Family-owned businesses flourishing in Kingdom

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Updated 12 April 2016

Family-owned businesses flourishing in Kingdom

JEDDAH: Family businesses will grow further and flourish in the Kingdom, says a top Saudi industrialist.

Anees Ahmed Moumina, CEO of SEDCO Holding Group, expressed this optimism on the sidelines of the Family Owned Business Forum at the Jeddah Hilton on Monday.
The most important element of family business is corporate governance and this forum talks about this issue, Moumina told Arab News.
Eihab H. Abou-Rokbah, chairman of Arabian Mehad Excellence (AME) and the driving force behind the forum, said family businesses have always been there. “The good thing is that they adapt to changes better than the companies not owned by families.”
The chairman added: “I do really believe family businesses should have strong management and financial foundations. With these two, there is no doubt about solid growth. And if family businesses have good corporate governance in place, then they will sustain for a very long time."
Mark Goyder, founder director of Tomorrow’s Company, said a number of family business owners and people from each generation could benefit from the deliberations.
“There was valuable discussion where we talked about the principles of corporate stewardship. The discussion also focused on how the younger generation learns the tools of the trade. The workshop explored how to preserve the values in a dynamic market,” Goyder said.
Tarek Alnabulsi, managing partner of Institutional Sustainable Growth (ISG), said the participants at the forum shared their experience and focused on succession planning.
He said family businesses represent 90 percent of the enterprises in Saudi Arabia. So sustainability of these businesses is very important for the Saudi economy.
The key challenge facing the family businesses is succession planning, he said, adding that family businesses in Saudi Arabia will continue to show better performance than other companies globally.
He said there are some challenges facing family businesses in Saudi Arabia. “Entrepreneurship is very important in family businesses,” he said.
Adib Haroun Rashid, Ernst & Young’s MENA family business centre of excellence leader, said: “Ernst & Young created the family business center of excellence to focus on issues facing family businesses and how their families can deal with those issues. When we looked at the issues, we found common themes that successful families have done to ensure successful transition between generations.”
According to him, the first and foremost is to set up proper governance rules that enable family members to have clear roles and responsibilities, and segregate business and family issues.
This will help create forums for dealing with family topics outside the business and also establish clear communication channels related to business and family issues.
“The second issue is related to succession. We found that around $1.6 trillion will change hands from one generation to the other over the next 10 years globally,” he said.
Accordingly, a clear succession plan for ownership and management is needed to be put forward in order to ensure smooth transition between generations and ensure continuity of business.
Adib said in Saudi Arabia, the family businesses will continue to contribute to the economy even during the transitional phases between generations.
“They thus need to start planning on succession and proper governance structures to ensure the continuity of their businesses and the unity of the family,” he added.

Despite agreement, China purchase of US agriculture lags

Updated 10 August 2020

Despite agreement, China purchase of US agriculture lags

  • The two sides are set to meet on Saturday to discuss the deal, American media says

NEW YORK: Seven months after the United States and China signed a preliminary agreement to temper their trade war, Beijing’s purchases of US agricultural goods have yet to reach the deal’s target.

As President Donald Trump readies for a tough reelection battle in November, US media reported the two sides are set to meet beginning August 15 to discuss the deal, which calls for China to sharply increase buying American goods and services this year and next.

But according to data compiled by the Peterson Institute for International Economics (PIIE), Chinese agricultural purchases at the end of June were far from where they should be at this point in the year.

They had reached only 39 percent of their semiannual target, according to US figures, or 48 percent, based on Chinese figures.

“If we get back to what the level of trade was in 2017, we’ll be lucky,” said Chad Bown, a PIIE senior fellow who authored the study, referring to the year before the trade war began.

Under the deal’s terms, China agreed to increase agricultural imports $32 billion over the next 2 years from 2017 levels.

Chinese orders for corn and soybeans have increased since mid-July, with Beijing buying just over 3 million tons of American oilseeds between July 14 and Aug. 7, according to US Department of Agriculture data.

At the end of July, the United States reported the largest-ever daily order by China for its corn, of 1.9 million tons.

The announcements were a relief to US farmers, who are expecting a bumper crop this year and need to find buyers to take it.

They also came at a time of high political tension between the two countries, after the Trump administration authorized sanctions against several Hong Kong leaders over the rights crackdown in the city, and restrictions on Chinese apps WeChat and TikTok.

The Chinese “realize we’re not being the best of buddies right now, but they need the products and they’re gonna take as much as they need,” said Jack Scoville, agricultural market analyst for Price Futures Group.

It’s possible that Beijing will change its orders from buying this year’s harvest to next year’s.

But analysts warn that any orders could be called off before the ships carrying them leave port.

Brazil and Argentina, two of the world’s largest soybean and corn producers, are starting their harvests next spring, said Brian Hoops, president of the brokerage firm Midwest Market Solutions.

China “could cancel all these purchases they made in July and buy at much cheaper prices if that’s available to them,” Hoops said.

The trade deal dubbed “phase one” and signed in January has managed to survive both the tensions and the sharp global economic downturn caused by the coronavirus pandemic, which has badly hit international trade.

US Trade Representative Robert Lighthizer in June said China would follow through on its commitments, while Washington would also pursue a “phase two” trade deal that “will focus on issues of overcapacity, subsidization, disciplines on China’s state-owned enterprises, and cyber theft.”

Bown said any success in getting China to buy not just farm but also energy and manufactured goods, would aid Trump in his reelection campaign.