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People's Daily Online>>China Business

Perpetuating the Chinese family business

(Chinanews.com)

10:30, December 16, 2011

Family businesses account for over eighty percent of all private business holdings in China, and now is the critical moment for many of these enterprise owners to pass them on to the next generation.

The All-China Federation of Industry and Commerce (ACFIC) released the China Family Business Development Report on December 12, says the National Business Daily. The report shows the typical family business has a life span of 8.8 years, and 59 percent of them were established after 2001, so they are still in the early stages.

Those established in the 1970s or 1980s, however, are casting about for a management successor, a crisis of middle age.

Family, a love knot in business

Of all the 3,286 private enterprises polled by the survey, the 85.5 percent classified as a family business dominate. Valid samples were obtained by excluding those who refused to disclose the extent of their family's share.

Also learnt by the survey, 2,135 private enterprises have family members actively engaged in it, while 1,151 are controlled and managed by single proprietors.

In Zhejiang Province, the family business category also takes the lion's share - over ninety percent, says Chen Ling, vice president of the School of Management, Zhejiang University. Chen adds that some private enterprises are unwilling to admit they are family owned and operated, presumably because of the nature of public opinion about this type of company.

Zhu Jian'an, vice president of the Family Enterprise Research Institute, has analyzed the phenomenon in Zhejiang Province. He reflects that, "Family culture is a love knot for Chinese. Especially in Zhejiang, many businessmen have started their business from virtually nothing, so they had to call on all their connections to succeed. It is common to see family playing a key role in a private enterprise."

Zhu says many brilliant private enterprises are working hard to adopt advanced western management techniques because the public, as well as some experts, often associate the family business with close-knit, backward management styles. Many private enterprises simply avoid mentioning in public the nature of their family's involvement.

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