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People's Daily Online>>China Business

Few family businesses hire professional managers

By Wei Heping, Chen Lu (China Youth Daily)

14:57, December 20, 2011

Edited and translated by People's Daily Online

According to the first Chinese Family Business Development Report recently released, majority of family businesses in China have a unified status of ownership and control power, where business owners themselves and family members serve as president and general manager.

In this survey, only 253 family businesses, or 7.9 percent of the total, hired professional managers as their president or general manager.

The survey shows 1,600 family businesses have the intention to hire professional managers. In the survey item of reasons for family business to employ professional managers, more than 65 percent of those companies thought it was needed for business’s scale and diversified development; about 27 percent believed they were unable to find the right talent within the family; and 23 percent of these family businesses chose the hope to "get rid of family management".

The survey shows, if it’s possible to appoint professional managers as presidents or general managers, the family businesses are willing to give professional managers 2.1 percent of company shares. This means some of the family businesses have accepted giving a certain degree of equity incentives to professional managers.

Among the 2,568 family businesses who do not want to hire professional managers, more than 55 percent of companies thought they unable to find suitable professional managers; about 34 percent of the family business believed the cost is too high, and about 21 percent of them said it was difficult to trust the professional managers. In addition, 16.5 percent of them thought the relevant laws are not consummated.

Thus it can be seen that family businesses are in a state of contradiction: as the company grows bigger, the family now is facing the bottleneck of lack of capacity. On the other hand they still have many misgivings against the employment of professional managers.

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wende at 2011-12-2071.125.80.*
Chinese entrepreneurs need to change this outlook to create an enduring enterprises. Professional managers can bring in expertise and perspective lacking in family style which often times become stagnant and wrecked by internal conflicts.

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