CKGSB Knowledge - China Business and Economy

DROPPING THE BATON?

Millions of Chinese family business owners are about to hit retirement age, but more than half their children say they’re not interested in taking over. Is China facing a business succession crisis?

Last year, Xu Jia had a big decision to make. Her father, the founder of a successful high-tech materials company in Cixi, a town not far south of Shanghai, was getting ready to retire. He offered her his stake in the business.

In the end, the 23-year-old declined. “I don’t want to do a job I’m not interested in,” she says. “I don’t think he was disappointed, but since he’s not someone given to expressions of emotion, I’m not really sure.”

Instead, Xu decided to continue her education in London, where she’s working on a master’s in Information and Experience Design at the Royal College of Art. After she finishes, she hopes to start her own business. “I’ve already found an office for my startup in London. I found a place and bought an apartment,” she says.

Xu is far from alone. Winnie Peng, Associate Director of the Tanoto Center for Asian Family Business and Entrepreneurship Studies at Hong Kong University of Science and Technology, says China’s young business heirs often have little interest in taking over the family firm.

“They’re all well-educated, most of them have studied abroad, and they have outside opportunities,” says Peng. “When they return to the family business they feel very bored.”

Joseph Fan,

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