Thai family businesses optimistic about a 2022 recovery from COVID-19

Family businesses in Thailand predict growth will pick up in 2022 even as they remain cautious this year due to the COVID-19 pandemic, according to PwC’s Global Family Business Survey 2021 – Thailand Report.

To survive and grow during this period, Thai family businesses must effectively manage working capital, said the report. Most people surveyed said the business was their family’s most important asset.

The Thailand Report was part of a global market survey of key decision makers in family businesses within PwC’s 87 countries and territories. Niphan Srisukhumbowornchai, Clients and Markets Leader, Entrepreneurial and Private Business Leader and Tax Partner at PwC Thailand, said that family businesses in Thailand expect sluggish growth in 2021 because the pandemic has affected the overall economy and domestic purchasing power.

The country’s epidemic prevention and control measures have temporarily disrupted some economic activities. But the rollout of mass COVID-19 vaccination programmes and a pick-up in consumer spending should bolster the recovery in the second half of this year, leading to better performances for family businesses in 2022.

“Most Thai family business leaders expect that this year’s sluggish sales and revenue won’t recover from the impact of COVID-19. Apart from this, managing liquidity for business continuity will remain a critical challenge for small-sized companies with limited working capital, as the COVID-19 crisis will drag on.

“In the near future, we may see more small family businesses and other companies who have liquidity shortages experiencing debt defaults, and there will be more business shutdowns than last year,” Niphan said.

PwC’s findings show that 61% of Thai family businesses said that the pandemic would lead to sales declines, compared with 46% of global family businesses. However, 83% of Thai family businesses expect to see growth next year, in line with the percentage (86%) of counterparts around the world.

Thailand family businesses are much more likely to prioritise long-term business survival and expansion into new markets and client segments due to the pandemic, the PwC report said.

More than half of respondents, or 56%, are focussing on survival and protecting their core businesses. Furthermore, they said increased use of new technologies and digitalisation are key priorities over the next two years.

“During the past few years, the pace of technological change is faster than in the past. Consumer trends and behaviour are alike. So, family businesses that don’t prepare or adapt the business to properly respond to this rapid change will have less competitiveness and will have more difficulty running their business,” Niphan said.

Thai family businesses are less likely to embrace change compared with global peers, and they scored lower on clarity of roles and strength of leadership. Only 28% feel they have strong digital capabilities as compared with 38% of global family businesses.

Finance sources and liquidity management as the pandemic continues

Based on the findings, traditional forms of finance, such as operational cashflow and bank lending, remain the primary methods for driving growth for both Thai and global family businesses. Some 25% of Thai family business needed additional capital in the last year, compared with 21% globally.

Niphan said that small-sized family businesses that have less access to sources of finance or business consultants than large businesses can join integrated platforms, such as super applications. A Super App provides comprehensive services for customers. Although there is some cost to join a platform, it will help keep the business alive and increase cash flow.

When asked about the prospects of Thai family businesses in 2021, Niphan concluded:

“This is truly a year of assessing the ability of family businesses to face the COVID-19 crisis.

“On the other hand, we will see a new generation of leaders who will implement new technologies and turn the existing crisis into an opportunity for their business expansion. We will also see new tech ventures in response to digital technologies, which is key for business to survive in the new normal.”