Family business owners in Asia are keen to maintain their legacy and wealth across future generations; however, few are actively preparing for succession, including those who are themselves second- or third-generation owners, according to recent report.

This gap between intention and reality is particularly apparent when compared with Western markets, finds London-based bank HSBC’s global private banking division’s Family-owned Businesses in Asia: Harmony Through Succession Planning report.

Globally, 78% of entrepreneurs surveyed for the report would like to keep their business in the family. However, over half ( 52% ) have not planned for this future.

Asian business owners lag even further behind, the report notes, with approximately two-thirds of respondents from mainland China, Hong Kong and Taiwan not having planned for how their businesses might continue after them.

As well, there are key regional differences, the report points out, in business owners’ motivations and preferences for exit.

Among them, India has the highest percentage of entrepreneurs who intend to pass their business on to a family member, with 79% intending to do so, which puts Indian business owners on a level with their counterparts in the UK ( 77% ) and Switzerland ( 76% ). However, fewer than half of the respondents in Hong Kong share this intention ( 44% ), along with just 56% in mainland China and 61% in Taiwan.

Entrepreneurs in mainland China ( 25% ), Hong Kong ( 29% ) and Taiwan ( 27% ), plus to a slightly lesser extent Singapore ( 22% ), show the most interest in selling their business as the exit route of the 10 surveyed markets. The sector most favoured for sale globally is electronics ( 21% ), a sector in which Asia accounts for almost two-thirds of world exports.

This varied appetite for selling may also be connected to the lived experience and motivations of respondents who themselves inherited the family business. Among the second- and third-generation entrepreneurs surveyed, almost 60% of respondents in mainland China say they felt a sense of obligation to take on the family business, compared with only 7% in India.

Nevertheless, many multi-generational entrepreneurs across the region feel supported by older generations in the family. In Singapore, this stands at 83%, and even in Taiwan, which sits at the bottom of the Asian pack, it still remains high at 70%.

Although families in Asia are planning for succession less than their global counterparts, the report shares, they increasingly recognize the need to formalize their wealth structures. The importance of succession planning for family businesses in Asia is also underscored by their economic contribution.

These enterprises, the report hightlights, account for about 79% of GDP in India, one of the highest ratios globally, and around 50% of GDP in mainland China, dominating the private sector.

“It is important to consider the value of family-owned businesses as a part of the global economy,” adds Lok Yim, the bank’s regional head of global private banking for Asia-Pacific. “Acknowledging this means accepting that we are now in the depths of a record transition of businesses between generations, or to new management.”