China's rich are less likely to keep business in the family – unlike Hong Kong’s wealthy
Unlike elsewhere in Asia, first-generation entrepreneurs in China are less likely to pass down their companies to their descendants
The relatively recent creation of wealth on the mainland and the nation's one-child policy have resulted in wealthy mainlanders being less inclined to leave their businesses to their descendants, compared with business families in Hong Kong and other parts of Asia.
Forbes said earlier this year there were 152 billionaires on the mainland and 45 in Hong Kong.
"I see many Hong Kong families sticking with traditional preferences in passing down the family business, while many from [the mainland] do not," said Clifford Ng, a partner at Zhong Lun, a mainland law firm that serves wealthy clients.
"The new billionaires in China are generally very open-minded about their legacy. They have seen how wealth can destroy families and family disputes can destroy businesses.
"While cultural preference in inheritance may play a role, [mainland] clients recognise that the success of their business relies on meritocracy, and the child may not be the best person to run the business or, conversely, running the family business may not be the child's best career option."
With the one-child policy, mainland families were more likely to follow the Western model of selling the business and leaving it to professional managers to run, said Katie Graves, a partner at Withers, an international law firm.
"The choice is limited, and the child may not be suitable," Graves said.
However, Ng noted that a significant number of his clients have more than one child.
Nonetheless, he said, "because the second generation is still relatively young and the first generation are self-made entrepreneurs, the first generation seldom see themselves as dynasty builders. That age and culture seem to have passed."
Michelle Chow, a consultant at Withers, has a client who is a wealthy entrepreneur in his 80s. He is grooming his grandson, who is in his 40s, to take over his business.
"For this mainland family, there is no pressure for the grandson to carry on," she said.
Entrepreneurs who made their fortunes in technology - like Jack Ma Yun of Alibaba and Robin Li Yanhong of Baidu - were less inclined to pass their business to their descendants and more inclined to follow the practice of their peers in Silicon Valley, a US venture capitalist said.
However, some older Chinese, such as Lu Guanqiu, the founding chairman of Wanxiang Group, the mainland's biggest car parts maker, preferred to have their descendants involved in their business, the venture capitalist said.
Lu was quoted by Bloomberg as saying: "If I don't succeed, my son will continue with it. If he doesn't make it, my grandson will."
A survey of Hong Kong and mainland family business owners by Coutts, a British bank specialising in wealth management, in 2012 found only 16 per cent expected the next generation to be involved in running the family business.
"Now more next-generation family members are questioning the merits of joining [the family business]," the survey said.
Reasons for not wanting to join the family business ranged from the impact of a Western education to wanting to start their own business, to doing something different, it said.
Many listed mainland family businesses are managed by outside professionals, partly because of regulatory requirements.
Another reason was families were smaller and there were not enough family members willing or competent to manage the business, said Fan Choi, the north Asia head of wealth planning at Coutts.
To break the curse of a family's wealth not lasting three generations, family businesses must modernise, Wong Choihing, the chairman of Hydoo International Holding, told state television. "Family members do not agree … It is difficult to find a successor for the company. The only way is to reform," he said.