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| Yu Jiangbo (left), general manager of Zhejiang Neoglory Jewelry Co, has dinner with his parents. Yu has been working for his mother's company since 2008 after studying overseas for six years. |
Gradual transition
Experts say it's essential that both generations prepare for the transition gradually.
"Family businesses should be prepared to pass on the succession to the next generation, which will directly lead to a promising future for the companies," said Nueno from CEIBS.
He added that business techniques, including management skills, leadership principles, financial management and a management philosophy should be passed from one generation to the next.
Unlike Pan and Jin, Yu Jiangbo, general manager of Zhejiang Neoglory Jewelry Co, hadn't experienced life as part of the family business until he started working at his mother's company in 2008, following six years studying overseas.
After graduating from the London School of Economics in 2008 with a masters degree in human resources management, he headed straight back to China to work as a sales manager for his mother's company.
"I've spent two and half years learning the overall operation of the business, getting used to negotiating with business partners and in discussions with my parents and experienced senior employees," said the 28-year-old.
He believes overseas study has taught him how to assimilate knowledge swiftly and has helped him to rectify the gaps in his skills base that resulted from six years away from the company and the Chinese business scene.
First-generation bosses realize the importance of knowledge, especially when enhanced by experience overseas, while the younger generation have the advantage of a relevant background in education or work experience overseas which provides an insight into the qualities required for entering the global market.
"Many younger family members, those born in 1970s or 1980s, and with experience of overseas education, have different characteristics and have led a comfortable life, unlike their parents," said Jean Lee, director of the CEIBS Kaifeng Center for Family Heritage.
Lee said many second-generation entrepreneurs who studied abroad lack contacts in, and experience of local business networks, and they should take time to combine Chinese business culture with their international perspective.
Like many other privately-owned enterprises in China, Neoglory Jewelry in Yiwu, Zhejiang province, is restructuring. It's transforming its core business and making the change from being a manufacturer and seller of cheap products to becoming a middle- and high-end brand making high-quality items.
"I have been persuading my mother to try something new, instead of remaining as a traditional manufacturer forever. She eventually took my advice after noticing that competition among manufacturers of low-end goods was too tough," said Yu.
During the past five years, Yu has worked on finding global business partners, such as Zara, H&M and Accessorize, and has introduced the company's branded products to them.
In addition, the company has launched branches in the United Kingdom, the United States and Dubai to expand its international business. It has also established an e-commerce platform, managed entirely by Yu, to promote its products globally.
"I am going to run the company in my own way to focus on brand-building. Meanwhile, the online platform will be expanded in the next five to 10 years," he said.
The company has also hired experienced, professional managers to offer advice on its operations. "I think we need to find someone from outside the family to lead the growing management team, while the managers can play an essential role in offering objective suggestions to assist with the operation of the business," said Yu, adding that he will apply modern management concepts to ensure that the transition is effective.
Meanwhile, Lee believes that a system of "family cohesion", including rules and guidelines in the decision-making process, should be set up within businesses to reduce the possibility of conflict between the generations.
"Over time, in another five to 10 years, the tensions between the generations will become easier; the second generation will have the desire to change the companies and the first generation will offer greater democratic opportunities to their children," said Lee.
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