UAE entrepreneurs put family first, reveals HSBC survey

Entrepreneurs in the UAE are among the most connected and family-driven in the world, according to a new HSBC report that has been released. 

HSBC’s Global Entrepreneurial Wealth Report 2023 has surveyed current and former entrepreneurs in nine markets and explores the views of current entrepreneurs and those who have exited their businesses. 

Respondents of the survey are from France, the UK, Singapore, Hong Kong, India, China, Switzerland, the United States and the UAE. The survey was conducted in partnership with AON UK limited, interviewing a total of 973 individuals in these markets.

The report delves into the priorities, concerns and plans that these entrepreneurs have in three key areas: international opportunities, the path to business exit and beyond, and the transfer of wealth through generations. 

But it also has a range of other interesting insights.

The first of these is how entrepreneurship runs in the family. Here, the UAE ranks highly with 66 per cent of respondents saying that they come from a family business background. Switzerland (67 per cent) and India (63 per cent) also have a higher proportion of entrepreneurs with a family business background.

Overall, 54 per cent of all respondents, from the 9 markets, said that they are first-time entrepreneurs.

As part of a second insight, the report further found that UAE respondents ranked highly in terms of international connectedness as well.

“Those most likely to live in two or more markets are those residing primarily in the UAE or India, followed by Switzerland and Singapore,” say the authors of the report.

Here, 51 per cent of UAE respondents said that they operate in at least two markets, followed by Singapore (36 per cent) and Hong Kong (34 per cent).

UAE entrepreneurs are among the most likely to operate beyond their immediate border or be in the process of expanding abroad (86 per cent). Only Hong Kong ranks higher at 96 per cent. 

Hong Kong entrepreneurs are also most likely to operate beyond their immediate border or be in the process of expanding abroad (96 per cent), followed by those in the UAE (86 per cent), Singapore (85 per cent) and mainland China (81 per cent).

When it comes to personal drivers, family becomes another big theme for entrepreneurs from the Emirates.

“As for personal drivers, entrepreneurs are largely focused on investing, with access to international direct investments (43 per cent) and investing in real estate (41 per cent) as priorities. However, education for their children is also driving international interest – with over half of entrepreneurs in Hong Kong (57 per cent) and the UAE (55 per cent), and 50 per cent in mainland China stating this as a priority,” say the authors.

The approach towards exiting a business also differs in the UAE.

Of all the respondents across the nine markets, 34 per cent said they are considering an exit in the next five years. 

But entrepreneurs in the UAE have “the least interest in exiting their business” with 79 per cent of respondents in the Emirates saying that they don’t currently intend to sell or hand it down. 

“Hong Kong has the highest proportion thinking about exiting in the next five years (45 per cent), while India has the highest proportion considering an exit in the next two years (23 per cent),” notes the report.

Entrepreneurs in the UAE further place a high priority on transferring their businesses to the next generation. Here, 42 per cent of UAE respondents said that they would seek to keep the business within their immediate family, while 23 per cent of UAE respondents said they would consider transferring it to another family member.

Transferring of wealth by UAE entrepreneurs is also already par for the course for 26 per cent of the Emirates’ respondents, while 20 per cent said that they are also informally helping their children and grandchildren.

“The work ethic of family members (34 per cent), their desire to pursue personal goals (33 per cent) and a lack of interest in the business (33 per cent) are the major concerns that entrepreneurs have about handing over wealth to the next generation,” cites the HSBC report. 

“Entrepreneurs also cite a lack of trust in the next generation’s ability to manage the family wealth or business. This is largely consistent across markets, with concerns about work ethic higher in India and the UAE, and lack of interest in the business higher in France, the UK and the US. Interestingly, those with higher levels of wealth (more than $10m) have more specific concerns, including their own ability to cede control – 29 per cent, above the overall average of 14 per cent,” says HSBC.

The report concludes with a note from Edith Ang, who is the head of family advisory, Asia Pacific HSBC Global Private Banking

“The succession planning dialogue is invariably emotional, yet needs to have a clear purpose, be a reasoned discussion and have an alignment of objectives. This communication needs to be two-way. If done right, succession planning can be a celebration of the entrepreneurial spirit and hard work of the leading generation, which becomes the springboard from which the succeeding generations can reach greater heights,” says Ang.