Mr. Shangkong
PUBLISHED : Monday, 18 February, 2013, 12:00am
UPDATED : Monday, 18 February, 2013, 9:11am

Private thoughts on the business of Xi and the next generation

Mainland businesspeople are grappling with change brought by the new leadership and their own children's lack of interest in the family firm

BIO

George Chen is Managing Editor for SCMP.com International Edition and Mr. Shangkong Columnist. George has covered China's political and economic changes since 2002. George is the author of two books: This is Hong Kong I Know (2014) and Foreign Banks in China (2011). George has been named a 2014 Yale World Fellow. Follow George on Twitter: @george_chen.
 

Kung hei fat choi! I wish all my readers good health and wealth in the Year of the Snake.

During the Lunar New Year holiday, I went with my parents, as usual, to visit relatives and friends, some of whom are very successful businessmen in the private sector.

Despite the positive headlines you may read in the state media, a good number of these businessmen are quite worried about the country's economic prospects and their own ability to keep and grow their wealth.

Our talk at dinner or over coffee often began with the latest political rumours from Beijing. We all know politics and the economy are much the same thing in China. If you don't understand Chinese politics, your business won't survive.

I asked the businessmen for their views on the new leader, Xi Jinping. Some were eager to share their concerns about his leadership style.

Referring to Xi's repeated orders to run a clean and humble government and cut down on the drinking and banquets many officials habitually enjoyed, one businessman friend said: "It seems Xi may be too tough - or perhaps it is not because of Xi himself but that those who are under Xi have become too nervous all of a sudden."

The new unwritten rule for officials at lunch or dinner is to have no more than four simple dishes and one soup. Chinese wines, in particular the famous Maotai, known as the "national spirit", are strictly forbidden.

"I am not talking about bribery or corruption here, but you know Chinese people just love wine and food, especially as you go further north. As businessmen, we always say if you can't drink, you can't do business in China," my friend said. "I think officials just overreacted to Xi's clean-up efforts, and I wonder if business growth may be hurt if our country enters a kind of pause mode."

More or less the same thoughts were shared by many other businessman friends.

The other thing many of them are worried about is their children, the so-called second generation of the rich, or fu er dai in Putonghua.

In a quick-and-dirty personal survey, three out of five businessmen I met during the holiday told me their children were not really interested in running the family business, a big concern for their parents, who in many cases built up their operations from almost nothing.

Some children tell their parents that the way fortunes are made has changed. One businessman, a small developer, told me his son once asked him jokingly: how many flats must Li Ka-shing sell a year just to match the value of the sales of Apple's iPhone and iPad - which can be made much more cheaply - in just one big mainland city?

His dad laughed and told his son to be more realistic, but the son replied it was his dad who must be aware of the shift in "global economic structure".

The private economy accounts for more than 60 per cent of the mainland's economic growth, and private businesses have become major job creators.

If more than half of the fu er dai have no interest in the family business, many of which are in manufacturing and property, what does this mean for China's economic prospects?

 

George Chen is the Post's financial services editor. Mr. Shangkong appears every Monday in the print version of the SCMP. Like it? Visit facebook.com/mrshangkong

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