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People's Daily Online>>China Business

Most private firms to face succession crisis

By Zhou Kai (China Youth Daily)

14:35, March 20, 2012

Edited and translated by People's Daily Online

More than 60 percent enterprises in China are facing a succession crisis in the next 10 years, said Wang Fanghua, president of the Institute of Chinese Enterprise Development, Shanghai Jiao Tong University.

"80 percent enterprises will meet the succession problem in the next ten years. Of them, about 80 percent second generations of these enterprises do not want to succeed their fathers. That means that at least 60 percent enterprises are facing a succession crisis," Wang said.

According to a survey conducted in 182 family businesses in China, Yu Mingyang, vice-president of the Institute of Chinese Enterprise Development and his team, found that founder entrepreneurs are 52 years old averagely.

They will enter or have completed the "successor" selection and power handover process in the next 10 years. About 20 percent second generation entrepreneurs are willing to take over their fathers' businesses; but as many as 80 percent are unwilling to do so.

An important reason for this is that "they see too many hardships and helplessness of their fathers". Optimizing the survival environment of private entrepreneurs, protecting private entrepreneurs and making the society fully respect the winners must be given high priority in social macro-management, Yu said.

"Generally speaking, challenges and pressure faced by second generation entrepreneurs are unprecedented", said Yu. Such challenges and pressure require that second generation entrepreneurs must have rather high personal qualities and social operational capabilities. Only by adapting to such challenges, can they remain in an invincible position in the new round of reshuffle.

"The government should do something in improving the operation environment of private businesses and in the smooth transition of succession of private enterprises, but not turn a blind eye". Wang Fanghua appealed to the government for paying high attention to the succession problem of Chinese private enterprises.

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