Keeping it in the family

The research, by Shanghai Jiaotong University, found that only 18 per cent of fuerdai – children born to rich families – are willing to take the helm of their family-run businesses. The result was based on analysis of over 180 leading family-owned enterprises in their respective industries.

“The average age of these enterprises’ founders is 52. Over the next 10 years, these enterprises will face succession issues,” said Yu Mingyang, professor of the China Enterprise Development Institute of Shanghai Jiaotong University.

Unlike their parents, the younger generation has different characteristics. According to Yu, most of them had an overseas education and have always had a comfortable life.

The succession issue aroused concerns during the annual National People’s Congress and the Chinese People's Political Consultative Conference.

Sammy WS Lee, a member of the national committee of the CPPCC, as well as chairman of Hong Kong-based company Lee Kum Kee, suggested the government should attach more importance to succession issues at family businesses. “Most first-generation entrepreneurs in China, mostly in their 50s and due to retire in their 60s, will pass on the baton in five to 10 years to their children, who are expected to build on their success,” said Lee, whose sauce business was started in 1888 by his great-grandfather.

Nan Dianle, a steel business owner in Hebei province, has had to pin all her hopes on her younger son to take over the family business. “My older son, now 21, shows no interest in business matters,” the 40-year-old entrepreneur said. Originally from Wenzhou, the cradle of the country’s booming small and medium-sized enterprises, Nan and her husband Chen Debin moved to Tangshan, an inland manufacturing hub, two decades ago. 

Their business acumen and hard work transformed the family-owned workshop with 10 people to a local powerhouse that employs around 600. But it has always been a headache for the couple that their son thinks he is a “poet” rather than an entrepreneur.

After years of entrepreneurship, Nan and Chen look forward to the day when they retire, secure in the knowledge that their business is safe for another generation. So Nan has to devote her energy to cultivating her other son, just 11, to be business savvy.

Currently, there are over 8.4 million family-owned businesses nationwide, accounting for 87.4 per cent of all company types, according to a poll conducted by business portal hexun.com and consultancy DATA100. These businesses contributed 60 per cent to the country’s gross domestic product.

Zhou Dewen, chairman of the Wenzhou Small and Medium-sized Enterprise Development Association, said: “Some company heads simply don’t want their children to undergo the hardships they had. In other cases, it is the second generation who want to run their own lives and to be true to their own values.”

And these fuerdai do not necessarily lack compassion or ambition, Zhou added. 

“The young generation have less interest in the real economy, but turn to areas like investment and other virtual economies,” Yu from Jiaotong University said.

Zhou said the uncertain economic situation may have deterred some young entrepreneurs, as most of China’s family-run SMEs are engaged in manufacturing and the wholesale and retail trade, which relies heavily on the performance of key global economies.

According to the Chinese Family Business Report in 2011, only 7.9 per cent of company heads interviewed were willing to hire professional managers, with 55.9 per cent complaining about the difficulty in finding suitable candidates and 34.6 per cent citing the high cost.

Zhao Zi, secretary of the National Centre for Private Economy Studies, said: “It’s urgent we come up with a platform for family businesses to share experiences to ensure the smooth transition.