WEF 2019: Why FamBiz matter

At the World Economic Forum in Davos, the most influential global leaders discussing the future of the global economy as well as social and environmental challenges in. In this context we should recognize also the role and importance of Family businesses, which are not only the a major global economic force, but also acting with their long-term view and social responsibility as a stabilizing factor in times of uncertainty and disruption.

The top 750 family businesses in the world collectively generate US$9tn in annual revenues, equivalent to the combined GDP of Germany and Japan. Together they employ 30 million people worldwide, which is similar in size to the UK workforce. They are just as likely to be publicly listed as they are privately owned. This illustrated the importance of this segment in the current global environment.

These are some of the headline findings from The World’s Top 750 Family Businesses, compiled by Family Capital with support from PwC′s Global Family Business team and Professor John Davis, of MIT’s Sloan School of Management. The ranking is a fantastic new global reference point and updated on a quarterly basis, allowing further insights to be gained on the impact of and potential for rapid transformation.

What the research also highlights is the diversity of family businesses in terms of their scope and scale. For the first time, the research shares statistics from many countries where they have previously been hard to compile, including those from China, Russia, the Middle East, Africa, and Asia.

While the term ‘family business’ can conjure images of a few well-known big companies, generally many would assume that the majority are smaller private businesses. In fact, over half (54%) of the Top 750 are listed companies.There are many familiar names on the list - such as BMW, Ford and Walmart - but also many others that may surprise you. According to the recently published 9th PwC Global Family Business Survey, the source for long-term success is based on strong values and purpose, which make them even more important in these turbulent times.

While Western Europe is still the home of most Top 750 family businesses, the United States is leading the ranking from a country perspective, with 171 family businesses amongst the Top 750. Yet one of the main stories from this edition is the increasing appearance of Asian businesses on the list, and how this may affect the global representation of future rankings.

While the US is likely to lead the rankings for the immediate future, European family businesses will be more challenged by the fast growth of their Asian peers. PwC’s recent report The new Chinese unicorns, which surveyed executives of start-ups valued at $1bn+, found that 70% already have plans or strategies for overseas expansion. Many of these Chinese unicorns are family-owned, and we can expect to see them feature more prominently in future editions.

The potential influence of unicorns also illustrates a challenge for many of the Top 750: how digital transformation may disrupt traditional business models. Many of the businesses in this ranking operate in sectors - such as retail, automotive, manufacturing and mining - that are already confronting substantial challenges from new technologies.

How many of these family businesses adapt to this coming transformation will be one of the stories to watch in forthcoming editions. The extent to which a codified set of values can guide family businesses in their preparations and protect their ‘family feel’ in a digital age is the subject of a recent blog from PwC colleagues Hannah Harris and Jim Woods, which I would urge you to read.

Current family business owners face a unique challenge of balancing competitiveness and high levels of growth in the present, whilst ensuring the next generation are equipped with the skills needed to flourish. None of the family businesses who make up the current Top 750 will take their current position for granted, and will be extremely conscious on how to maintain that legacy in a fast-changing 21st century business environment. With our PwC NextGen program we support the next generation of business owners on their personal journey to keep up the entrepreneurial spirit and acknowledge their responsibility as potential future owners.

To conclude, I think the appearance of the Top 750 ranking is timely. It provides an invaluable recognition of the global scale and diversity of family business today, as well as the contribution they make to the world economy and local societies.

Understanding the contribution and potential of family business globally, tracking it, supporting it and celebrating it is a great opportunity for us all. That is why I am so pleased that PwC have been able to support this initiative and encourage you to explore the findings, methodology and analysis in more detail: https://www.famcap.com/the-worlds-750-biggest-family-businesses/

Please share your thoughts on the results in the comments, or get in touch directly at [email protected]

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