Ancient and modern
Asia has always been a strong area for business. From ancient trades such as silk and spices, to its undeniable position as the home of the world’s manufacturing, Asia has continued to mean business. Asian business owners are redefining what it means to be an entrepreneur in the modern age. In Hong Kong, Singapore, and mainland China, 40% are female, with nearly half under the age of 35. Asian entrepreneurs are ripping up the rulebooks, and setting their tone for business in today’s world. Despite this focus on modernity, tradition is still important. Family structures and personal networks play an important cultural and practical role for Asian business owners. As Asian business record higher turnover, entrepreneurs have less personal wealth. A study by HSBC Private Bank sought to explain these shifts. A fresh generation of business owners in Hong Kong, Singapore, and mainland China is challenging Western ideas of entrepreneurialism, according to new research from HSBC Private Bank. The study is based on a survey of more than 2,800 active business owners with a net worth greater than 1 million US dollars. The study shows that entrepreneurs in these Asian markets have different motivations, achievements, and barriers to their Western counterparts.
Starting young, growing fast
Entrepreneurs in the Asia region display strongly different career trajectories than those in the West. Many tend to start their businesses earlier, and rely more heavily on support from family and friends. In the East, the average age for entrepreneur’s maiden businesses is 29. This is a full six years earlier than their counterparts in the West. What is more, 41% of those surveyed are still under the age of 35. In these Asian countries, becoming an entrepreneur is not as simple as setting up a business. To be an entrepreneur is a much more conscious decision. In countries such as France, Germany, the United Kingdom and the United States, 26% have always considered themselves to be entrepreneurs, compared to only 14% in Asia. In Asia, this identity comes during professional development, either at university or college, or with professional business experience.
In the East, women entrepreneurs are flourishing. In Singapore and Mainland China, the percentage of female entrepreneurs is 36% and 37% respectively. In Hong Kong, with 48% of entrepreneurs female, the ratio between men and women is almost even. Asia is powering ahead with female entrepreneurship, while in the West just 31% of business owners surveyed are female. The lowest proportions are in Germany and the United Kingdom, with 21% and 27% respectively. 51% of entrepreneurs in Asia with net worth of over 15 million USD are female. In the West, this is 33%. In Singapore, the average female entrepreneur is worth more than the average male entrepreneur in Western markets, USD6.4m to USD4.8m.
“Despite being more interconnected and globalised than ever before, this study reveals that culture, society and economies can have a significant impact on what it means to be an entrepreneur in different regions. Entrepreneurialism runs deep in Asian countries and often across multiple generations, so it is natural to have so many relatively young entrepreneurs in these markets. In fact, many of today’s young entrepreneurs come from families with their own businesses where there was opportunity to acquire the necessary skill set and experience that can position them for success.” – Nick Levitt, Head of Global Solutions Group at HSBC Private Bank.
Driven to succeed
Entrepreneurship in Asia is a long term endeavour. In Asia, entrepreneurs are much more likely their Western counterparts to be focused on their ventures for the long-term. This is most true in mainland China. Less than a quarter (24%) intend to exit their businesses, compared to over half (55%) in the United Kingdom. It is also notable that while entrepreneurs in these markets are running larger businesses, they are less personally wealthy than business owners in the West. On average, entrepreneurs in Asia say that their main venture has a turnover of $12m, more than double those in the West. However, their personal wealth averages in the region of $16.2m, 26% less than Western entrepreneurs. “Once they reach a certain level of wealth, many Western entrepreneurs branch out into many other ventures or move on to new projects,” commented Nick Levitt. “For Asian entrepreneurs who are proud to have built successful empires, there is more of a focus on consolidating and growing their current enterprise.”
Family and friends: Trusted support or added complicity?
One of the most notable findings is the importance of family and personal networks for entrepreneurs in Asia. At 54%, more than half come from business-owning families. In Europe and the United States, this is only 43%. This entrepreneurial background and culture extends to creating one’s own business. In Asia, 49% make use of family wealth when creating their first business; 26% sought investment from friends or acquaintances. In mainland China, family wealth plays an even more important role. 61% of entrepreneurs find funding for their initial venture through familial wealth, and 32% look to friends and acquaintances. However, such informal connections can be a help or a hindrance. In Asia, nearly a third (30%) of entrepreneurs thought it a disadvantage.
“Personal connections invariably play an important role for entrepreneurs regardless of geography. In Asia, these personal connections can often provide financial support, as well as valuable business guidance for entrepreneurs. The next generation entrepreneurs also understand and recognise the value of building strong networks,” Nick Levitt continues. Business owners in Hong Kong, Singapore, and mainland China, 20% cited increasing personal wealth as the most important driver to starting a career as an entrepreneur. This may seem bizarre when it is considered that entrepreneurial wealth has been declining in these countries. The reason is that personal ambition is balanced with a strong desire to give back. Western entrepreneurs are just as likely to engage in philanthropy as their Asian counterparts. However, many Asian entrepreneurs have a defined and strong social goal to their charitable giving. 54% stated that there was a clear strategy underlying their giving, and 42% say their giving reflects their social, cultural, or religious values. For Western entrepreneurs, this is 42% and 38% respectively. It is clear that Asian culture is a key factor. “As we saw in our research, Asian cultures place a great deal of importance on the role of the family, and these informal networks are very much part of business life,” according to Nick Levitt. “It’s also notable that Asian business owners are just as likely to give back to society through philanthropy, but that their giving is more strategic than spontaneous, and informed more by societal and cultural values than personal ones.” Asian entrepreneurs are redefining what it means to be an entrepreneur, and at the heart of this drive are unique cultural factors. Using tradition to underpin a move to modernity, the meaning of entrepreneur is undoubtedly found in the East.
These findings will form part of the HSBC Private Bank Essence of Enterprise report, which is due to be released early in 2016. The report is based on interviews of over 2,800 business owners with assets of more than USD1m in countries including Hong Kong, Singapore, Mainland China, United States, United Kingdom, Germany, and France. The report will be one of the largest and most in-depth analyses of the motivations and journey of entrepreneurs across a range of major international markets.