confident when the reins are taken care of, compared to the global average of 81%.
The report also underlined how the dynamics of the succession differ between Asia. For example, while 60% of second and third generation entrepreneurs in continental China felt obliged to continue the family business, this figure drops considerably to 7% in India. Meanwhile, business owners in Hong Kong (44%), China (56%) and Taiwan (61%) are much less likely than their Indian counterparts to maintain the business within the family.
The results highlight the urgency of planning the formalized succession, especially since India is about to one of the biggest transfers of wealth in its history – a person estimated at 1.5 Billion of dollars, which is equivalent to more than a third of their GDP, according to Hurun data.
