Image by © Royalty-Free/Corbis
Family business dominates the economic landscape around the world. In the US, family business accounts for 64% of GDP and employ 62% of the total workforce. In Europe this is even higher and family business significantly contributes to the economic growth of South and East Asia, Latin America, and Africa’s economy (Anderson and Reeb, 2003; Astrachan and Shanker, 2003). This is why students of the Global Entrepreneurship Program spend a semester of the program at Zhejiang University in China studying Family Business. The program is focused around 4 main pillars of entrepreneurship: New Venture Creation, Family Business, Social Entrepreneurship and Corporate Entrepreneurship, with learning taking place across 3 continents: Europe, Asia and America.
What is a Family Business?
The Entrepreneur defines Family Business as “a business actively owned and/or managed by more than one member of the same family.” Typically characterized by small and medium-sized organisations, the definition can also include major international groups, such as Mars, Walmart and Ford, whose founding families still retain ownership. According to researchers Sirmon and Hitt, 2003, a successful family business depends on the effective management of five unique resources: Human Capital: the skill sets of family members need to be complimentary and coordinated, with a clear division of labor, Social capital: family members should have a strong network and other external relationships to complement the internal capabilities, Solid Financial Capital in the form of both equity and debt financing, Survivability Capital i.e. a willingness to work for free or provide an emergency loan to save the venture from failure and Lower Cost of Governance, meaning there is less of a requirement for security systems, policy manuals, legal documents etc, due to the level of trust between the family.
Why study Family Business in China?
China has recently overtaken the USA to become the world’s biggest economy, according to figures by the IMF released in October 2014. The report stated that by the end of 2014, China would make up 16.48% of the world’s purchasing-power adjusted GDP (or $17.632 trillion), whilst the US would account for 16.28% (or $17.416 trillion). Add to this the fact that 85% of China’s private companies are family businesses, in which an individual or a family controls at least 50% of the firm, according to a study by the All-China Federation of Industry and Commerce in collaboration with Zhejiang University, 2010. Studying this aspect of entrepreneurship will therefore give future entrepreneurs a better understanding of how family business will grow in importance in the future world economy.
By studying family business as part of the entrepreneurship program, students interested in developing their own family business in this world region will learn entrepreneurship in a safe environment. If you make the wrong decision in your family business, this can be extremely costly and damaging. Discover more about Entrepreneurship in China.
Students will also gain an understanding of how to take advantage of the opportunities and overcome the threats facing family businesses. For example, according to KMPG Family Business, succession is one of the biggest threats to the future of family businesses in China. “In China, the vast majority of family business are first-generation firms; most mainland families have only one child, so there is only one potential heir to the business, and the cultural issue in China is that outsiders are usually not trusted. So, the vast majority of family businesses in China are likely to be sold because nobody takes care of the business after the first generation.”
Success story: Global Entrepreneurship Program graduate launches “Teayaan” family business in India
Upon graduating from the program in 2012, Global Entrepreneurship Program alumni Akash Takwani launched a successful tea business in India; Teayaan loose leaf tea. Akash conceived the idea whilst studying Family Business in China during his second semester of the entrepreneurship program. It was in here that Akash discovered a new culture of drinking loose leaf tea with friends, leading him to spot a new entrepreneurial opportunity. Akash says “It was a very new culture to me. It excited me, it fascinated me. Back home I found it very difficult to have loose leaf tea, so I thought it’s a very good opportunity. I took help from my friends in China and abroad and I came up with this product.”
Find out more: http://www.teasage.in/
Study Family Business and consult a Chinese company during semester in Asia
As a student of the Global Entrepreneurship Program, you have the unique opportunity to spend a semester studying at Zhejiang University, located in Hangzhou, China. The purpose of this learning experience is to give you an understanding of the challenges that international companies face when operating in the Asian business environment, requiring you to develop your cultural awareness and cross-cultural communication skills as well as focus on the Family Business aspect of entrepreneurship.
You will also have the chance to complete an In-Company project with a Chinese organisation. This Business Project gives you practical, hands-on experience of how to successfully navigate the Asian business environment. According to program graduate Tomas Paulauskas “In China, instead of building interesting strategies in the classroom, we went to events and talked with the main stakeholders in order to develop a better feeling of the project we were dealing with and a better understanding of the market. It was a really interesting challenge to try to get in touch and connect with the local community.”
Discover the program – taking place at EMLYON, Zhejiang University & Pace University