07/08/2015
Only 3% of the family businesses in Saudi reach its 4th generation
Ashrqia chamber’s communication division has issues the 12th issue of “Ailyah” pamphlet, which follows the news of the family businesses in Saudi. This pamphlet covered the latest events that the chamber has organized, in particular what concerns family businesses. It published a statement from Tawfiq Al-Rabiah, the minister of industry and commerce, about releasing a new guidance system for family businesses, which exempt them from publishing their listing as a protection measure, since those businesses are considered an important economic sector that requires protection.
The pamphlet has also included the news about the Saudi chambers of commerce, highlighting their achievements in the family businesses sector. This included a statement from Assistant Secretary General of the Jeddah Chamber of Commerce and Industry, Mohieddin Hakami, during the family businesses 2015 forum, which ended last April, about introducing a committee for family businesses. He mentioned that Jeddah has the highest number of family businesses in Saudi, thus this committee will help the chamber, by exchanging expertise, managing and dealing with all the complicated issues that those business face.
The pamphlet had also included a special coverage for a workshop about the importance of preparing future management in family businesses. Professor. Ebrahim Baeshen, spoke about the balance between the family side and financial side. The hiring process should be based on merits and not mere inheritance, to protect the company from collapsing. He mentioned that most of the international and local studies assert that 30% of the family businesses often survive until the 2nd generation, 13% reach the 3rd generation, while only 3% make it until the 4th generation which is a concerning matter that requires an intervention. Most family businesses start with a founder, but by the time, it reaches its first generation it often turns to a company without a family, then a family without a company. Thus, each company has to plan for its successors to keep the business successful.
The pamphlet has included as well a study about the role of women in family businesses in GCC countries. The conclusion was that Saudi is constantly improving by allowing women to participate more in cultivating the national economy. This enforces women role and participation in family businesses. The study was conducted by Khadijah Bint Khuwaelid Center for businesswomen in Jeddah’s chamber, and strategic company, where they relied on a survey that included 30 family company in GCC. It said that there is progress in many aspects; better chances in education and scholarships abroad in various majors, as well as governmental policies that support women’s participation and give them bigger leading roles in the family business. The results of this study confirmed that many family businesses in GCC are moving the management to the 3rd generation of the family, in a period that stretches along 5 to 10 years. This shift in management is considered one of the main difficulties family businesses face, but it could be considered an opportunity to browse through qualified family members, which is not exclusive to males, since some of the company stocks could go to females through inheritance which encourages them to pursue more effective roles in managing the family business.
The pamphlet included news about the most important family businesses around the world. It reviewed one of the oldest Japanese businesses, Sumitomo group, which dates to the 17th century. The company started when Masatomo Sumitomo himself opened a store to sell medical books. When somitomo started, he wrote a document titled as ‘founders’ principals’ where he left a clear the coming generations to follow. He described the best way to conduct business and that document has been used for 400 years.
The pamphlet has included a number of reports, amongst which a specialized study by the business infos center in Ahsrqia chamber that calls all the businesses to forum committees in their management, to assure quality and performance. The role of those committees was outlined in the study, which is to understand the company’s activities, its environment and tasks and to improve the sustainable value for beneficiaries. It also strive for a better quality and performance control, periodic follow ups to confirm that those roles are being implemented, as well as making sure that all beneficiaries are being provided with information and the needed report and that those information are clear, understandable and reliable.
