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People's Daily Online>>China Business

Family business, a work of generations

By Fu Jing and Zhao Shengnan (China Daily)

08:46, December 13, 2011

BRUSSELS/BEIJING -Successful family businesses in China and Europe grow on fundaments that help cope with economic downturns, but it takes generations to develop such traits, experts said.

Darius Movaghar, policy advisor of GEEF (European Group of Owner Managed and Family Enterprises), agreed that it is hard for family businesses to go beyond three generations.

"The success of a business depends largely on the first inheritance, which is always the riskiest," Movaghar told China Daily.

"If that is successful, the next important inheritance is the third one. If it survives three inheritances, the company usually stays in business."

Family businesses are the main form of enterprise in Europe. On average, about 50 to 60 percent of businesses are family-owned and some countries, such as Germany, depend heavily on these enterprises to boost economic growth.

"In Europe, this is definitely a growing trend, as family businesses are a good way of doing business," said Movaghar. Carrefour, L'Oreal, Heineken, Peugeot and BMW are big names in European family businesses. Movaghar added that high-flying CEOs often choose to go into a family business, because these businesses have much more stability, much less pressure (no shareholders, no dividends), and are able to focus on the long term, instead of having to make snap decisions to turn a quick profit.

Movaghar also said that family businesses have been doing well despite the economic downturn, mainly because they have a strong and loyal customer base.

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