The Chinese Family Business in Transition

Family Business in China is undergoing a near-revolutionary transitory period. As more family business owners seek retirement, they look to other family members in order to create and implement a succession plan among the household. Unfortunately, up to 80 percent of Chinese households may be left without anyone to pass the family business on to. This is according to a recent study done by Peking University and share on The Independant. Most of the next generation of Chinese business men and women simply have no interest in inheriting the family business.

You might say that the problem arises from the generation gap. After all, the past three decades in China’s history have been very different than the world in which the family business owning generation experienced. A lot of this can be explained by changing values, goals, and beliefs. During their semester at Zhejiang University in China, students of the Global Entrepreneurship Program specialize in Chinese Family Business in the field of entrepreneurship.

The newest generation finds the idea of succession to be archaic, confusing, and feel unwilling to follow in their parents’ footsteps. Add to these educational differences, and economists fear that changes to China’s business direction will be a detriment to the global economy. This is important because China is the world’s second biggest economy.

The All-China Federation of Industry and Commerce says that as of 2011, in China, there are over 10 million privately owned companies, and these are responsible for around 60 percent of the country’s Gross Domestic Product (GDP). Of these private companies, a whopping 80 percent are family-run businesses. 88 percent of the children of Chinese business families have been educated at a university to degree level, and around 52 percent studied and experienced life abroad in prominent schools like Harvard or the London School of Economics.

It is this draw toward western management systems as well as innovation which poses one danger to Chinese family business succession. Another danger is the one-child policy in China, which means that the first-generation family businesses will usually have just one child to take up succession.



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