Forbes: Growth of China's listed family companies outpacing state enterprises

15:27, September 15, 2010      

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The growth rate and profitability of listed Chinese family companies is higher than in listed state-owned enterprises (SOEs), according to the first "Chinese Family Business Survey" that Forbes China magazine launched yesterday.

Statistics show that by the end of June of this year, a total of 305 of all listed companies in Shanghai and Shenzhen are family businesses, accounting for 36.2 percent of the total number of listed private enterprises. The total market value of listed family business has reached 1.47 trillion yuan, or about 218 billion U.S. dollars, accounting for 7 percent of the total market capitalization of Shanghai and Shenzhen listed companies.

In terms of the age distribution of the first generation of entrepreneurs, more than 60 percent were born in the 1940s and 1950s. And corresponding with their age distribution, 47 percent of the second generation of Chinese rich families were born in 1970s, only less than 30 percent were born in 1960s and less than 20 percent born after 1980. This shows that the post-70s generation forms the backbones of the second generation of entrepreneurs.

Of those listed family enterprises, 110 Chinese are husband-and-wife businesses and 133 are co-owned by one or more siblings. These two types account for the majority of listed family businesses.

Forbes explains that during the start-up period, many entrepreneurs can get better support from people who are in their own age group and can be trusted, such as their husbands or wives and brothers.

Although the Chinese family businesses started from small workshops, their earning power and growth rate put other companies to shame. The survey shows that the sales growth rate of the listed family businesses has reached 17.2 percent in last 3 years, while that of the listed state enterprises has grown by 7 percent. In terms of profitability, the average net profit rate of the listed family businesses reached 12.5 percent in three years, while state enterprises only saw less than 3 percent.

In regard to the company's future successors, 65.8 percent of the polled entrepreneurs hope that their business can be inherited by the second generation.

However, Forbes China chief editor Zhou Jiangong said that the Chinese private enterprises have just grown up and prospered in the hands of the first generation of the entrepreneurs, which are far from "rich over three generations" or "family business evergreen."

By Zhao Chenyan, People's Daily Online


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