Fatima Muhammad

Saudi Gazette

 

JEDDAH —  A survey among 2,400 family businesses in the world, 44 of which are in the Arabic region, revealed that these businesses have flexibility and were able to stand in difficult economic conditions.



At the Family Businesses Forum held under the title  “Towards Establishing Sustainable Family Businesses” which kicked off here in Jeddah Hilton Tuesday, in strategic partnership with the Ministry of Commerce and Industry and the Jeddah Chamber of Commerce and Industry, speakers expressed their thoughts and aired their concerns on the long-term plight of family-run businesses.



 Firas Haddad, a partner at PricewaterhouseCoopers noted that 79% of family businesses in the Middle East succeeded in generating growth. This percentage is high compared to the world average of 65%, he said.



Middle East family businesses are ambitious and 40% of them look forward for more growth during the coming five years, he further said.  However, they still lack strategies to indicate the future transfer of leadership of the businesses and only 14% of them have stated they have such strategies, he added.



Family businesses are of crucial importance in the GCC region. The region has 80% of family businesses in the Middle East and dominates up to 90% of non-oil business in the region as well as 70% of private sector employees.



Yasir Bajsair, the of Investcorp Bank, noted that the majority of GCC family businesses are “new” and are only 60 years old, many of which are controlled by the first and second generations. However 66% of them have contributed to at least five sectors.



Meanwhile, Ibrahib Baishin, partner of KPMG Al-Fawzan and Al-Sadhan, noted that SR20 billions are held by Saudi courts due to family conflicts. In the Kingdom, up to 75% of the private sector is controlled by 5,000 families. These family businesses control 90% of the regional commercial activities. The family businesses in the Middle East which will be handled by future generations are estimated at $2 trillions, added Baishin.



The globalization, he said, has forced families to establish different branches of their businesses in different regions, which require administration and leadership skills.



The challenges which face these businesses are the traditional thinking style of the older generation who fear risks. Therefore, he advised family businesses to give chances to the second generation to lead and discover skills and future plans. He stressed on the importance of having a family office in each company that will organize the workflow and financial gain of different generations and insure smooth transaction of leadership.