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People's Daily Online>>China Business

Succession problem threatens China's family firms


08:39, December 13, 2011

BEIJING, Dec. 12 (Xinhua) -- Family firms have been labelled China's economic "invisible engine" by a report released Monday, but it says their role is threatened by the inability of many to persuade the next generation to take over the reins.

Co-presented by the research organs of the All-China Federation of Industry and Commerce, Sun Yat-sen University, Zhejiang University as well as Hong Kong-based family firm Lee Kum Kee, the report features analysis of the development of Chinese family businesses, which it says have become hugely important in China.

However, of 1,014 surveyed entrepreneurs aged above 50, more than 40 percent expressed hope their kids would take over in the future, while only 35 percent of the younger family members confirmed their willingness to do so.

"Many Chinese family companies just had no clear family corporate ambitions or passing-down plans, and they still need to explore more how to sustain their family cultural heritage," said Chen Ling, co-author of the report and a family business researcher with Zhejiang University.

Lack of effective passing-down plans also contributed to the short lives of Chinese family businesses, said Chen.

The average age of 4,309 Chinese private businesses studied through a 2010 survey was only nine, much lower than their Western peers, according to the report.

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